Novo Resources Annual Report 2012

FY2012 Annual Report · Novo Resources

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novo nordisk
annual report
2012

Strategy
is all about
choice

Novo Nordisk’s performance in 2012 is a result
of important decisions made in recent years
– but there is more to the story

Diabetes

– an emergency in slow motion

Sustainable
growth
– can it be done?

Insulin in
a tablet
– why is it so difficult?

20 Diabetes – an emergency

in slow motion

Contents

Accomplishments
and results 2012
1
2
4
6

Letter from the Chairman
Letter from the CEO
Performance highlights
2012 performance
and 2013 outlook

22
24

Our business
15
20

Strategy is all about choice
Diabetes – an emergency
in slow motion
The protein powerhouse
Insulin treatment
is a balancing act
Insulin in a tablet
– why is it so difficult?
28
Simple injections
29 Prevent bleedings
Pipeline overview
30
Many markets – one model
32
Sustainable growth
38
– can it be done?
With every big opportunity
comes a risk

22 The protein

powerhouse

Governance,
leadership and shares
Shares and capital structure
44
Corporate governance
46
Remuneration
49
52
Board of Directors
54 Executive Management

Financial, social
and environmental
statements
55

Consolidated financial,
social and environmental
statements
Financial statements
of the parent company
Management’s statement
and Auditor’s reports

104

109

28 Simple

injections

Additional information
112
More information
113 Product overview

The Management review, as defined by the Danish Financial Statements Act (FSA), is found on pp 1–54 and 94.
This Annual Report is published in both a Danish and an English language version. In the event of any discrepancies, the Danish version shall prevail.

Chairman of the Board of Directors
Sten Scheibye at the Annual General
Meeting in March 2012.

Letter from
the Chairman

2012 was a very good year for Novo Nordisk. Both in terms of
financial performance – with reported sales up by 18% and net
profit growth of 25% – and progress in the company’s research
and development pipeline, which promises well for the future.
And as you will see from this Annual Report – in which we account
for both financial, environmental and social performance – the
company also did well in many other respects in 2012.

The company’s Management and all its employees around the
world can be proud of these results, which are exceptional in
the pharmaceutical world these days when financial constraints
and austerity measures are creating an increasingly difficult
environment for research-based pharmaceutical companies.

We are very aware that Novo Nordisk’s results are created against
a sad background, namely the continuing rise in the number of
people with diabetes around the world. And despite advances
in healthcare over the years, only a small fraction of the people
being treated today are well treated.

As I said in last year’s report: There has never been more need for
a company like Novo Nordisk; a company that has dedicated most
of its resources, skills and innovation power to improving diabetes
care. And at the same time is making very good use of the skills it
has built within diabetes in developing its biopharmaceutical business,
not the least within haemophilia.

Every year, the Board of Directors reviews the company’s long-term
strategy and outlook. As described in the article on p 15, the strategy
is characterised by a strong focus on a few diseases, five core
capabilities and a deeply rooted values-based management system.
The Board remains confident that these strategic choices provide a
solid basis for a continued positive development for Novo Nordisk in
the coming years.

We are also confident that with Lars Rebien Sørensen and his
Executive Management team we have the leadership needed to
execute the strategy and fulfil Novo Nordisk’s potential. Together
with Lars and his team, in January 2013 we decided to expand

Executive Management with two executives, promoted from
senior vice president positions within the company. This lifts
the direct responsibility for critical functions such as marketing,
business development and IT into Executive Management, while
also broadening the group of senior managers.

In his letter on the following pages, Lars outlines some key events
in 2013, and as you will see, it looks like yet another exciting year
for Novo Nordisk. However, I must also remind you that for Novo
Nordisk, as for any company of our size in the pharmaceutical
industry, there is always the risk of something not going as we
expected. In the article on p 41, you can read more about key
risks of which you should be aware.

At the Annual General Meeting on 20 March 2013, the Board
of Directors will propose a 29% increase in dividend to 18 Danish
kroner per share. The Board of Directors has furthermore decided to
initiate a new share repurchase programme of up to 14 billion kroner.

For me personally, 2012 was the last full year on the Board of
Directors of which I have been a member since 2003 and had the
privilege to chair since 2006. It has been an exciting journey, in the
course of which Novo Nordisk has developed into a leading, global
and highly respected company. Shareholder return has been high,
and the company’s strategic foundation has been strengthened,
making it well prepared to address the challenges ahead.

On behalf of the Board of Directors, I would like to express
my appreciation for the leadership shown by Lars and his
Management team and the hard work and dedication of the
entire Novo Nordisk organisation.

Sten Scheibye
Chairman of the Board of Directors

President and Chief Executive
Officer Lars Rebien Sørensen
at the European Diabetes
Leadership Forum in April 2012.

Letter from
the CEO

In 1923, the first patients were treated with insulin from the
company that is now Novo Nordisk. Today, 90 years later, insulin
is still our main product. I think it is worth mentioning for several
reasons: it says something about how focused this company has
been for many years – and still is. It also shows that insulin and
other protein-based medicines – ‘protein therapeutics’ as they are
also called – are fundamentally different from traditional chemical
medicines in that our clever researchers can always find ways to
make them even better. Finally, my brief history lesson is a reminder
to all of us who work in the company today – many of whom are
also shareholders in the company – that although we have good
reason to be proud of what we have achieved with Novo Nordisk
in recent years, we owe a lot to our predecessors, who laid the
foundation for what we are doing today.

Most annual reports these days talk about how the state of the
global economy and the ensuing austerity measures put pressure
on businesses. This report is no exception. We are often facing
situations where governments are demanding price reductions
that we consider unacceptable or implementing measures to
limit new products’ access to the market. It puts us in a moral
dilemma. On the one hand, we want to continue supplying our

best products to customers around the world; on the other hand,
we cannot sell our newest products at the old products’ prices.
If we do that, we start to erode the whole innovation model that
created the products in the first place. Then we deny all the 371
million people who have diabetes the possibility of future, better
treatments and, ultimately, a cure for their disease.

In such difficult times, it is crucial that we – industry, politicians
and payers – rethink the approach to managing diabetes and
other chronic diseases, ensuring more sustainable healthcare
solutions. That is why we support initiatives such as the European
Diabetes Leadership Forum, which gathered more than 700
participants in Copenhagen in April 2012 to discuss and agree
on ambitions, priorities and actions for improving diabetes care
in Europe and OECD countries.

Despite the difficult economic climate, we were able to grow sales
in 2012 by 12% measured in local currencies due to continued
strong demand for some of our key products. As in 2011, the
products behind most of this growth were our once-daily human
GLP-1 analogue Victoza® (liraglutide) and two of our modern
insulins, NovoRapid® (NovoLog® in the US) and Levemir®.

From a regional perspective, North America was again the main
contributor to our growth, followed by International Operations
and Region China. As you will see from the article on p 32 about
our different markets, it is also in these regions we expect to
see most of the growth in the coming years. Our sales growth,
combined with continuous focus on the efficiency of our operations,
resulted in operating profit growth of 32% reported and 20% in
local currencies.

• regulatory filing for IDegLira in the EU mid-2013 and in the
US during 2013 pending marketing authorisation of Tresiba®
• completion of the phase 3 programme investigating the use
of liraglutide for treatment of people with obesity and co-
morbidities

• initiation of the phase 3 studies for semaglutide, a once-weekly
GLP-1 analogue for the treatment of type 2 diabetes; FIAsp; and
liraglutide for type 1 diabetes as adjunct to insulin.

While on the subject of profit, I am aware of the public debate
on how much or how little large, international companies pay in
corporate taxes. Therefore, it is important for me to assure you
that Novo Nordisk does pay its fair share. In 2012, our tax expense
amounted to 6,379 million kroner, corresponding to an effective tax
rate of 22.9%. We pay taxes where profits are earned, according
to international transfer pricing rules, and being a good corporate
citizen everywhere we do business is a company objective.

We will invest in both current products and our new-generation
insulins. We will spend 14–15% of our sales on research and
development of new, innovative products, which will address
unmet medical needs and help secure Novo Nordisk’s long-term
development. In 2013 alone, we expect that more than 28,000
people will participate in Novo Nordisk-sponsored clinical trials.
And, we will continue investing in advocacy and activities in
support of people with diabetes and haemophilia.

Several products in our development pipeline passed important
milestones. However, almost all attention from investors and the
media was on our new generation of insulins, Tresiba® (insulin
degludec) and Ryzodeg® (a combination of insulin degludec and
insulin aspart). Both products were approved in Japan in 2012 and
in the EU in January 2013. In the US, Canada, Switzerland and
other countries, the approval process is ongoing.

All of these investments serve one purpose: To help patients live
better lives. That is what drives us. We know there are millions
of people with diabetes who could be living their lives in full if
only they got the necessary medical treatment and care, and we
are determined to contribute to closing that gap. We have set an
ambition that by 2020 we will provide medical treatment to an
estimated 40 million patients.

Despite all eyes being on Tresiba® and Ryzodeg®, I would like
to mention a few other encouraging developments. One is the
completion of the phase 3a programme for IDegLira, a fixed-
ratio combination of liraglutide and insulin degludec for the
treatment of patients with type 2 diabetes. We are planning
regulatory filing for IDegLira in the EU mid-2013 and in the US
during 2013 pending marketing authorisation for Tresiba®.

In December 2012, we selected for phase 3 development a new
formulation of insulin aspart, called FIAsp, with a faster onset of
appearance than NovoRapid® (NovoLog® in the US), which we
hope will enable more flexible insulin administration in connection
with meals, as well as improved blood sugar control after meals.

Within the area of haemophilia, we filed turoctocog alfa for approval
in the EU, US and other markets. Turoctocog alfa is a recombinant
factor VIII product for treatment of the most widespread form of
haemophilia, haemophilia A. Furthermore, we launched NovoThirteen®,
a recombinant factor XIII product for treatment of a rare bleeding
disorder, in the EU and Canada (where it is marketed as Tretten®).
On the negative side, we had to discontinue vactreptacog alfa, an
analogue of recombinant factor VIIa, due to safety concerns.

Another negative event, unrelated to our research and development
pipeline, came in December, when we received a so-called Warning
Letter from the US Food and Drug Administration (FDA), following
an inspection of an aseptic filling facility in Bagsværd, Denmark, in
March 2012. We immediately took action to address the concerns
raised by the agency, learn from them, and prevent them from
occurring again. We submitted our response to the Warning Letter
on 28 December. At the time of writing this letter, we are still
awaiting a response from the agency.

In 2013, we will have special focus on:
• the launch of Tresiba® in the EU, Japan (pending price

negotiations) and other markets where it has been approved

• approval of Tresiba® and Ryzodeg® in the US and other

countries, where the regulatory review process is ongoing

Last but not least, we will continue investing in the development
of our people, with a strong focus on doing business the Novo
Nordisk Way – never compromising on quality and business ethics.

Personally, I look forward to having two new members joining
my Executive Management team: Lars Fruergaard Jørgensen,
responsible for IT, Quality & Corporate Development, and Jakob
Riis, head of Marketing & Medical Affairs.

We have also promoted four corporate vice presidents in our US
affiliate to senior vice presidents and members of the company’s
global Senior Management Board. The promotions reflect the
increasing size, complexity and strategic importance of our
business and development pipeline in the US. I look forward to
working with the new senior vice presidents and to the increased
diversity and stronger US representation they bring to our Senior
Management Board.

I would like to thank everyone in the Novo Nordisk organisation
for their contributions to our results in 2012, the people who
use our products for their confidence in us, our stakeholders and
partners for their collaboration, and our shareholders for their
continued support.

Lars Rebien Sørensen
President and chief executive officer

PS: Please tell us what you think about our Annual Report. Does
it meet your information needs? Is it comprehensible? You can
help improve our reporting by answering a few questions at
novonordisk.com/annualreport/feedback.

4 ACCOMPLISHMENTS AND RESULTS 2012
4 ACCOMPLISHMENTS AND RESULTS 2012

Performance
Performance highlights
highlights

DKK million

2008

2009

2010

2011

2012

2011–2012

Financial performance
Sales
Modern insulins (insulin analogues)
Human insulins
Victoza®
Protein-related products
Oral antidiabetic products (OAD)

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

34,821
11,302
9,495
2,511
2,758

Diabetes care total

33,356

37,502

45,710

50,425

60,887

NovoSeven®
Norditropin®
Hormone replacement therapy
Other products

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

8,933
5,698
2,163
345

Biopharmaceuticals total

12,197

13,576

15,066

15,921

17,139

Total sales by business segment

45,553

51,078

60,776

66,346

78,026

North America
Europe
International Operations
Japan & Korea
Region China

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

34,220
19,707
11,080
6,617
6,402

Total sales by geographical segment

45,553

51,078

60,776

66,346

78,026

Underlying sales growth in local currencies
Currency effect (local currency impact)

Total sales growth as reported

Depreciation, amortisation and impairment losses
Operating proﬁ t
Net ﬁ nancials
Proﬁ t before income taxes
Net proﬁ t for the year

Total assets
Equity

Capital expenditure, net
Free cash ﬂ ow1

Financial ratios
Percentage of sales
Sales outside Denmark
Sales and distribution costs
Research and development costs
Administrative costs

Gross margin1
Net proﬁ t margin1
Effective tax rate1
Equity ratio1
Return on equity (ROE)1
Cash to earnings1
Payout ratio1
Payout ratio excl non-recurring events2

Long-term ﬁ nancial targets
Operating proﬁ t margin1
Operating proﬁ t growth
Operating proﬁ t after tax to net operating assets1
Cash to earnings, (three-year average)

12%
(3%)

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%

27.2%
38.4%
37.4%
97.6%

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%

29.2%
20.7%
47.3%
111.5%

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%

31.1%
26.5%
63.6%
115.6%

11%
(2%)

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%

33.7%
18.4%
77.9%
112.8%

12%
6%

18%

2,693
29,474
(1,663)
27,811
21,432

65,669
40,632

3,319
18,645

99.4%
27.6%
14.0%
4.2%

82.7%
27.5%
22.9%
61.9%
54.9%
87.0%
45.3%
45.3%

37.8%
31.7%
99.0%
103.7%

Change

21%
5%
58%
9%
7%

21%

7%
13%
5%
(27%)

18%

29%
3%
18%
6%
28%

18%

(2%)
32%
270%
27%
25%

2%
9%

11%
3%

Targets3
40%
15%
125%
90%

NOVO NORDISK ANNUAL REPORT 2012

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NOVO NORDISK ANNUAL REPORT 2012

ACCOMPLISHMENTS AND RESULTS 2012 5
ACCOMPLISHMENTS AND RESULTS 2012 5

2008

2009

2010

2011

2012

2011–2012

Social performance
Patients:
Least developed countries where Novo Nordisk sells
insulin according to the differential pricing policy
Healthcare professionals trained or educated
in diabetes (1,000)
People with diabetes trained (1,000)
Donations (DKK million)
New patent families (ﬁ rst ﬁ lings)

Employees:
Employees (total)
Employees (average FTEs)
Employee turnover

Assurance:
Relevant employees trained in business ethics
Business ethics assurance activities
Fulﬁ lment 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
Patients reached with diabetes care
products (million) (estimate)4
Working the Novo Nordisk Way
(employee assessment) (scale 1– 5)
Diverse senior management teams5

Environmental performance
Resources:
Energy consumption (1,000 GJ)
Water consumption (1,000 m3)

N/A
N/A
78
71

425
416
83
55

373
494
84
62

835
626
81
80

1,274
836
84
65

27,068
26,069
12.1%

29,329
27,985
8.3%

30,483
29,423
9.1%

32,632
31,499
9.8%

34,731
33,061
9.1%

N/A
25

92%
2
0

N/A

N/A
43%

N/A
30

93%
2
0

N/A

N/A
50%

98%
35

93%
5
0

N/A

N/A
54%

99%
46

93%
5
0

5.6

4.3
62%

99%
48

94%
6
1

5.7

4.3
66%

2,533
2,684

2,246
2,149

2,234
2,047

2,187
2,136

2,433
2,475

Emissions and waste:
CO2 emissions from energy consumption (1,000 tons)
Wastewater (1,000 m3)
Waste (tons)

217
2,542
24,314

166
2,062
26,362

95
1,935
25,627

94
2,036
41,376

122
2,272
82,802

Change

(3%)

53%
34%
4%
(19%)

6%
5%

20%
–

Targets

40 million by 2020

4.0
100% by 2014

Change

11%
16%

30%
12%
100%

Targets

Long-term environmental targets
Energy consumption
(change compared with prior year)
Water consumption
(change compared with prior year)
CO2 emissions from energy consumption
(change compared with 2004)7

Share performance
Basic earnings per share/ADR in DKK1
Diluted earnings per share/ADR in DKK1
Dividend per share in DKK
Total dividend (DKK million)

(9%)

(11%)

(1%)

(17%)

(20%)

(5%)

(2%)

11%

16%

(1%)

(24%)

(56%)

(57%)

(44%)

3% annual growth6

5% annual growth6
10% reduction
by 2014

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

39.09
38.85
18.00
9,7158

Change
29%
30%
29%
25%

1. For deﬁ nitions, please refer to p 93.
2. Impact of Zymogenetics, Inc. share divestment, discontinuation of all pulmonary diabetes projects and impact of DAKO A/S share divestment.
3. The long-term ﬁ nancial targets were updated in February 2013. Please refer to p 10.
4. The accounting policy has been updated in line with WHO deﬁ nition, and historical data have been restated accordingly. Please refer to p 97.
5. By the end of 2014 all senior management teams must comply with the target to be diverse in terms of both gender and nationality or explain why this is not achievable.
6. For target deﬁ nition, please refer to p 14.
7. The accounting policy has been updated and historical data have been restated accordingly. The target remains unchanged. Please refer to p 102.
8. Proposed dividend for the year (not yet declared).

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NOVO NORDISK ANNUAL REPORT 2012

6 ACCOMPLISHMENTS AND RESULTS 2012

2012 performance
and 2013 outlook

2012 was a positive year for Novo Nordisk with strong sales growth, robust performance against
long-term financial and social targets and significant progress in the clinical development pipeline.

Financial
performance

The results for the year are higher than
expected in the outlook in the Annual
Report 2011 and in line with the latest
guidance provided in connection with the
quarterly announcement in October 2012.1

Sales development
Sales increased by 18% measured in Danish
kroner and by 12% in local currencies in
2012 compared with 2011. North America
was the main contributor with a 66% share
of growth measured in local currencies,
followed by International Operations and
Region China, contributing 20% and 11%
respectively. Sales growth was realised
within both diabetes care and biopharma-
ceuticals, with the majority of growth
originating from the modern insulins and
Victoza®. Sales growth in 2012 was negatively
impacted by around 1.5 percentage points
due to healthcare and pricing reforms in
several European markets, the US, China
and International Operations.

In the following sections, unless otherwise

noted, market data is based on moving

1. Please refer to the company announcement dated

31 January 2013 for explanation of results compared
to latest expectations.

annual total (MAT) from November 2012
and November 2011 provided by the
independent data provider IMS Health.

constitute more than 75% of Novo
Nordisk’s sales of insulin.

Diabetes care sales
development
Sales of diabetes care products increased
by 21% measured in Danish kroner to
DKK 60,887 million and by 15% in local
currencies. Novo Nordisk is the world leader
in diabetes care and now holds a global
value market share of 26% compared with
24% at the same time the year before.

Modern insulins, human insulins
and protein-related products
Sales of modern insulins, human insulins
and protein-related products increased by
16% in Danish kroner to DKK 48,634 million
and by 10% measured in local currencies,
with North America, International Operations
and Region China achieving the highest
growth rates. Novo Nordisk is the global
leader with 49% of the total insulin market
and 46% of the modern insulin market, both
measured in volume.

Sales of modern insulins increased
by 21% in Danish kroner to DKK 34,821
million and by 15% in local currencies.
North America accounted for more than
half of the growth, followed by
International Operations and Region
China. Sales of modern insulins now

North America
Sales of modern insulins, human insulins and
protein-related products in North America
increased by 29% in Danish kroner and
by 20% in local currencies. This reflects
continued solid market penetration of
the modern insulins, NovoLog®, Levemir®
and NovoLog® Mix 70/30, and a modest
growth in human insulin sales. 50% of Novo
Nordisk’s modern insulin volume in the US
is used in the prefilled device FlexPen®.

Europe
Sales of modern insulins, human insulins
and protein-related products in Europe
were unchanged in Danish kroner but
decreased by 1% in local currencies. Sales
in Europe reflect continued progress for
NovoRapid® and Levemir®, countered
by declining human insulin sales. Sales
growth in Europe is negatively impacted
by a continued low insulin volume growth,
below 3%, and by the implementation
of pricing reforms in several European
markets. Device penetration in Europe
remains high with 96% of Novo Nordisk’s
insulin volume being used in devices,
primarily NovoPen® and FlexPen®.

International Operations
Sales of modern insulins, human insulins
and protein-related products in International

Sales growth

In DKK as reported
In local currencies

Sales by geographic region

Sales by therapy area

■ Region China
■ Japan & Korea
■ International Operations
■ Europe
■ North America

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

2008 2009 2010 2011 2012

DKK billion

100

DKK billion

100

2008 2009 2010 2011 2012

NOVO NORDISK ANNUAL REPORT 2012ACCOMPLISHMENTS AND RESULTS 2012 7

Operations increased by 19% in Danish
kroner and by 16% in local currencies.
The growth is driven by all three modern
insulins and a solid contribution from
human insulins. Currently, 58% of Novo
Nordisk’s insulin volume in the major
private markets is used in devices.

Japan & Korea
Sales of modern insulins, human insulins
and protein-related products in Japan
& Korea increased by 1% measured in
Danish kroner but declined by 6% in local
currencies. Sales development is impacted
negatively by a continued volume decline
in the Japanese insulin market and a
challenging competitive environment.
Device penetration in Japan remains
high, with 98% of Novo Nordisk’s insulin
volume being used in devices, primarily
the FlexPen®.

Region China
Sales of modern insulins, human insulins
and protein-related products in Region
China increased by 27% in Danish kroner
and by 15% in local currencies. The sales
growth was driven by all three modern
insulins, while sales of human insulins only
grew modestly. Currently, 97% of Novo
Nordisk’s insulin volume in China is used
in devices, primarily the durable device
NovoPen®.

Victoza® (GLP-1 therapy
for type 2 diabetes)
Victoza® sales increased by 58% in Danish
kroner to DKK 9,495 million and by 50%
in local currencies, reflecting robust sales
performance in all regions. The global roll-
out is continuing, with 60 countries having
launched Victoza® by the end of December
2012. Victoza® holds the global market
share leadership with a 68% value market
share in the GLP-1 segment compared with
58% in 2011. The GLP-1 segment’s value
share of the total diabetes care market has
increased to 6.0% compared with 4.5% in
2011.

North America
Sales of Victoza® in North America increased
by 60% in Danish kroner and by 48%
measured in local currencies. This reflects
a continued expansion of the GLP-1 class,
which represents 7.3% of the total US
diabetes care market in value compared
with 5.8% in 2011. Despite the launch of
a competitive product, Victoza® continues
to drive the US GLP-1 market expansion
and is the GLP-1 market leader with a 62%
value market share.

Europe
Sales in Europe increased by 50% in Danish
kroner and by 48% measured in local
currencies. Sales growth is primarily driven
by France, the UK, Italy and Spain. In Europe,
the GLP-1 class’s share of the total diabetes
care market in value has increased to 6.7%
compared with 5.0% in 2011. Victoza® is
the GLP-1 market leader with a value market
share of 76%.

International Operations
Sales in International Operations increased
by 90% in Danish kroner and by 98%
measured in local currencies. This reflects
continued strong performance, driven by
Brazil and a number of Middle Eastern
countries, and a modest comparator in
2011. The GLP-1 class is expanding in
International Operations and represents
3.0% of the total diabetes care market by
value compared with 1.2% in 2011. The
significant expansion of the GLP-1 class
is primarily driven by a strong uptake in
Brazil. Victoza® is the GLP-1 market leader
across International Operations with a value
market share of 80%.

Japan & Korea
Sales in Japan & Korea increased by 39%
in Danish kroner and by 29% measured
in local currencies. In Japan, the GLP-1
market is growing and represents 2.3%
of the total diabetes care market by value
compared with 1.6% in 2011. Victoza®
is the leader in the Japanese GLP-1 class
with a value market share of 77%.

Region China
Victoza® was launched in China during the
fourth quarter of 2011. Early market feed-
back is positive and hospital listings are
developing satisfactorily. The GLP-1 class
in China is not reimbursed and is relatively
modest in size, but its share of the total
diabetes care market by value has expanded
to 0.5% compared with 0.2% in 2011.
Victoza® holds a GLP-1 value market
share of 44%.

NovoNorm®/Prandin®/PrandiMet®
(oral antidiabetic products)
Sales of oral antidiabetic products increased
by 7% in Danish kroner to DKK 2,758 million
and remained unchanged in local currencies.
The sales development reflects sales growth
in all regions except Europe, where generic
competition is negatively impacting overall
sales in several markets.

Biopharmaceuticals
sales development
Sales of biopharmaceutical products
increased by 8% measured in Danish kroner
to DKK 17,139 million and by 2% measured
in local currencies, primarily driven by higher
sales in the US and partly countered by lower
sales in Europe.

NovoSeven®
(bleeding disorders therapy)
Sales of NovoSeven® increased by 7% in
Danish kroner to DKK 8,933 million and
by 2% in local currencies. The market for
NovoSeven® remains negatively impacted
by stricter budgetary controls, an increased
number of inhibitor patients participating
in clinical trials and patients transferring
to an alternative treatment regimen of
immune tolerance therapy. The sales develop-
ment reflects a strong performance in Japan
countered by lower sales in Europe.

CONTINuED

Sales of diabetes care

■ Protein-related products
■ Oral antidiabetic products (OAD)
■ Victoza®
■ Human insulins
■ Modern insulins

DKK billion

100

2008 2009 2010 2011 2012

Sales of modern insulins
by geographic region

■ Region China
■ Japan & Korea
■ International Operations
■ Europe
■ North America

Sales of Victoza® by
geographic region

■ Region China
■ Japan & Korea
■ International Operations
■ Europe
■ North America

DKK billion

2008 2009 2010 2011 2012

NOVO NORDISK ANNUAL REPORT 20128 ACCOMPLISHMENTS AND RESULTS 2012

Norditropin®
(growth hormone therapy)

Sales of Norditropin® increased by 13%
measured in Danish kroner to DKK 5,698
million and by 8% measured in local
currencies. The sales growth is primarily
driven by North America and International
Operations. Novo Nordisk is the leading
company in the global growth hormone
market, with a 24% market share measured
by volume.

Other products

Sales of other products within biopharma-
ceuticals decreased by 1% in Danish kroner
to DKK 2,508 million and by 6% measured
in local currencies. This development reflects
a negative impact from the decline in the
total glucagon market for diagnostic pur poses
in Japan as well as generic competition to
Activella®, countered by continued sales
growth for Vagifem® in the US.

Development in costs
and operating profit
The cost of goods sold grew by 7% to DKK
13,465 million, resulting in a gross margin of
82.7% compared with 81.0% in 2011. This
development primarily reflects an underlying
improvement of 1.0 percentage point driven
by favourable price development in North
America and a positive net impact from
product mix due to increased sales of modern
insulins and Victoza®. The gross margin was
positively impacted by around 0.7 percentage
point from currencies as a result of the
appreciation of primarily the US dollar versus
the Danish krone compared with 2011.

Total non-production-related costs in-
creased by 12% to DKK 35,753 million and
by 8% in local currencies.

Sales and distribution costs increased
by 13% to DKK 21,544 million and by 8%
in local currencies. The cost increase is
driven by the expansion of the US sales
force and other costs to prepare for the
global launch of Tresiba® (insulin degludec).

Furthermore, costs increased due to sales
and marketing investments in selected
countries in International Operations as
well as the Chinese sales force expansion
in mid-2011. Growth in sales and distribution
costs is being partly offset by a reversal
of provisions for legal disputes that have
been resolved during 2012.

Research and development costs increased
by 13% to DKK 10,897 million and by 11% in
local currencies. The cost increase is primarily
driven by development costs related to the
ongoing phase 3 trials for liraglutide in
obesity and the phase 3a trials for IDegLira,
a fixed-ratio combination of insulin degludec
and liraglutide. Within biopharmaceuticals,
costs are primarily related to the portfolio of
development projects within haemophilia and
the phase 2 trial for anti-IL-20, a recombinant
human monoclonal antibody, in rheumatoid
arthritis.

Administration costs increased by 2%

to DKK 3,312 million and stayed flat in
local currencies. The unchanged costs in
local currencies reflect items of a non-
recurring nature in 2011 and 2012, and
an underlying increase of approximately
4%, primarily to support the expansion
of the international sales organisation.

Licence fees and other operating income
amounted to DKK 666 million compared
with DKK 494 million in 2011. This devel-
op ment reflects a higher level of recurring
royalty income.

Operating profit in 2012 increased by
32% to DKK 29,474 million. In local cur-
rencies, the growth was 20%.

Net financials and tax
Net financials showed a net expense of
DKK 1,663 million compared with a net
expense of DKK 449 million in 2011. As
of 31 December 2012, foreign exchange
hedging gains of around DKK 850 million
have been deferred for recognition in the
Income statement in 2013.

In line with Novo Nordisk’s treasury

policy, the most significant foreign
exchange risks for the Group have

been hedged primarily through forward
currency contracts. Reflecting the port-
folio of foreign currency exchange hedging
contracts, the foreign exchange result for
2012 was an expense of DKK 1,529 million
compared with an expense of DKK 322
million in 2011. This devel opment reflects
losses on foreign exchange hedging,
involving especially the US dollar due to
its appreciation versus the Danish krone
compared with the prevailing ex change
rate level in 2011.

The effective tax rate for 2012 was 22.9%,

amounting to DKK 6,379 million. Danish
income tax amounted to DKK 3,527 million,
and accounted for an estimated 11% of total
Danish corporate tax contributions.

Capital expenditure
and free cash flow
Net capital expenditure for property,
plant and equipment for 2012 was DKK
3.3 billion compared with DKK 3.0 billion
in 2011. The main investment projects
in 2012 were primarily related to filling
capacity in Denmark, Russia and France
as well as device production facilities in
the US, China and Denmark.

Free cash flow for 2012 was DKK 18.6
billion compared with DKK 18.1 billion in
2011. The limited increase compared with
2011 reflects non-recurring tax payments
in 2012 related to income tax disputes
from prior years.

Equity
Total equity was DKK 40,632 million
at the end of 2012, equivalent to 61.9%
of total assets, compared with 57.9% at
the end of 2011. The increase in equity
of DKK 3,184 million was primarily driven
by the generated net profit of DKK
21,432 million, partly offset by dividend
payments of DKK 7,742 million and share
repurchases in 2012 of DKK 11,896 million.
Please refer to Statement of changes in
equity at 31 December on p 59.

Sales of biopharmaceuticals

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

Development in costs
Costs in % of sales

Sales and distribution
Cost of goods sold
Research and development
Administration

DKK billion

2008 2009 2010 2011 2012

Operating proﬁt

■ Operating proﬁt (left)

Operating proﬁt margin (right)

DKK billion

2008 2009 2010 2011 2012

NOVO NORDISK ANNUAL REPORT 2012ACCOMPLISHMENTS AND RESULTS 2012 9

Danish krone compared with the average prevailing exchange rates
in 2012. The expectations for gains related to currency hedging
contracts are more than offset by the expected significant negative
net impact on reported operating profit from the depreciation of
invoicing currencies versus the Danish krone, primarily reflecting
depreciation of non-hedged emerging market currencies.

The effective tax rate for 2013 is expected to be around 23%.
Capital expenditure is expected to be around DKK 3.5 billion in
2013, primarily related to investments in filling capacity and prefilled
device production facilities, and new office buildings in Denmark.
Depreciation, amortisation and impairment losses are expected to
be around DKK 3.0 billion. Free cash flow is expected to be around
DKK 22 billion.

All of the above expectations are based on the assumption that
the global economic environment will not significantly change
business conditions for Novo Nordisk during 2013, and that currency
exchange rates, especially for the US dollar, will remain at the current
level versus the Danish krone.

Novo Nordisk has hedged expected net cash flows in a number
of invoicing currencies and, all other things being equal, movements
in key invoicing currencies will impact Novo Nordisk’s operating
profit as outlined in the table below:

Key
invoicing
currencies

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

Hedging
period
(months)

USD
JPY
CNY
GBP
CAD

DKK 975 million
DKK 200 million
DKK 110 million1
DKK 85 million
DKK 55 million

12
13
12
12
8

1. USD used as proxy when hedging Novo Nordisk’s CNY currency exposure.

The financial impact from foreign exchange hedging is included in
‘Net financials’.

Outlook 2013

The current expectations for 2013 are summarised in the table below:

Expectations are
as reported, if not
otherwise stated

Sales growth
• in local currencies
• as reported

Operating profit growth
• in local currencies
• as reported

Net financials

Effective tax rate

Capital expenditure

Depreciation, amortisation
and impairment losses

Free cash flow

Expectations
31 January 2013

8–11%
Around 4.5 percentage points lower

Around 10%
Around 7 percentage points lower

Income of around DKK 1,400 million

Around 23%

Around DKK 3.5 billion

Around DKK 3.0 billion

Around DKK 22 billion

Novo Nordisk expects sales growth in 2013 of 8–11% measured
in local currencies. This reflects expectations for continued robust
penetration for the portfolio of modern insulins, a continued
steady Victoza® performance and a positive sales contribution
from Tresiba®, primarily in the US, the EU and Japan. These sales
drivers are partly expected to be countered by an impact from
the challenging pricing environments in major markets, generic
competition to oral antidiabetic products, intensifying competition
within diabetes care as well as biopharmaceuticals and the
macroeconomic conditions in a number of markets in International
Operations. Given the current level of exchange rates versus the
Danish krone, the reported sales growth is now expected to be
around 4.5 percentage points lower than growth measured in
local currencies.

For 2013, operating profit growth is expected to be around 10%
measured in local currencies. This reflects significant costs related
to the expected global launch of Tresiba®, the expanded US sales
force, as well as sales and marketing investments in China and in
a selected number of countries in International Operations. Given
the current level of exchange rates versus the Danish krone, the
reported operating profit growth is now expected to be around
7 percentage points lower than growth measured in local currencies.
For 2013, Novo Nordisk expects a net financial income of around

DKK 1,400 million. The current expectation primarily reflects
gains associated with currency hedging contracts following the
depreciation of the US dollar and the Japanese yen versus the

Tax contribution

■ Income tax (left)

Effective tax rate (right)

Capital expenditure, net

■ Capital expenditure, net (left)

Free cash ﬂow

■ Free cash ﬂow (left)

Capital expenditure, net to sales (right)

Free cash ﬂow to earnings (right)

DKK billion

2008 2009 2010 2011 2012

DKK billion

2008 2009 2010 2011 2012

DKK billion

2008 2009 2010 2011 2012

150

120

NOVO NORDISK ANNUAL REPORT 201210 ACCOMPLISHMENTS AND RESULTS 2012

Long-term financial targets
2012 performance against long-term financial targets

Novo Nordisk introduced four long-term financial targets in
1996 to balance short- and long-term considerations thereby
ensuring a focus on shareholder value creation. The targets
were subsequently revised and updated on several occasions.
Novo Nordisk has now reached the performance level stipulated
in the four long-term financial targets. The target levels have
consequently been reviewed and two targets have been updated.

The targets have been revised based on an assumption of a
continuation of the current business environment. Significant
changes to the business environment, including the structure
of the US healthcare system, regulatory requirements, pricing
environment, competitive environment, healthcare reforms and
exchange rates, may significantly impact the time horizon for
achieving the long-term targets or require them to be revised.

Growth in operating proﬁt

Operating margin

Target
Realised

2008 2009 2010 2011 2012

Operating proﬁt after tax
to net operating assets

Target
Realised

Cash to earnings
Three-year average

Target
Realised

100

2008 2009 2010 2011 2012

150

120

2008 2009 2010 2011 2012

Long-term financial target update

Result
2012

Previous
target

Updated
target

Operating profit growth

Operating margin

Operating profit after tax to net operating assets

Cash to earnings

Cash to earnings (three-year average)

32%

38%

99%

87%

104%

15%

35%

90%

15%

40%

125%

90%

Long-term financial
target update
The target level for operating profit growth
remains at 15% on average. The target
still allows for deviations in individual years
if necessitated by business opportunities,
market conditions or exchange rate move-
ments.

The target level for operating margin
is increased from 35% to 40%. This is
expected to be enabled by continued
robust sales growth coupled with gross
margin expansion from both product mix
and pricing, as well as further productivity
improvements in the manufacturing areas.
For non-production-related activities, the
operating margin expansion is expected to
be supported by a modest development in
administrative costs and scale advantages
within sales and marketing, whereas
continued investment is envisioned for
research and development activities, which
are expected to grow in line with sales.

The target level for operating profit after
tax to net operating assets is increased
from 90% to 125%. The raised target
reflects the expectation of a continued
robust operating profit growth combined
with a stable effective tax rate and
relatively limited increase in net operating
assets.

The target level for the cash-to-
earnings ratio is maintained at 90%,
as expected continued growth in
International Operations and Region
China will gradually impact working
capital requirements. As previously, this
target will be pursued looking at the
average over a three-year period.

Forward-looking statements
Novo Nordisk’s reports filed with or furnished to the US Securities and Exchange Commission (SEC),
including this document as well as the company’s Form 20-F, both expected to be filed with the SEC in
February 2013, and written information released, or oral statements made, to the public in the future
by or on behalf of Novo Nordisk, may contain forward-looking statements. Words such as ‘believe’,
‘expect’, ‘may’, ‘will’, ‘plan’, ‘strategy’, ‘prospect’, ‘foresee’, ‘estimate’, ‘project’, ‘anticipate’, ‘can’,
‘intend’, ‘target’ and other words and terms of similar meaning in connection with any discussion
of future operating or financial performance identify forward-looking statements. Examples of such
forward-looking statements include, but are not limited to:
• statements of 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

• 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
• statements regarding future economic performance, future actions and outcome of contingencies

such as legal proceedings

• statements regarding the assumptions underlying or relating to such statements.

In this document, examples of forward-looking statements can be found under the heading ‘2012
performance and 2013 outlook’ and elsewhere.

These statements are based on current plans, estimates and projections. By their very nature,

forward-looking statements involve inherent risks and uncertainties, both general and specific. Novo
Nordisk cautions that a number of important factors, including those described in this document, could
cause actual results to differ materially from those contemplated in any forward-looking statements.
Factors that may affect future results include, but are not limited to, global as well as local political

and economic conditions, including interest rate and currency exchange rate fluctuations, delay or
failure of projects related to research and/or development, unplanned loss of patents, interruptions of
supplies and production, product recall, unexpected contract breaches or terminations, government-
mandated or market-driven price decreases for Novo Nordisk’s products, introduction of competing
products, reliance on information technology, Novo Nordisk’s ability to successfully market current
and new products, exposure to product liability and legal proceedings and investigations, changes
in governmental laws and 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 the ‘Risk overview’ on p 43.
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 2012ACCOMPLISHMENTS AND RESULTS 2012 11

Research and
development progress
Diabetes care
In 2012, Novo Nordisk made several
advances in its marketed product
portfolio. Following its approval for use
in children aged 2–5 in the US, Levemir®
became the modern long-acting basal
insulin offering treatment to the widest
range of patients in both the US and
the EU. Furthermore, a new durable
insulin pen for adults, NovoPen® 5, was
launched in Europe, and NovoMet®, a
fixed combination of metformin and
repaglinide, was launched in China
(marketed as PrandiMet® in the US).

with IDegLira, a fixed-ratio combination
of Tresiba® and Victoza®, for treatment
of patients with type 2 diabetes. The
completed phase 3 clinical trial programme,
DUAL™, reconfirmed the competitive
profiles of each of the components and
documented that patients can benefit from
the advantages of both compounds when
combined into one product. Novo Nordisk
is planning regulatory filing for IDegLira
in the EU mid-2013 and in the US during
2013 pending marketing authorisation of
Tresiba®.

Within GLP-1, semaglutide was selected

The product label for Victoza® was
ex panded in both the EU and the US
based on studies comparing Victoza®
with exenatide and sitagliptin showing
the superiority of Victoza® in blood sugar
control and weight reduction. As part of a
post-approval commitment given in the US
and the EU with the objective of assessing
the cardiovascular benefit–risk profile of
Victoza®, completion of enrolment of more
than 9,000 patients globally was achieved.
Also, positive results from a phase 1 trial
exploring the efficacy and safety of
liraglutide, the active ingredient in Victoza®,
as adjunct therapy to insulin in people with
type 1 diabetes, enabled the decision to be
taken to progress this project into a phase
3 programme, ADJUNCT™, commencing in
the second half of 2013, with the intention
of further expanding the Victoza® label.
Novo Nordisk also made significant

progress in the clinical development
pipeline in 2012. Within insulin, Novo
Nordisk is pioneering innovation in all
three segments: basal, combination
and mealtime treatment. One major
accomplishment was the approval of the
two new-generation insulins Tresiba®
(insulin degludec) and Ryzodeg® (insulin
degludec/insulin aspart) in Japan and
Mexico as well as in the EU in January
2013, alongside the FDA Advisory
Committee’s positive votes on the two
products in the US. Further, phase 3b
trials confirmed the efficacy and safety
profile of the two compounds that had
been demonstrated in the comprehensive
BEGIN™ and BOOST™ studies. Finally,
based on the successful completion of
the phase 1 trial of the new faster-acting
formulation of insulin aspart (NovoRapid®),
FIAsp will initiate its phase 3 programme,
onset®, in the second half of 2013.

Novo Nordisk is also at the forefront of
the development of a new product class,
the fixed combination of insulin and GLP-1,

as the company’s once-weekly candidate
and was approved to enter the global
phase 3 development programme,
SUSTAIN™, starting in the first half of 2013,
while liraglutide Depot was discontinued.

For both insulin and GLP-1, Novo Nordisk

continued to explore oral formulations of
these proteins in phase 1 studies. These
products are primarily intended for the
treatment of type 2 diabetes.

Biopharmaceuticals
Haemophilia
Novo Nordisk made important headway
in the continued development of
solutions for people with haemophilia
and other rare bleeding disorders. For
the marketed product for haemophilia
with inhibitors, NovoSeven®, marketing
authorisations for a new administration
system for intravenous infusion were
obtained in both the EU and the US. The
device reduces the number of steps that
patients have to go through before they
can commence dosing. Novo Nordisk also
launched a new product, NovoThirteen®
in the EU, Tretten® in Canada, for the
treatment of a rare congenital deficiency
affecting approximately 900 people
worldwide, and the regulatory file was
re-submitted to the FDA in the US.

For the broader haemophilia indications,

Novo Nordisk submitted regulatory
applications for turoctocog alfa in the
EU and the US, among others, for the
prevention and treatment of bleeding in
people with haemophilia A. For the same
population, the company also initiated the
phase 3 programme for its recombinant
long-acting coagulation factor VIII
project and completed recruitment for
its recombinant long-acting coagulation
factor IX offering, targeting the treatment
of bleeds in people with haemophilia
B, in phase 3. Novo Nordisk decided to

discontinue the phase 3 development of
vatreptacog alfa, a fast-acting recombinant
factor VIIa analogue for haemophilia
patients with inhibitors, due to an
unfavourable benefit–risk profile. Finally,
the phase 1 investigation of mAb2021 for
all three haemophilia segments continued.

Inflammation
Novo Nordisk aspires to improve the lives
of people with autoimmune and chronic
inflammatory diseases by developing
compounds with new modes of action for
rheumatoid arthritis, lupus, inflammatory
bowel disease and psoriatic arthritis. In
2012, for the first time ever, the company
advanced an inflammation project, anti-
IL-20 for rheumatoid arthritis, into phase 2b
clinical development.

Further, phase 2a trials with anti-IL-21
for rheumatoid arthritis were initiated as
was a phase 1 trial for lupus erythematosus.
Novo Nordisk also started a phase 2a trial
to investigate rFXIII (the active ingredient
in NovoThirteen®) in ulcerative colitis,
began a phase 1 trial with anti-C5aR-215
in rheumatoid arthritis and discontinued
anti-NKG2D in rheumatoid arthritis and
Crohn’s disease due to insufficient efficacy.

Clinical trials
The number of people in Novo Nordisk’s
clinical trials reflects the high level of
activity in the pipeline. In 2012, a total
of 23,018 people participated in Novo
Nordisk-sponsored clinical trials.

People participating in clinical trials

■ Active participants in clinical
research during the year

Thousands

2008 2009 2010 2011 2012

NOVO NORDISK ANNUAL REPORT 201212 ACCOMPLISHMENTS AND RESULTS 2012

Social
performance

Social performance has three dimensions:
improving access to medical treatment
and quality of care for patients, offering
a healthy and engaging working
environment, and providing assurance
that responsible business practices are
in place, with the aim of contributing
to the communities in which the company
operates.

Patients
Access to care

Novo Nordisk estimates, based on the
WHO standard data for daily insulin
doses, that it provides medical treatments
for approximately 23 million people with
diabetes worldwide.

Of the 371 million people with diabetes,

it is known that a large proportion is
undiagnosed. About 80% of all people
with diabetes live in low- and middle-
income countries where provision of
adequate healthcare is often absent or
insufficient. Novo Nordisk’s updated
global access to diabetes care strategy
aims at closing the gap between health
needs and health care and the company
has established a goal of reaching an
estimated 40 million patients with medical
treatment by 2020, Changing Diabetes®
40by20 (see pp 13 and 39).

Through the dedicated programme
Changing Diabetes® in Children, 9,710
children with type 1 diabetes in nine of
the world’s poorest countries are now
receiving free insulin and care. In addition,
about 2,000 healthcare professionals were
trained and more than 70 clinics were
established during 2012. The programme,
which was launched in 2008, has a goal to
reach 10,000 children by 2014.

Employees
Average number of full-time employees

■ Region China
■ Japan & Korea
■ International Operations
■ Europe1
■ North America

Thousands

2008 2009 2010 2011 2012

1. Includes headquarter functions and Research and

Development in Denmark.

Capacity-building

Improved diagnosis and treatment of chronic
conditions such as diabetes and haemophilia
relies on healthcare professionals’ knowledge
and disease understanding, as well as on the
availability of treatment and access to care.
Novo Nordisk therefore invests in building
healthcare capacity such as diabetes clinics,
and training and education of professional
medical staff. During 2012, a total of
1,274,000 healthcare professionals attended
face-to-face or online training programmes
offered or sponsored by Novo Nordisk and
836,000 people with diabetes were trained
in how to manage their condition.

Efforts to expand access to diabetes care
include financial support through the World
Diabetes Foundation, an independent non-
profit organisation established by Novo
Nordisk in 2002. In 2012, the company
donated DKK 64 million to the foundation,
which invests in sustainable initiatives to
build healthcare capacity that improve
prevention and treatment of diabetes in
developing countries. See note 5.4 on p 89
and worlddiabetesfoundation.org.

Novo Nordisk also seeks to improve global
access to haemophilia care through financial
support to the Novo Nordisk Haemophilia
Foundation, established in 2005. In 2012,
donations amounted to DKK 20 million for
projects and fellowships in 48 developing
and emerging economies. Initiatives focus
on capacity-building, awareness, diagnosis
and registries. See nnhf.org.

Pricing
Access to medicines is a key element of
effective disease management and therefore
a cornerstone in Novo Nordisk’s global
strategy for improved access to diabetes
care. In 2012 the company’s long-standing
differential pricing policy, offering human
insulin to the world’s 49 poorest countries
at prices not to exceed 20% of the average
prices in the Western world, was accepted
through government tenders or private
market distributors in 35 of these countries.
This means that patients are getting insulin

treatment at a maximum price of USD 0.2
per day. In other low- and middle-income
countries, Novo Nordisk sells insulin at very
low tender prices through government health
programmes involving large volumes. As
a result, an estimated 4.9 million patients
have been treated with insulin for less than
USD 0.2 a day in 2012. Such initiatives,
however, will not suffice. To achieve the
40by20 target, more impact will need to
be achieved by increasing the availability
of all of Novo Nordisk’s products, coupled
with awareness-raising and early detection,
training of healthcare professionals and
support to patients, in partnership with local
stakeholders.

Animal testing
The number of animals purchased for research
went up to 73,601, which is an increase of

11%, due to higher activity within early-stage
discovery and development. This is partly
countered by the elimination of the use of live
animals for biological production control. The
company works to continuously reduce, refine
and replace the use of animals for testing.

Employees
In 2012, the average number of full-time
employees was 33,061, an increase of 5%
compared with 2011. At the end of 2012,
Novo Nordisk employed a total of 34,731
people, corresponding to 34,286 full-time
positions. The growth in the number of
employees is driven by the expansion of
the sales and marketing organisation in the
regions North America and International
Operations as well as of the global Research
and Development organisation. Employee
turnover decreased from 9.8% in 2011 to
9.1%.

Working the Novo Nordisk Way
The annual employee survey, eVoice,
measures the extent to which the
organisation is working in accordance
with the Novo Nordisk Way (see p 19).
In 2012, as in 2011, the consolidated
score was 4.3, measured on a scale of
1 to 5, with 5 being the best score. The
high score indicates a strong culture and
commitment to the company’s values.

Diversity
Novo Nordisk seeks to attract and develop
the best talent from all over the world
and offers equal opportunities for career
development and an inclusive, non-
discriminating working environment. As the
business globalises, it is imperative to nurture
diversity at all levels. The company has chosen
a strategic focus on gender and nationality
and has set an ambition that by the end of
2014 all senior management teams must
comply with the target to have members
of both genders and different nationalities or
explain why this is not achievable. At the end
of 2012, 66% of the 29 senior management
teams met the diversity criteria, compared
with 62% at the end of 2011.

Health and safety
Novo Nordisk will continuously improve
the working environment and has three
strategic focus areas: safety, ergonomics
and well-being. In 2012, the average
frequency rate of occupational injuries was
3.2 per million working hours, compared
with 3.4 in 2011. Working from a zero-
injury mindset, the long-term goal is to
continually improve performance.

Assurance
Business ethics
Each employee must understand their
responsibilities in line with the company’s

NOVO NORDISK ANNUAL REPORT 2012ACCOMPLISHMENTS AND RESULTS 2012 13

values-based management system and
policies for specific areas such as business
ethics. Adherence to the company’s global
standards for ethical behaviour must be
observed and monitored.

With more than 5,000 new employees

being onboarded each year, training is a
high priority. Training programmes address
compliance requirements as well as emerging
trends, such as changes in the regulatory
environment. Annual business ethics training
is required for all employees. In 2012, 99% of
these completed the required training, in line
with previous years’ performance.

Internal business ethics assurance activities

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
2012, 48 business ethics assurance activities
were conducted, compared with 46 in 2011.
Any instances of suspected misconduct

must be reported, whether related to
specific areas such as business ethics or
fraud or to other aspects of the Novo
Nordisk Way. Employees can report to a
manager or company legal counsel, or
they can report anonymously through a
compliance hotline monitored by the Audit
Committee. The hotline is also open for
calls from people outside of Novo Nordisk.
During 2012, 88 cases were reported
through the compliance hotline, compared
with 66 cases in 2011. Cases reported
concerned potential instances of business
ethics issues, fraud, violations of the Novo
Nordisk Way, quality concerns and other
issues. Disciplinary action was taken in all

substantiated cases, none of which had any
material impact for Novo Nordisk.

Nordisk’s global quality organisation, found
no critical non-conformities.

Values
Adherence to the Novo Nordisk Way, the
company’s values-based management
system, is thoroughly reviewed through so-
called facilitations, a systematic form of values
audits conducted at organisational unit level.
In 2012, the global facilitator team, consisting
of senior people with deep understanding of
the business and the business environment,
conducted 61 facilitations, covering a total
of almost 16,000 employees. Through close
to 3,000 interviews with employees, local
management and stakeholders the facilitators
seek to determine the level of adherence to
corporate values and behaviours. Best practice
for how the Novo Nordisk Way translates
into action is shared internally, while findings
of non-compliance – categorised as critical,
major and minor – are reported to local
management, which subsequently must
implement corrective actions. In 2012, there
were 166 findings overall.

Supplier audits
Novo Nordisk conducts audits of its suppliers
to assess their level of compliance with the
company’s standards for suppliers. These
relate to quality as well as environment,
labour, human rights and business ethics,
in line with Novo Nordisk’s responsible
sourcing policy. In 2012, a total of 219 audits
were conducted, compared with 177 in
2011. These audits, carried out by Novo

Quality
Quality and patient safety must never be
compromised. Despite increasing volumes
of production output, quality levels, measured
as inspection findings, have been maintained.
In 2012, 130 inspections of Novo Nordisk
production facilities were concluded.

Novo Nordisk has received a Warning
Letter dated 12 December 2012 from the
US Food and Drug Administration (FDA)
following a current Good Manufacturing
Practice (cGMP) inspection of an aseptic filling
facility in Bagsværd, Denmark. The facility
inspection took place on 12–20 March 2012,
and Novo Nordisk submitted its response to
the inspection findings by the FDA in April 2012.
In the Warning Letter, the FDA cites two

specific violations. Novo Nordisk takes
the observed violations very seriously and
is committed to taking the appropriate
steps to address the concerns raised by
the agency. The company submitted its
response to the Warning Letter on 28
December. Novo Nordisk does not expect
the Warning Letter to have an impact on
products currently marketed in the US.

In 2012, Novo Nordisk had six instances

of products recalled from the market,
compared with five in 2011. None of the
products recalled caused any harm to
patients. Local health authorities were
informed to ensure that appropriate
information was provided to pharmacies,
medical staff and patients.

Long-term social targets

2012 performance against long-term social targets

Novo Nordisk has chosen three long-term social targets to support
long-term financial performance, balancing responsibility with
profitability, with the aim of creating sustainable value for shareholders
and other stakeholders. The social targets reflect aspirations expressed
in the Novo Nordisk Way: helping patients live better lives, working the

Novo Nordisk Way and nurturing a diverse working environment. In
2012 a new target was set to accelerate the reach to patients – from the
2011 baseline of 21 million to 40 million people by 2020. Performance
against the target for working the Novo Nordisk Way was exceeded.
Performance against the long-term target for diversity is on track.

Patients reached with diabetes
care products (estimate)

Working the Novo Nordisk Way
Average score in annual employee survey

Target (2020)
Realised

Million

Target1
Realised

Scale 1–5

2008 2009 2010 2011 2012

Diverse senior management teams

Target (2014)2
Realised

100

2008 2009 2010 2011 2012

1. New long-term target. Data not available prior to 2011.
2. All senior management teams must comply with the target to be diverse in terms of gender and nationality or explain why this is not achievable.

NOVO NORDISK ANNUAL REPORT 201214 ACCOMPLISHMENTS AND RESULTS 2012

Environmental
performance

As production and sales continue to grow,
it becomes increasingly challenging to
meet the company’s long-term aspiration
to keep minimising the total environmental
impact. The environmental policy covers
the entire value chain from molecule
to patient. In addition to ensuring
compliance and sound management
practices in accordance with ISO 14001,
efforts include process optimisations in
production and innovation projects in
partnership with suppliers, healthcare
providers and local communities.

Resources
Energy consumed for production at the
company’s 13 production sites in 2012
amounted to 2,433,000 GJ, while water
consumption increased to 2,475,000 m3.
This is directly linked to the increased
production volume output. While all
electricity supplies in Denmark are based
on renewable energy, supplies of heating
and steam for the company’s largest
production site in Kalundborg, Denmark,

still rely on fossil fuels. Production increases
at the Kalundborg site are therefore
reflected as a negative trend in the total
environmental performance, despite
ongoing process optimisation, which has
improved environmental impact. Around
half of Novo Nordisk’s direct environmental
footprint derives from the production site
in Kalundborg. A partnership initiative
to secure supplies of district heating
and steam based on biological waste –
modelled on the long-standing successful
Symbiosis project – will, if successful,
result in a reduced carbon footprint from
consumption of district heating and steam.

Emissions and waste
CO2 emissions related to production
increased by 30% in 2012 compared
with 2011. Most of the increase is
due to the phase-in of a new filling
plant in Tianjin, China. The remaining
increase is a consequence of the larger
production volume in Kalundborg. Since
2007, significant reductions have been

achieved as a result of energy savings
at all production sites and, in particular,
the conversion to renewable energy for
electricity supplies in Denmark. Initiatives to
optimise resource utilisation, particularly in
Kalundborg, partly counter the increasing
need arising from production growth.
Options for increasing the use of renewable
energy in China, Denmark and the US are
being explored.

Reducing waste is a key element of the

company’s environmental strategy.
In 2012 the total volume of waste doubled
to 82,802 tons from 41,376 tons in 2011,
as a result of increased production volumes
and a reclassification, effective since
the end of 2011, of organic production
waste (biomass). The majority of the
waste, 58,193 tons, is biomass from the
fermentation process in Kalundborg. The
biomass was previously used for animal
feed but is now recovered for biogas
production. As a result, the recycling rate
is high – 84% in 2012 – and only 5% and
1% respectively are disposed of as special
waste and landfill.

Long-term environmental targets
2012 performance against long-term environmental targets

Novo Nordisk has chosen three long-term environmental targets to
support long-term financial performance, balancing responsibility
with profitability, with the aim of creating sustainable value for
shareholders and other stakeholders. The environmental targets are
ambitious and reflect the aspiration to produce more with less and
continuously reduce impacts on the environment: to curb average

annual increases in energy to 3% and average annual increases in
water consumption to 5%, and to achieve an absolute reduction in
CO2 emissions of 10% by 2014, compared with the 2004 baseline.
The CO2 emissions target is expected to be achieved. Performance
against the targets for energy and water consumption is as
projected.

Energy consumption

Water consumption

Target1
Realised

CO2 emissions from
energy consumption

Target (2014)
Realised

1,000,000 GJ

1,000,000 m3

1,000 tons

2008 2009 2010 2011 2012

300

240

180

120

2008 2009 2010 2011 2012

1. From 2007 to 2011 the target was set as an accumulated reduction over four years from a 2007 baseline.

NOVO NORDISK ANNUAL REPORT 2012 Strategy

is all about choice
Novo Nordisk is the world’s leading diabetes care company. While choices made in the past
decade have played an important role in achieving this position, there is more to the story.

Today’s Novo Nordisk is the result of many
decisions taken during more than 90 years.
The most important, without which there
would be no company, was made in 1922.
During a visit to the United States, August
Krogh, a Danish Nobel laureate, and his
wife, Marie, a medical doctor who had
diabetes, learned about the discovery of
insulin in Canada. Marie urged August to
meet Professor Macleod in Toronto who
led the team of researchers behind the
discovery. After the meeting, August and
Marie returned to Copenhagen bringing
with them a permission and a desire to
start insulin production in Scandinavia. In
March 1923, the first patient was treated
with insulin produced in Denmark.

This was the beginning of what is now

Novo Nordisk. Since then, many other
important decisions and choices have
been made. The direction and strategy for
the company’s further development are

laid out in a strategic framework, which
forms the basis for the decisions and
choices Management is making today. The
framework forms a profile of Novo Nordisk
with three distinct features:

First, Novo Nordisk has a sharp focus on
a few diseases and conditions where it can
make a significant difference. As a result,
the company has built strong positions
within diabetes care, haemophilia and
growth disorders, while creating a platform
for entering into treatments for obesity and
autoimmune inflammatory diseases.

Second, the company has five distinctive
core capabilities:
• Engineering, formulating, developing
and delivering therapeutic proteins
(protein-based treatments)
• Deep disease understanding
• Efficient large-scale production of proteins

• Planning and executing global launches

of new products

• Building and maintaining a leading

position in emerging markets

Third, Novo Nordisk has a values-based
management system formalised in the
Novo Nordisk Way (see p 19). A key
element of the Novo Nordisk Way is the
Triple Bottom Line business principle, which
was written into the company’s Articles of
Association at the Annual General Meeting
in 2004. It states that Novo Nordisk ‘strives
to conduct its activities in a financially,
environmentally and socially responsible
way’.

This is the company that 23 million
patients rely on for their daily medication,
where more than 34,000 employees work,
and in which more than 130,000 investors
have bought shares.

CONTINuED

NOVO NORDISK ANNUAL REPORT 2012

16 OUR BUSINESS

Responding to a challenging
business environment
In a world characterised by slowing
economic growth and austerity measures,
the research-based pharmaceutical
companies’ business model is being
challenged. Governments and private
payers are struggling to meet the demands
of ageing populations and are reluctant
to pay a premium for new, innovative
therapies. Furthermore, many companies
are seeing major products going off patent
and are unable to bring out innovative
products that can make up for this lost
revenue.

Pharmaceutical companies have

responded to these challenges in various
ways. Research and development budgets
have been cut. Thousands of employees
have been laid off. Some companies have
added generic and ‘over-the-counter’
medicines to their offering, while others
have created a broader service offering
around their core products. And all have
realised that new products will only have
a chance in the market if they address
unmet medical needs and are accompanied
by convincing data about their health
economic benefits.

Strategy update
Novo Nordisk’s strategy is updated
and reviewed annually by the Board of
Directors to ensure that the company
identifies and responds to new business
challenges and opportunities in a timely
way. This is what led Novo Nordisk
to direct its resources to therapeutic
proteins and five strategic focus areas.
While other options for broadening the
company’s business and research focus
are being considered regularly as part of
the annual strategy process, all indicators

show that the way in which Novo Nordisk
can create most value for patients,
shareholders and society at large is to
remain focused on developing new,
innovative therapeutic proteins within its
current focus areas.

The five strategic
focus areas
Expand leadership
in diabetes care

In 2012, more than 371 million people
worldwide were living with diabetes and
it is predicted that by 2030 more than
550 million people worldwide will have
diabetes1 (all footnotes can be found on
p 112). Read more about the diabetes
pandemic on pp 20–21.

The global market for diabetes care
products amounts to approximately DKK
228 billion, of which Novo Nordisk products
account for about 26%. The market has been
growing by around 10% annually in recent
years. Of this global market, insulin accounts
for 49%, oral diabetes products for 45% and
GLP-1 products for 6%.

Novo Nordisk’s largest and fastest-
growing business area is products for
treating diabetes, accounting for close to
80% of total sales. Within this area, the
company’s focus is on insulin and GLP-1.
In both areas Novo Nordisk is the global
market leader by volume.

Novo Nordisk is well positioned to
address the unmet medical needs in
diabetes:
• Around half of all insulin in the world

comes from Novo Nordisk.

• Novo Nordisk is the only company with
a full portfolio of human insulins and
modern insulins (also known as insulin
analogues).

Novo Nordisk’s strategy
Strategic focus areas

Core capabilities

• A new generation of insulins, Tresiba®

(insulin degludec) and Ryzodeg® (insulin
degludec/insulin aspart), is due to be
launched in key markets in 2013.
• Victoza® (liraglutide) has become the

world’s most prescribed GLP-1 product
(Glucagon-Like Peptide 1) for treatment
of adults with type 2 diabetes since its
first launch in 2009.

• Novo Nordisk makes the world’s most

widely used injection devices for insulin
and GLP-1.

• New promising treatments are under

development, including a once-weekly
GLP-1 analogue and a fixed-ratio
combination of liraglutide and insulin
degludec.

• Finally, Novo Nordisk is involved in early-
stage research with leading academic
centres to find a cure for type 1 diabetes.

The insulin portfolio
Novo Nordisk’s modern insulin portfolio
includes:
• NovoRapid® (NovoLog® in the US), the
world’s most widely used rapid-acting
insulin for use at mealtimes. NovoRapid®
is used by people with both type 1 and
type 2 diabetes.

• 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 and
is primarily used by people with type 2
diabetes.

Engineering,
formulating,
developing
and
delivering
protein-
based
treatments

Deep disease
under-
standing

Efficient
large-scale
production
of proteins

Planning and
executing
global
launches
of new
products

Building and
maintaining
a leading
position in
emerging
markets

Expand leadership in DIABETES

Establish presence in OBESITy

Pursue leadership in HAEMOPHILIA

Expand leadership in GROWTH DISORDERS

Establish presence in INFLAMMATION

Novo Nordisk Way and the Triple Bottom Line business principle

NOVO NORDISK ANNUAL REPORT 2012• Levemir® is a soluble, long-acting

modern insulin for once-daily use for
people with type 1 and 2 diabetes.
Levemir® provides glucose control with
a favourable weight profile.

The primary goal of the company’s research
in diabetes is to discover new therapies that
safely and effectively lower blood glucose
while reducing the risk of low blood sugar
(hypoglycaemia). Tresiba® and Ryzodeg®
are the latest outcomes of this effort:

Tresiba® is a once-daily basal insulin
analogue with an ultra-long duration of
action and a flat and stable action profile
which reduces the rate of low blood sugar
(hypoglycaemia). This also makes it possible
to adjust insulin dosing time when needed.
Ryzodeg® is a soluble insulin combination
of Tresiba® and NovoRapid® (insulin aspart),
providing both basal and mealtime glucose
control. Insulin aspart is marketed under
the brand name NovoLog® in the US. Read
more about the challenges associated with
insulin treatment on pp 24–25.

Novo Nordisk is also developing a faster-

acting insulin to be taken at mealtimes,
FIAsp, a new formulation of insulin aspart.
The phase 1 proof-of-concept trials for a
number of different formulations of insulin
aspart have been completed and Novo
Nordisk expects to initiate the phase 3a
programme, onset®, towards the end of
2013.

In addition to new and improved
injectable insulins, Novo Nordisk is
developing formulations of insulin that
can be taken orally as tablets. Encouraging
progress has been made in 2012, but many
technological challenges remain. Read
more about the development of insulin in a
tablet on pp 26–27.

GLP-1 (Glucagon-Like Peptide 1)
– a new class of diabetes treatments
With the launch of Victoza® in 2009, Novo
Nordisk entered a new segment of the
diabetes care market: GLP-1 therapies.
Victoza® is a human GLP-1 analogue with
97% similarity to the natural gut hormone.
Victoza® is taken once daily and, like
natural GLP-1, works by stimulating the
beta cells in the pancreas to release insulin
only when blood sugar levels are high.
GLP-1 therapy is a major innovation

in the treatment of type 2 diabetes
because it lowers glucose with a very
low risk of triggering low blood sugar
(hypoglycaemia).

Victoza® is approved for adults with

type 2 diabetes who are unable to
achieve blood glucose goals with lifestyle
changes and metformin, the most widely
used tablet for type 2 diabetes). In less
than two years Victoza® has become the
leading GLP-1 treatment globally and has
steadily expanded the market for GLP-1
treatment. The market is currently valued
at approximately DKK 13.6 billion, of
which Victoza® accounts for approximately
68%. Available in more than 60 markets,
Victoza® is now used by approximately
700,000 people worldwide.

OUR BUSINESS 17

Furthermore, a clinical pharmacology
trial investigating the use of liraglutide as
adjunct therapy to insulin in people with
type 1 diabetes, LATIN T1D (liraglutide as
adjunct therapy to insulin in people with
type 1 diabetes) has been completed. The
phase 3 programme, ADJUNCT™, which
includes around 2,000 people with type 1
diabetes, will be initiated in the second half
of 2013.

Based on the expertise Novo Nordisk
has obtained through the development
of Victoza®, the company is now building
a GLP-1 portfolio with the intention
of providing an even broader range
of treatment options. Key projects
include a once-weekly GLP-1 analogue,
semaglutide, which has been approved
for phase 3, and IDegLira, a fixed-ratio
combination of liraglutide and insulin
degludec, which offers the benefits of
both compounds.

Novo Nordisk is also developing

formulations of GLP-1 that can be taken
as tablets.

Injection devices
Novo Nordisk offers the world’s most
widely used durable and disposable devices
for insulin and GLP-1: NovoPen® 4 and
FlexPen®, and has recently introduced
its latest innovations NovoPen® 5 and
FlexTouch® in many markets. Read more
about injection devices on p 28.

Establish presence in obesity
According to the World Health
Organization (WHO), obesity has reached
pandemic proportions, with up to 1.4
billion adults (over 20 years old) being
overweight or obese. Of these, more than
200 million men and nearly 300 million
women are clinically obese (ie BMI ≥ 30).2
Obesity is known to be a major risk factor
in developing serious diseases such as type
2 diabetes and cardiovascular disease.
Despite the growing prevalence of
severe and morbid obesity globally, there
are currently only a few medical treatment
options, and reimbursement for these
medications is limited. The market is
currently valued at DKK 1.7 billion.

Novo Nordisk is investigating the use
of once-daily liraglutide 3 mg as a new
way of treating high-risk obese patients,
namely those with obesity-related medical
conditions such as prediabetes, sleep
apnoea, high blood pressure and lipid.
Results of the phase 2 trials and the first
of four phase 3 trials have been reported.
They suggest that liraglutide 3 mg may
have a positive benefit–risk profile.
Gaining regulatory approval for
antiobesity medications is a major
challenge. However, for the first time in
more than a decade, the US Food and Drug
Administration has approved new obesity
medications in 2012.

CONTINuED

NOVO NORDISK ANNUAL REPORT 201218 OUR BUSINESS

Pursue leadership
in haemophilia
Haemophilia is an inherited or acquired
bleeding disorder that prevents blood
from clotting. An estimated 400,000
people worldwide are living with severe
or moderate haemophilia. The global
haemophilia drug market is estimated at
DKK 50 billion and has grown by around
8% annually in recent years.

Novo Nordisk entered the haemophilia

market in 1996 when it introduced
NovoSeven® for the treatment of
haemophilia patients who form antibodies
against traditional treatments. The
company’s ambition is to move from
this niche into the main segments of the
haemophilia A & B market and achieve
leadership by developing improved
treatment options for all patients. In
October 2012, turoctocog alfa – a
recombinant factor VIII therapy – was filed
for approval in Europe and the US. Long-
acting versions of recombinant factor VII
and factor IX are in phase 3 development.
Read more about activities within
haemophilia on p 29.

Expand leadership
in growth disorders
Novo Nordisk has been active in the
treatment of growth hormone insufficiency
for almost four decades. The market for
growth disorder treatments is estimated at
DKK 18 billion and has grown by close to
6% annually in recent years. Novo Nordisk
is the leading human growth hormone
producer with a market share of 28%
measured by value.

Novo Nordisk’s strategy in growth
hormone therapy is to expand leadership
by providing innovative and convenient
products and devices. 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.

Novo Nordisk is also developing a

long-acting growth hormone formulation,
currently in phase 1 trials.

Establish presence
in inflammation
Autoimmune inflammatory diseases, such
as rheumatoid arthritis and Crohn’s disease,
result from the immune system attacking the
body’s own tissues and creating a chronic
state of inflammation. Many people with
autoimmune inflammatory diseases do not
respond adequately to current treatments.
Novo Nordisk is using its expertise in
designing therapeutic proteins and chronic
disease management care to develop new
treatments, particularly for patients who
are unresponsive to current treatments.
While most projects are still at an early
stage of clinical development, three are
in phase 2 clinical studies.

The core capabilities
Engineering, formulating,
developing and delivering
protein-based treatments

Novo Nordisk has dedicated research and
development facilities in Denmark, China,
the US and India. Around 6,000 employees
are involved in research and development
activities throughout the company, working
in partnerships with external biotech and
academic researchers. Novo Nordisk’s
researchers have many years’ experience
of formulation technology, protein
engineering, expression and delivery,
which makes it possible for the company
to continuously improve the properties of
therapeutic proteins such as insulin and
GLP-1. Furthermore, since 1985, when
Novo Nordisk launched the world’s first
insulin injection device – NovoPen® – the
company has developed world-class
expertise in designing and producing
simple and convenient devices for injecting
protein therapeutics. Read more about
capabilities in research and development
on pp 22–23.

Deep disease understanding
Novo Nordisk has a deep understanding
of the unmet medical needs associated
with chronic conditions. This, together
with strong relationships and numerous
collaborations with external researchers
and clinicians, provides a solid foundation
for the company’s research, development
and marketing activities.

Efficient large-scale
production of proteins
A high-quality, cost-effective global
manufacturing infrastructure is a
prerequisite for competing successfully in
an increasingly competitive pharmaceutical
market. This also enables Novo Nordisk
to make treatments available at very
low prices in developing countries. Novo
Nordisk has a global production set-up
with facilities strategically located in five
different countries across four continents:
• The production of active pharmaceutical
ingredients is a highly specialised process
and mainly takes place in Denmark, where
Novo Nordisk has nine plants, including the
largest insulin factory in the world.
• The production of diabetes finished
products takes place in five strategic
plants in Denmark, France, the US, Brazil
and China, which all have the approval
and the ability to export to other markets.

• In addition, Novo Nordisk has a number of

smaller manufacturing plants which support
local demand in selected countries.
• All production facilities are operating

under one global quality management
system with centrally deployed standard
operating procedures for all involved
employees. This ensures a uniform and
high quality standard for all products.

All manufacturing sites are held
accountable for meeting ambitious
targets for minimising their impact on
the environment. Performance measures
include energy and water consumption,
CO2 emissions and the amount of waste
generated during production processes.

Planning and executing global
launches of new products
Due to the high and increasing costs
associated with developing, obtaining
approval for and marketing a new
medicine, most pharmaceuticals must be
launched globally to optimise the return on
investment. And, importantly, such launches
must happen over a relatively short time
so there is a reasonable period left before
the product’s patents expire. Through the
launches of Victoza® in multiple markets
over the past years, Novo Nordisk has
refined this capability within diabetes, which
is being put to use in connection with the
launches of Tresiba® in 2013.

Building and maintaining
a leading position in
emerging markets

Many years of experience have helped
Novo Nordisk understand the needs of
new markets and forge partnerships with
local stakeholders. The company’s strategy
has always been to establish a local
organisation very early – as soon as there
are signs of a market developing – and
to grow the organisation organically as
the market develops. This is a key reason
behind Novo Nordisk’s success in emerging
markets such as China. Read more about
Novo Nordisk’s markets on pp 32–37.

The Triple
Bottom Line
business principle

Financially
responsible

Patients

Socially
responsible

Environmentally
responsible

Novo Nordisk’s sustainability strategy is
based on the Triple Bottom Line business
principle, which means the company
sets goals, manages and accounts for

NOVO NORDISK ANNUAL REPORT 2012treatment for people with chronic
diseases. Today, approximately 23 million
people all over the world benefit from
the treatments Novo Nordisk offers. The
company also prioritises improving timely
detection and prevention of diabetes
and invests in strengthening healthcare
infrastructure, awareness campaigns,
education and support for lifestyle
interventions.

In terms of societal value, Novo Nordisk

generates wealth and contributes to
socioeconomic development through
sustainable business practices, investment
and employment. As a pharmaceutical
innovator, the company provides
knowledge, research and development,
and healthcare products. Outreach
programmes such as Changing Diabetes®
and Changing Possibilities in Haemophilia®
improve awareness, diagnosis and
treatment. Through these efforts, Novo
Nordisk aims to bring down the human,
societal and financial burden of diabetes.
Read more about sustainable growth on pp
38–40.

Social responsibility is also about ensuring
a healthy and engaging workplace for Novo
Nordisk’s employees. Novo Nordisk has
global health and safety standards and
policies to ensure respect for the rights
of all employees. Through the workplace
wellness programme, NovoHealth, the
company also offers a healthy workplace
and actively promotes healthy lifestyles.
As a global player, Novo Nordisk must
also offer a diverse and inclusive working
environment. Diversity – in management
teams and in functional units – fosters
innovative thinking, nurtures collaboration
between people with different perspectives
and drives performance. Novo Nordisk’s
Management has set an ambitious long-
term aspiration that all senior management
teams must be diverse in terms of gender
and nationality.

Environmentally responsible:
doing more with less
Producing more with less is not just
sound household management; it is also
a way to proactively address sustainability
challenges throughout the value chain. As
its business grows, Novo Nordisk seeks
to reduce the consumption of natural
resources and manufactured inputs
across the value chain. There is also a
focus on minimising outputs in the form
of emissions such as CO2 and waste. The
ambition is to continue to produce ‘more
with less’ – more products to serve more
people, using less energy and water for
production, and leaving less waste.

performance on three dimensions:
financial, social and environmental. The
aim is to ensure long-term profitability
by minimising any negative impacts
from business activities and maximising
the positive footprint from its global
operations: improved health, employment,
economic prosperity and social equity.

The Triple Bottom Line model (see p 18)
illustrates the three dimensions with patient
interests at the core, aiming to create long-
term value by making balanced decisions.
Value is created in three ways. Firstly, it
makes Novo Nordisk more adaptive to
changes in its business environment. This,
in turn, helps protect the company’s licence
to operate and builds trust. Novo Nordisk
proactively engages with stakeholders
to address emerging challenges in the
business environment. One example is the
debate over access to health. Novo Nordisk
has supported the advocacy for a UN
Resolution on Diabetes and is partnering
with multiple stakeholders to bring policies
into action.

Secondly, the Triple Bottom Line business

principle strengthens competitiveness.
The company chose to invest in the
conversion to renewable energy in
Denmark in a strategic partnership with
its energy supplier. With this move, Novo
Nordisk has managed to continue to grow
production and sales, and yet decrease
carbon emissions significantly. This is a
good example of how sustainability-driven
decisions can drive operational excellence
and reduce costs.

Finally, the Triple Bottom Line business

principle can be an engine for business
development. Through partnerships with
stakeholders, Novo Nordisk can co-create
innovative solutions that lead to new
opportunities to grow the business. One
example is a pilot project that makes
human insulin available to low-income
populations in Kenya at prices they can
afford and with effective distribution via
local communities.

Financially responsible:
profitable for the long term
Doing business in a profitable and
responsible way is the basis for delivering
an attractive return on investment for
shareholders and making a contribution
to society. Novo Nordisk uses four financial
targets to steer the business towards
long-term profitable growth: operating
profit growth, operating profit margin,
operating profit after tax to net operating
assets, and cash to earnings. These targets
help Management balance growth in the
short term with investments in longer-term
growth such as research and development.

Socially responsible:
patients first
As a research-based healthcare company,
Novo Nordisk is focused on therapeutic
innovations and improvements to medical

Novo Nordisk Way

The Novo Nordisk Way is a description
of the ambitions and the values that
characterise the company. It was developed
for employees in Novo Nordisk, but has
been shared with a broader audience. It
sets the direction for all employees in Novo
Nordisk and is a promise employees make
to each other – and to stakeholders outside
the company.

The Novo Nordisk Way
In 1923, our Danish founders began a
journey to change diabetes.

Today, we are thousands of employees
across the world with the passion, the
skills and the commitment to continue this
journey to prevent, treat and ultimately
cure diabetes.

• Our ambition is to strengthen our

leadership in diabetes.

• We aspire to change possibilities in

haemophilia and other serious chronic
conditions where we can make a
difference.

• Our key contribution is to discover and
develop innovative biological medicines
and make them accessible to patients
throughout the world.

• Growing our business and delivering
competitive financial results is what
allows us to help patients live better
lives, offer an attractive return to our
shareholders and contribute to our
communities.

• We never compromise on quality and

business ethics.

• Our business philosophy is one

of balancing financial, social and
environmental considerations
– we call it the Triple Bottom Line.

• We are open and honest, ambitious and
accountable, and treat everyone with
respect.

• We offer opportunities for our people to

realise their potential.

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.

20 OUR BUSINESS

Diabetes
– an emergency in slow motion

Some emergencies happen in a split
second. Others take decades to develop
and in some cases you do not even realise
what happened until you see it in the
clear light of hindsight. Diabetes is an
emergency developing in slow motion.
Whenever the International Diabetes
Federation (IDF) updates its figures on
people affected by diabetes, the numbers
just get bigger. The latest estimates,
published in November 2012, say that
today more than 371 million people have
diabetes, diagnosed and undiagnosed,
of which 80% live in low- and middle-
income countries. And if current trends
continue, IDF predicts that the number will
rise to more than 550 million by 2030.

While diabetes care has improved greatly

in recent decades, there are still millions
of people dying from the disease annually
– 4.8 million in 2012 according to the IDF.
Others are losing their eyesight or requiring
amputations because of poorly controlled
diabetes. Some because they do not have
access to medicine or doctors who can
tell them how to use it. Others because
the treatment they receive is inadequate.
Yet others maintain too high blood sugar
because they fear the consequences
of low blood sugar (hypoglycaemia), a
common side effect of insulin treatment.
Findings from a landmark study in the UK
showed that reducing blood sugar levels
by close to 1% may reduce diabetes-
related deaths by more than 20% and

reduce microvascular complications by
nearly 40%.1 Microvascular complications
include diabetic retinopathy, which causes
10,000 cases of blindness annually in the
US alone.2

Apart from the effect diabetes has on
the person with diabetes, the disease is
becoming a growing financial burden for
society. It is estimated that diabetes caused
at least 471 billion US dollars in healthcare
expenditure in 2012.3

The psychosocial
aspects of diabetes
The physical, financial and emotional
burden of diabetes across cultures and
countries is carried by the entire family, not
just by the person with diabetes. This is one
of the initial results of Diabetes Attitudes,
Wishes and Needs 2 (DAWN2™) published
in December 2012, which shows that:
• 63% of family members are anxious
about the possibility that the person
they live with will develop serious
complications from the condition.
• 66% of family members of insulin-
treated people with diabetes fear
that their loved one will become
hypoglycaemic during the night.
• 34% of family members report a

negative financial impact on themselves
due to the diabetes of their loved one.

What is diabetes?
Diabetes is a metabolic disorder
affecting the way our bodies use
digested food for growth and
energy. Diabetes has two main
forms: type 1 and type 2.

Type 1 diabetes is a lifelong

autoimmune disease that develops
when the body creates an
immune reaction against its own
cells, destroying beta cells in the
pancreas. As a result, the pancreas
stops producing insulin, often at a
young age but this can happen at
any time over a lifetime.

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 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 damage to the kidneys,
neurological system, cardiovascular
system, the retina or to the feet
and legs through effects on both
large and small blood vessels.

Potential complications
of uncontrolled diabetes

Progression of type 2 diabetes
and treatment intensification

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.

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.

n
o
i
t
c
n
u
f

l
l
e
c
a
t
e
B

Diet and exercise

Tablets
NovoNorm®
PrandiMet®

GLP-1
Victoza®

Time

Insulin
Levemir®
NovoRapid®
NovoMix®

NOVO NORDISK ANNUAL REPORT 2012

A woman gets a simple blood
sugar test from a volunteer
doctor outside a local
healthcare centre in a remote
village in southern India.

How is diabetes treated?
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 of the disease. The first step is lifestyle
changes and initiation of tablet therapy
(metformin) may be introduced. If treatment
goals are not met, as a second step 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 achieve and to maintain good glycaemic
control. This may include adding a rapid-
acting modern insulin at mealtimes, such
as NovoRapid® (insulin aspart, marketed
as NovoLog® in the US), 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 with

insulin is to maintain appropriate blood
glucose levels, adjusting insulin dosing as
necessary to balance the impact of food
and exercise and to avoid low blood glucose
levels (hypoglycaemia), which, if untreated,
can lead to seizures or unconsciousness.
In rare cases, low blood sugar can lead to
permanent brain damage or death.

The ‘Rule of Halves’
According to the Rule of Halves*, only around 6% of people with diabetes live a life
free from diabetes-related complications.

About
50% are
diagnosed**

Of whom
about 50%
receive care**

Of whom
about 50%
achieve
treatment
targets**

Of whom
about 50%
achieve
desired
outcomes**

Of the
estimated
371 million
people with
diabetes

Diabetes

Diagnosed

Receive care

Achieve
treatment
targets

Achieve
desired
outcomes

* Hart J.T., 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, and W.C.S. Smith, A.J. Lee, I.K. Coombie, H.
Tunstall-Pedoe, Control of blood pressure in Scotland: The rule of halves, Br. Med. J, 300 (1990): 981–983.

** Actual rates of diagnosis, treatment, targets and outcomes vary in different countries.

NOVO NORDISK ANNUAL REPORT 2012Senior scientist Ib Jonassen (left) has worked
almost 30 years on the molecule now known
as insulin degludec (will be marketed as
Tresiba®). Here he is in the lab with
colleague Sven Havelund.

OUR BUSINESS 23

The protein powerhouse

Novo Nordisk is highly focused on proteins. Some researchers at the company have
spent their entire careers immersed in one specific protein.

For 90 years, Novo Nordisk has been
researching proteins to treat what was
originally an uncommon disease, but
which today has reached pandemic
proportions: diabetes.

“Our dedication to discover and develop

better and better therapeutic proteins
to help people with diabetes is the red
thread running through the company,”
explains Dr Mads Krogsgaard Thomsen,
executive vice president and chief science
officer at Novo Nordisk. “Over many years
we have developed a unique expertise,
which helps us to make both incremental
changes and leaps forward so that our
medicines are getting more physiological
and acting closer to what nature intended.
This requires decades of perseverance.
While other companies might stop looking
for treatments for diabetes after launching
one or two medicines, we are constantly
searching for new ways to improve our
medicines further.”

Long-term focus
In fact there are very few, if any,
companies with as great a focus on side
chain protein backbones and engineering
as Novo Nordisk. “In the beginning we
focused on purifying insulin. Thereafter
we realised that insulin needed to work
for longer, so we looked at how we could
engineer this property into the product.
With the advent of our human insulin
range, diabetes treatment became safer
and unlimited by slaughterhouse suppliers.
Later, we developed our injection pens to
make it easier for people to inject insulin.
At the same time, we began to wonder
how we could use protein technology to
even more closely mimic the action profile
of insulin found naturally in the body of
someone who doesn’t have diabetes, and
this is what we’re still working on today.
We don’t look five years into the future;
we think in decades. And this long-term
view has helped us to produce generation
after generation of insulin to improve the
lives of people with diabetes,” says Mads
Krogsgaard Thomsen.

Mimicking nature is not easy
Protein-based biological medicines –
therapeutic proteins – are significantly
different from ‘traditional’ chemical drugs:
while these small molecules usually block a
target and therefore a process in the body
around the clock, large protein molecules
such as insulin seek to stimulate a process
at the time it is needed. Mimicking nature
in this way is not as easy as it perhaps
sounds. In a person without diabetes,
insulin is released from the pancreas

straight into the body’s circulation, giving
a characteristic action profile of peaks at
meals and a steady basal level between
meals and at night. But a person with
diabetes who needs insulin injects this
protein directly under the skin. This
changed route of entry into the body
results in a different action profile. To
mimic nature as closely as possible Novo
Nordisk’s scientists therefore have to study
a protein in great detail to work out which
amino acids can and cannot be changed,
in order to engineer particular properties
into the molecule without changing its
characteristics unfavourably. Side chain
attachments to prolong the effect of
the protein are also used to create the
desired result. In this way Novo Nordisk
has designed a full range of insulins,
including Tresiba® (insulin degludec), the
first once-daily basal insulin with an ultra-
long duration of action, and the world’s
leading short-acting insulin NovoRapid®
(NovoLog® in the US).

The company has also used its protein
expertise to develop the leading human
GLP-1 analogue, Victoza®, but research
does not stop there. Current projects
in development include a fixed-ratio
combination of Tresiba® and Victoza®
(IDegLira) and semaglutide, a once-weekly
GLP-1 analogue for the treatment of type
2 diabetes. Further, Victoza® is being
investigated for use in type 1 diabetes
as an adjunct therapy to insulin. With
12 diabetes treatments in the pipeline,
diabetes firmly remains Novo Nordisk’s
primary business. See the pipeline on pp
30–31 for more information.

“We have been working with this disease

since it was considered a niche area that
only few seemed to care about,” explains
Mads Krogsgaard Thomsen. “We have a
unique competence platform of research
and are only now beginning to understand
how much more can be done for people
with diabetes. And I think it’s fair to say
that our perseverance has paid off. You can
see it in the number and quality of projects
in our pipeline, the number of patents
we’re granted, publications in leading
scientific journals, and the new medicines
we have launched. What’s also worth
noting is that we use the same expertise,
knowledge and technology to design
proteins for haemophilia and growth
hormone therapy.”

Passion, pride and perseverance
To engineer a protein to such a level
of perfection takes a network of
scientists who understand that protein
fully, including protein engineers,

pharmacologists, chemists and clinicians.
But Novo Nordisk does not have much
difficulty attracting and retaining the best
people in these fields. “Working here is lots
of fun: we have a high level of expertise,
we understand our area, our research and
development budgets are growing and
we treat people with respect. So scientists
want to work here,” says Mads Krogsgaard
Thomsen, referencing the prestigious
Science 2012 Top Employer survey in which
Novo Nordisk ranked number 4, up from
ninth place in 2011.

“Our scientists have a profound insight
into the protein on which they’re working.
For example the scientist who invented
Tresiba® was working on this molecule
for almost 30 years and is still invaluable
in this area. All our scientists share the
company’s passion for proteins and our
drive to constantly improve our medicines.
This thrill is ignited when we see patients
and doctors embrace our products. I think
the bottom line is we’re all proud of what
we do.”

What is it?

Proteins are large biological
molecules consisting of one or
more chains of amino acids in a
specific sequence. Twenty different
types of amino acids are commonly
found in proteins and when
combined in various ways they
create millions of different proteins
each with a specific function. Each
cell in the human body contains
thousands of different proteins,
which together make the cell do
its job. Some proteins are
hormones that regulate various
activities in the body.

Insulin is a hormone that is
produced by the beta cells in
the pancreas. It is needed for
moving sugar (glucose) from the
bloodstream into some cells in the
body, for example muscle cells.

GLP-1 (Glucagon-Like Peptide-1)
is a natural gut hormone that helps
regulate glucose metabolism by
stimulating beta cells to secrete
insulin and by reducing glucagon
secretion. GLP-1 also has effects on
food intake and it may play a role in
protecting the beta cells, a key
to slowing diabetes progression.

NOVO NORDISK ANNUAL REPORT 2012Training camp in Spain,
December 2012. Team Novo
Nordisk is a global sports
team with more than 100
cyclists, triathletes and runners
who all have diabetes.

Insulin treatment
is a balancing act

Every day is a balancing act for people with diabetes who use insulin: too little
insulin will make blood glucose levels rise, which can cause long-term complications
such as blindness and amputations; too much insulin can result in dangerously
low blood sugar levels, which can ultimately lead to coma and death.

The symptoms of low blood sugar (hypogly-
caemia) are immediate, very unpleasant
and something almost all people with
diabetes try to avoid. Confusion, dizziness,
trembling, a pounding heart and sweating
are among the typical early symptoms. If
left untreated, hypoglycaemia can lead to
seizures or unconsciousness and, in rare
cases, permanent brain damage or death.
So it is no surprise that many patients
and doctors are reluctant to treat the blood
sugar down to the levels recommended,
for example by the American and European
diabetes associations. They know that the
closer the patient is to reaching the desired
near-normal blood sugar level, the closer he
or she also is to a state of hypoglycaemia.

But maintaining blood sugar at higher-
than-recommended levels comes at a price.
Diabetes is a chronic disease, so while in the
short term the side effects of high blood
sugar may not have a great impact on quality
of life, over time potentially irreversible
damage is being done to the body.

The problems of a
progressive disease
According to Dr Alan Moses, Novo Nordisk’s
global chief medical officer, one barrier to
effective blood sugar control is that most
doctors have very little time for educating
patients about their disease: “Diabetes
is complex, and different stages of the

disease spectrum require different types of
medications. But primary care physicians see
many patients per day, perhaps over 100,
so they have very little time to educate the
patient about all the elements involved in
good diabetes control, including medication,
weight-appropriate diet, distribution of
calories over the day, exercise and so
on. There is therefore a tendency for the
physician to prescribe the simplest treatment,
even though it may not be appropriate or no
longer match the stage of the disease. The
next step in treatment is then not taken until
the patient’s blood glucose level increases to
an unacceptable level. This is what some refer
to as the ‘treat to failure’ paradigm, which is
sadly all too common.”

Reducing the risk
of hypoglycaemia

One way to reduce the risk of
hypoglycaemia – and thus allow for
tighter blood sugar control – is to develop
‘engineered’ insulins that more closely
mimic the way insulin acts in the body of
a person without diabetes.

“One of the challenges we’re trying
to overcome when developing new and
improved insulin types is that insulin acts
in a different way when injected compared
with when it’s secreted naturally into the
bloodstream,” says Alan Moses. “It takes
time for injected insulin to pass through the
subcutaneous tissue into the blood vessels,
and several factors, including the site of
injection, play a role in how fast the insulin
is absorbed in the body and which tissues
it goes to first. This means that the insulin
activity profile can vary significantly from
day to day in the same individuals.”

“When Novo Nordisk launched human
insulin in 1982 as the first company in the
world, we thought that we had developed
the perfect insulin,” continues Alan Moses.
“I mean, it’s 100% identical to the insulin
produced in the body of a person who

doesn’t have diabetes, so how could we
do better? However, we came to realise
that while human insulin is indeed the
perfect insulin when secreted naturally
from the pancreas, it’s far from perfect
when injected, for the reasons I mentioned
before. That’s what led us into the research
and development of insulin analogues.”
Insulin analogues are types of insulins
that have been modified through genetic
engineering to either act faster or slower
than human insulin. Novo Nordisk’s
fast-acting insulin analogue NovoRapid®
(NovoLog® in the US) was engineered to
match the insulin peak seen in a person
without diabetes following a meal.
However, this type of insulin does not work
long enough to provide an adequate basal
level of insulin for full 24-hour coverage.
Long-acting insulin analogues (basal insulin)
were therefore developed to meet this
need, but while they have been shown
to reduce the risk of low blood sugar
(hypoglycaemia) compared with human
insulin, available insulin products are still
associated with substantial variability of
absorption, which can result in low blood
sugar (hypoglycaemia) – most worryingly
at night. Furthermore, these insulins are

required to be injected at the same time
every day. That is why Novo Nordisk
decided to develop Tresiba® (insulin
degludec).

The importance of good
blood glucose control
People with diabetes should aim
to keep their blood glucose (blood
sugar) levels as near normal as
possible, in other words in the
range of that of someone without
diabetes. The blood glucose
target should be decided between
the patient and his or her doctor.
Good blood glucose control is
important as it has been shown
to significantly reduce the risk of
developing complications and
prevents complications from getting
worse.1,2 Regular blood glucose
testing helps people with diabetes
achieve their target blood glucose
level. For more information read the
article on diabetes on p 20.

Oral insulin and oral
GLP-1 in a tablet could be
available in about 10 years.

OUR BUSINESS 27

Insulin
in a tablet
– why is it so difficult?

Many companies have tried, and failed, to develop insulin in tablet form. So what makes
Novo Nordisk think it can do any better?

Many people ask why insulin and GLP-1
products such as Victoza® (liraglutide) are
not made in tablet form. The short answer
is that it is really difficult. Insulin and GLP-1
are amazing protein molecules, but if taken
orally they would ordinarily be attacked by
digestive enzymes in the gastrointestinal
tract whose job it is to break down
proteins, which is useful for food uptake
but detrimental if the protein is a drug that
needs to stay intact. And even if they were
to somehow survive in the stomach, these
large molecules would then have difficulty
passing through the wall of the intestine
and entering the bloodstream.

Oral insulin and GLP-1 – that is insulin and

GLP-1 in tablet form – therefore have to be
designed and engineered to overcome these
challenges. But even if these barriers can
be overcome, further challenges lie ahead
as these proteins have to be absorbed by
the body in the right quantities and stay
in the blood for the right length of time –
regardless of whether the patient has an
empty stomach, has just eaten or is suffering
from diarrhoea. “We have been working on
oral insulin and GLP-1 for about five years. I
can tell you that when we started, I thought
this was nearly impossible – and it is!” says
Dr Peter Kurtzhals, senior vice president and
head of Diabetes Research at Novo Nordisk.
“But I’ve been positively surprised and
encouraged by the progress we’ve made.
Many other companies have tried to develop
oral insulin but none have been able to
show proof of concept – but we are getting
very close to this stage. I would say we are
the leaders in this field at this point.”

Convenience leads
to better outcomes
Currently, when people are diagnosed
with type 2 diabetes they are often given

a tablet-based medication, for example
metformin. What these medications have
in common is that their active substance
is a small molecule – a chemical – which
is not broken down by enzymes in the
gastrointestinal tract. However, for many
people with type 2 diabetes the disease
eventually progresses to a stage where
insulin therapy is necessary to control the
blood sugar. But insulin injections are
daunting for many, and patients must be
educated by healthcare professionals in
order to administer insulin effectively and
safely. Progression to insulin injections is
therefore often delayed, with potential
serious consequences for health in the
long term.

Insulin in a tablet would enable patients

to begin insulin therapy earlier and treat
themselves more easily. “The simplicity
and convenience of oral insulin would
be amazing. While it takes time to learn
how to inject insulin with a pen, everyone
knows how to swallow a pill. This in turn
could support greater compliance and lead
to much better treatment outcomes to the
benefit of patients, healthcare providers
and society,” highlights Peter Kurtzhals.
He emphasises that insulin in tablets will
probably not be able to replace injections
entirely because it is likely to be used only
in patients whose bodies can still produce
some insulin.

Expert knowledge
For a company that is committed
to changing diabetes, it is therefore
understandable that Novo Nordisk is
investing so much time and money in
developing oral insulin and GLP-1. And
Peter Kurtzhals believes the company
has the best people working on this task:
“The research and development team

is built on our 90 years of experience
with the insulin molecule and 20 years
of experience with GLP-1. The scientists
involved have been experts in the field
for decades. This is a clear strength for
engineering and designing the molecules
for the oral route and is a major
advantage over our competitors.”

While Novo Nordisk is an expert in
protein research, these oral preparations
also require formulations that will enable
the active ingredients to reach their
targets in the body. Novo Nordisk has
over the last five years built substantial
oral formulation expertise and has
entered into licensing and collaboration
agreements with companies having
technologies to facilitate oral absorption.
“It has been a learning curve for Novo
Nordisk to establish technologies, animal
models and exploratory clinical trials to
support the development of oral insulin
and GLP-1 formulations,” says Peter
Kurtzhals, “and the company currently
has two oral insulin and three oral GLP-1
formulations in phase 1 clinical trials.”
The journey ahead will not be easy.
“We’re up against major barriers and
we still don’t know whether they can be
overcome,” reports Peter Kurtzhals. “But
if we look at the ideas we’ve got and the
progress we’ve made I’m optimistic that
Novo Nordisk will be the first to turn oral
insulin and GLP-1 into a reality. We are
currently in phase 1 development so it
is not unrealistic to think that if studies
are successful, oral insulin and oral GLP-1
could be available in about 10 years. In
the world of pharmaceutical research and
development that’s pretty close.”

NOVO NORDISK ANNUAL REPORT 201228 OUR BUSINESS

Simple injections

The pursuit of simplicity for patients is the driver of Novo Nordisk’s development
of injection devices.

Novo Nordisk invented the market for
insulin injection devices with the launch
of the world’s first insulin pen in 1985.
“NovoPen® was designed and developed
by a group of people who had a burning
passion for this project and they had the
persistence to see it through,” explains
Jesper Kløve, senior vice president for
Device R&D at Novo Nordisk. Since then,
Novo Nordisk has launched generation
after generation of pen devices, the latest
being NovoPen® 5 (pending approval in the
US), which in July 2012 won the prestigious
‘Red Dot Best of the Best Design Award’.
“This was a huge accolade. To see our pen
next to iconic products such as Apple’s
iPad and the redesigned Porsche 911 was
fantastic,” says Jesper Kløve.

NovoPen® 5 is the successor to

NovoPen® 4, the current global market
leader among durable insulin injection
pens. It aims to heighten the safety
of insulin treatment by integrating an
electronic module memory function into
the pen that reminds the patient how
much insulin has been taken and when.
This helps the patient avoid missing an
injection or mistakenly repeating a dose,
which may have severe consequences.

Six million FlexPen® users

The largest category of insulin injection
devices is prefilled pens in which Novo
Nordisk’s FlexPen® has been the global
leader for many years. It is estimated that
around 6 million people use FlexPen®
every day to treat their diabetes. While
patients using a durable pen have to load
and replace insulin cartridges, prefilled
pens already have the cartridge built in.
“Novo Nordisk’s latest innovation in
prefilled insulin pens is FlexTouch®, which
is designed to improve the experience of
performing daily injections,” explains Jesper
Kløve. “A few years ago, competition
between insulin device manufacturers was
about accurate dosing. We’re beyond that
point and are now focusing on how to
reduce the force you need to apply to inject
a dose. While other insulin pens require
users to inject their insulin in the traditional
way – using the force of their thumb to
push the button – FlexTouch® has an easy-
touch button which requires very little force
to inject the insulin at any dose.”

The technical platform of FlexTouch®

(pending approval in the US) can be
manufactured to deliver injections for
insulin, GLP-1, combinations of insulin and
GLP-1, or growth hormone treatments.
In fact it is already being marketed under
the brand name FlexPro® as a delivery
device for Novo Nordisk’s human growth
hormone, Norditropin® (somatropin).

Novo Nordisk has also made progress

with its first device for haemophilia
treatment. In October 2012, a new prefilled
syringe for delivering NovoSeven® was
approved by both the European Medicines
Agency and the US Food and Drug
Administration. It is designed to make life
easier for NovoSeven® users by making the
injection process less cumbersome.

Responding to patients’ needs
"As with all our device developments,
the market research for FlexTouch® and
NovoPen® 5 started early on,” explains
Jesper Kløve. “We sat down with patients
and healthcare professionals in different
countries to capture their initial feelings
about the prototype. We then gave them
time to test it to see how they got on.”
Further insights into how patients feel
about injections have been obtained from
the DAWN2™ study. “Supporting patients
and healthcare professionals is very
important to us. I think the injection device
makes a huge difference. New patients
have to deal with the knowledge that they
have diabetes. Then they have to deal with
learning how to inject. We can make a
difference by making the device as simple
and safe as possible to use for patients and
for the doctors and nurses who teach the
patients how to inject,” says Jesper Kløve.
“We seek to make our Scandinavian
design heritage for simplicity inherent
in all our devices, so that they are both
aesthetically pleasing and user-friendly.
Yes, we are the leaders in the device
market but we know we can make more
improvements to create even simpler
devices. In fact we’re already working
on the next-generation NovoPen®.”

A FlexTouch® and two NovoPen® 5.
In July 2012, the latter won the
prestigious Red Dot Design Award.

OUR BUSINESS 29

Prevent bleedings

Imagine having to give a 3-year-old an intravenous infusion several times a week which
takes up to 40 minutes and can be very painful.

When we talk about the number of people
with diabetes globally, we speak in the
ballpark of hundreds of millions. But the
scenario for haemophilia is very different.
In fact, this is a small community of
around 400,000 people globally, with just
over 160,000 of them having haemophilia
A or B.1,2 Of those diagnosed, only about
25% receive optimal treatment.3
It is, therefore, no wonder that

employees at Novo Nordisk are passionate
about the haemophilia treatments that
the company has on the market and in
its research and development pipeline.
“Haemophilia can be mild, moderate or
severe, and the current treatments only
manage to convert severe disease to
moderate. This means that the patients
bleed less, which is good, but I don’t
think there are any other diseases where
it is considered optimal to treat someone
only partially. So making a treatment
better – for example by needing fewer
doses to achieve a good result, which
means fewer intravenous injections – can
make a real difference,” explains Dr Anne
Prener, senior vice president, in charge of
the haemophilia R&D portfolio at Novo
Nordisk.

It started with NovoSeven®
15–20% of people with haemophilia will at
some point develop an inhibitory antibody

to the product they are using to treat or
prevent bleeding episodes. For about 3,500
patients worldwide, these inhibitors will
eventually prevent the treatment from
working.3 Novo Nordisk addressed a huge
unmet medical need when it launched
NovoSeven® (recombinant factor VIIa) in
1996 as a treatment for these people.
It was the first recombinant treatment
available, as at the time other coagulation
factors were derived from blood plasma.
Novo Nordisk has been working within

the field of haemophilia for more than
20 years. Like diabetes, haemophilia is a
chronic disease, and the skills needed to
develop new therapies are very similar. “Our
company has many years of experience in
discovery, development, manufacturing and
delivery of proteins, which gives us a big
advantage,” says Anne Prener.

One project filed, two in phase 3,
a fourth discontinued
Novo Nordisk’s investments in haemophilia
research have resulted in a broad range
of haemophilia projects, including one
filed for approval and two in phase 3
development for people with haemophilia
A or B. “This is our first step into
haemophilia A and B on a broad basis,”
explains Anne Prener. “We hope that our
recombinant factor VIII product will offer
patients an extremely pure and consistent

What is haemophilia?
Haemophilia is an inherited or acquired bleeding disorder that prevents blood from
clotting. People with haemophilia lack, either partially or completely, an essential
clotting factor needed to form stable blood clots. Internal bleeding into the joints,
muscles and other tissues can cause severe pain, joint damage and disability. The
treatment for haemophilia involves intravenous administration of replacement clotting
factors. Treatment may be administered when bleeding occurs or, increasingly, on a
preventive basis, which is called prophylactic treatment. People with haemophilia A
may have either a decreased ability or total inability to produce clotting factor VIII.
Those with haemophilia B have deficiencies in producing clotting factor IX. Around
3,500 people with haemophilia worldwide have high-titre inhibitors – resistance
(due to antibody formation) – to their normal replacement treatment. Factor VIIa
(NovoSeven®) was developed as a treatment for these people.

Living with haemophilia
HERO (Haemophilia Experiences, Results and Opportunities) is an international study that
aims to build an understanding of life with haemophilia, seen from the perspective of
people with haemophilia, their families and their healthcare providers. The first results
from the study, which is supported by Novo Nordisk, were presented in July 2012. HERO
is an initiative under the Changing Possibilities in Haemophilia® programme. It supports
Novo Nordisk’s strategic objective to achieve leadership in haemophilia by improving
the efficacy of prevention and treatment of bleeding episodes for all haemophilia
patients. Read more about HERO and Changing Possibilities in Haemophilia® at
novonordisk.com/about_us/improving_haemophilia/improving-haemophilia.asp.

NovoThirteen®
launched for rare
bleeding disorder
In 2012, Novo Nordisk received
approval in Europe and Canada
to market a recombinant factor
XIII product for the treatment of
congenital factor XIII deficiency.
It is a rare bleeding disorder
with potentially life-threatening
consequences if untreated. Factor
XIII is the protein responsible for
stabilising the formation of a blood
clot. Without it, a clot will still
develop but will remain unstable.
Factor XIII deficiency affects men
and women equally. It is estimated
that about 900 people globally have
the disease. Novo Nordisk’s product
is the first recombinant factor XIII
product. It is marketed in Europe
under the brand name NovoThirteen®
and in Canada as Tretten®, and
is under regulatory review in the
US and in a number of additional
countries.

product, while our long-acting versions of
factor VIII and factor IX aim to reduce the
number of injections needed when used
proactively to prevent bleeds.”

A third phase 3 project was discontinued

in September 2012, when development
of a fast-acting analogue of recombinant
factor VIIa, vatreptacog alfa, was stopped
due to safety concerns, as some patients in
the phase 3 study developed antibodies to
the product. Although all of these patients
continued to respond well to treatment
after having developed antibodies, there
was still a potential risk that continued
treatment would inhibit the effectiveness of
the treatment over time. “This would be an
unacceptable situation as, in almost 20 years
of use, no haemophilia A or B patients
have developed inhibitory antibodies to
NovoSeven®,” says Anne Prener.

The dream
“Our dream is to find treatments that can
be administered subcutaneously, prevent
bleeds and preserve joints,” concludes
Anne Prener. “Imagine having to give a
3-year-old an intravenous infusion several
times per week which takes up to 40
minutes and can be very painful; then you
realise what a big difference these new
products can make.”

NOVO NORDISK ANNUAL REPORT 201230 OUR BUSINESS

Pipeline overview

During 2012, Novo Nordisk made progress throughout the clinical development pipeline.
This overview illustrates key development activities.

Compound

Indication

Description

Phase 1

Phase 2

Phase 3

Filed/
regulatory
approval

Diabetes care

Diabetes

Tresiba®
(insulin
degludec)
NN1250

Ryzodeg®
(insulin
degludec and
insulin aspart)
NN5401

Type 1 and 2
diabetes

A new-generation basal insulin with ultra-long duration
of action of more than 42 hours. Intended to offer a flexible
treatment and a good safety profile. Approved in the EU and
Japan and under regulatory review in the US and other major
markets.

A soluble fixed combination of Tresiba®, the new-generation
basal insulin analogue with an ultra-long duration of action,
and NovoRapid® (insulin aspart, marketed as NovoLog® in the
US), a rapid-acting mealtime insulin. Approved in the EU and
Japan and under regulatory review in the US and other major
markets.

IDegLira
NN9068

Type 2
diabetes

A fixed-ratio combination of insulin degludec and liraglutide
intended to offer the benefits of the two components in a
single preparation.

Semaglutide
NN9535

Type 2
diabetes

A once-weekly GLP-1 analogue intended to offer the clinical
benefits of a GLP-1 analogue with less frequent injections.

FIAsp
NN1218

Type 1 and 2
diabetes

A faster-acting formulation of insulin aspart (NovoRapid®).

LATIN T1D
NN9211

Type 1
diabetes

Liraglutide, a once-daily human GLP-1 analogue, intended to
offer clinical benefits as adjunct therapy to insulin.

OI338GT
NN1953

OI362GT
NN1954

OG217SC
NN9924

OG987GT
NN9926

OG987SC
NN9927

LAI287
NN1436

Obesity

Type 1 and 2
diabetes

A long-acting oral basal insulin analogue intended as a tablet
treatment.

Type 1 and 2
diabetes

A long-acting oral basal insulin analogue intended as a tablet
treatment.

Type 2
diabetes

A long-acting oral GLP-1 analogue intended as a tablet
treatment.

Type 1 and 2
diabetes

A long-acting basal insulin analogue with potential for once-
weekly dosing.

Liraglutide 3 mg
NN8022

Obesity

A once-daily human GLP-1 analogue. Intended, as adjuvant
to lifestyle changes (including diet), to offer sustainable
weight loss for people with severe obesity, including those
at particular risk of developing diabetes.

NOVO NORDISK ANNUAL REPORT 2012OUR BUSINESS 31

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.

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 2
Studies of various dose levels in a larger
group of patients to learn about its effect
on the condition and its side effects. In

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.

See more at novonordisk.com/investors
and clinicaltrials.gov.

Compound

Indication

Description

Phase 1

Phase 2

Phase 3

Filed/
regulatory
approval

Biopharmaceuticals

Haemophilia and other rare bleeding disorders

NovoThirteen®
(rFXIII)
NN1841

Congenital
FXIII
deficiency

A recombinant coagulation factor XIII. Launched in the EU and
Canada and approved in Switzerland. Submitted for marketing
authorisation in the US and other larger markets.

Turoctocog
alfa
NN7008

N8-GP
NN7088

N9-GP
NN7999

mAb2021
NN7415

Haemophilia A

A recombinant coagulation factor VIII intended to prevent and
treat bleeds. Submitted for marketing authorisation in the US,
EU, Japan, Australia and Switzerland.

Haemophilia A

A long-acting recombinant coagulation factor VIII derivative
intended to offer prophylaxis and treatment of bleeds.

Haemophilia B

A long-acting recombinant coagulation factor IX derivative
intended to offer prophylaxis and treatment of bleeds.

Haemophilia
A, B and with
inhibitors

A monoclonal antibody against Tissue Factor Pathway Inhibitor
(TFPI) intended for bleeding prevention.

Growth disorders

NN8640

Growth
disorders

A long-acting human growth hormone intended to offer less
frequent injections.

Inflammation

Anti-IL-20
NN8226

Rheumatoid
arthritis

Anti-IL-21
NN8828

Rheumatoid
arthritis

A recombinant human monoclonal antibody. The compound's
novel mechanism of action is intended to improve treatment
outcomes in patients who do not respond adequately to
existing treatments. A phase 2b programme is ongoing.

A recombinant human monoclonal antibody. The compound’s
novel mechanism of action is intended to improve treatment
outcomes in patients who do not respond adequately to
existing treatments. A phase 2a programme is ongoing.

rFXIII
NN8717

Ulcerative
colitis

A recombinant coagulation factor XIII. The study is investigating
the biological and clinical effect on mucosal healing in patients
with mild to moderate active ulcerative colitis.

Anti-C5aR-151
NN8209

Rheumatoid
arthritis

Anti-C5aR-215
NN8210

Rheumatoid
arthritis

Anti-NKG2A
NN8765

Rheumatoid
arthritis

Anti-IL-21
NN8828

Systemic lupus
erythematosus

A recombinant humanised monoclonal antibody. The
compound’s novel mechanism of action is intended to
improve treatment outcomes in patients who do not respond
adequately to existing treatments.

A recombinant human monoclonal antibody. The compound's
novel mechanism of action is intended to improve treatment
outcomes in patients who do not respond adequately to
existing treatments.

A recombinant human monoclonal antibody. The compound’s
novel mechanism of action is intended to improve treatment
outcomes in patients who do not respond adequately to
existing treatments.

NOVO NORDISK ANNUAL REPORT 2012Many markets
– one model

Novo Nordisk sells its products in more
than 180 countries. Among them are
the richest and poorest countries in
the world, with healthcare systems
ranging from well-developed to non-
existent. And yet, Novo Nordisk’s basic
business model and strategy is the
same in all countries, says Kåre Schultz,
Novo Nordisk’s chief operating officer.

Novo Nordisk has its own wholly owned
country organisations – affiliates as they
are called internally – in 75 countries,
organised in five regions, each reporting
to a senior vice president: Europe, North
America, International Operations, Region
China and Japan & Korea. The reporting
lines meet at Kåre Schultz’s desk.

Novo Nordisk’s business model and

strategy is basically the same in all regions,

and based on a common ambition,
which is to be the leading diabetes care
company, both in commercial terms
and when it comes to making a positive
change for people with diabetes.

“Our core offering to people with
diabetes all over the world is sophisticated
proteins – biologic pharmaceuticals
such as modern insulins – to which our
scientists have been able to give some
distinct properties that can help better
control the disease,” says Kåre Schultz.
“We market and sell the products the
same way globally, which is by sharing the
clinical knowledge about our products
with doctors, so they can make an
informed choice about whether they are
right for their patients. At the same time,
we present the payers – whether these are
public health systems or private insurance

companies – with evidence about the
cost-efficiency of our products so they can
make informed decisions about pricing
and reimbursement. This is in essence our
business model all over the world.”

In many countries Novo Nordisk also
engages in activities aimed at improving
awareness about diabetes and training
doctors in managing the disease. This
work is much appreciated, especially in
developing countries where diabetes has
only recently become a serious problem
and where there is not the knowledge or
capacity to deal with the disease. “I see
this as a long-term investment,” says Kåre
Schultz. “It can take many years to create
a sustainable business in these countries,
but once the economy allows for proper
diabetes care for the population, doctors
and health authorities will remember that

NOVO NORDISK ANNUAL REPORT 201233

Chief Operating Officer Kåre
Schultz (far left) travels to meet
management teams in key
markets several times a year.

we were there for them when the going
was tough. That’s our experience.”

Competitors
In the insulin market, Novo Nordisk’s main
competitors are the same all over the world,
Eli Lilly and Sanofi. In addition, there are
local competitors in some countries such
as China and India, but they primarily offer
older-generation products and have not
been able to gain significant market shares.
In the biopharmaceuticals business, Novo
Nordisk faces competition in some markets
from producers of biosimilar medicines
(products that are similar, but not identical
to an original medicine), for example
human growth hormone. But so far it has
not had a dramatic impact on the business.

CONTINuED

Diabetes care
Value market share by geographic region

Modern insulins
Value market share by product

North America
Europe
International Operations
Japan & Korea
Region China

NovoMix®
NovoRapid®
Levemir®

2008 2009 2010 2011 2012

100

2008 2009 2010 2011 2012

NOVO NORDISK ANNUAL REPORT 201234 OUR BUSINESS

North America

Sales in North America

DKK billion

+29%

2008 2009 2010 2011 2012

The US is the world’s largest market
for pharmaceuticals, accounting for
approximately 34% of global sales.
It took Novo Nordisk many years and
several failed attempts to establish a
successful presence there. But this was
achieved around 10 years ago when Novo
Nordisk launched its first modern insulins
(insulin analogues) and NovoSeven® (a
haemophilia product) in the US. At the
same time, major investments were made
in building a strong organisation, which
today totals more than 5,000 people.

Since then there has been no looking

back. Today, North America is Novo
Nordisk’s largest and fastest growing
region by far. In 2012, the region
accounted for 66% of Novo Nordisk’s
total sales growth. And this picture will
not change in the foreseeable future,
predicts Kåre Schultz:

“Diabetes is on the rise, and we have
a range of great products on the market,
even more promising products in our
pipeline and an organisation that has
proved it can meet our customers’ needs.”

In his view there is still a major growth

potential for Novo Nordisk’s current
modern insulins and Victoza® (liraglutide):
“Our insulin market share is still lower in
the US than it is in many other countries,
and I can’t see why this should be the
case, especially when we launch Tresiba®.
Another thing to keep in mind is that
in the US, only around 35% of insulin
is delivered in pen systems, such as

FlexPen®. In Europe, it’s close to 100%.
This means there’s still a significant
potential to upgrade treatment in the US.”
In the GLP-1 market Victoza® is already

the market leader. It is still a relatively
small market but predicted to grow in the
coming years, and Kåre Schultz believes
there is a good chance Novo Nordisk will
capture the lion’s share of this growth, not
only with Victoza® but also with IDegLira
(a fixed-ratio combination of insulin
degludec and liraglutide) and semaglutide
(a once-weekly GLP-1 analogue) which
Novo Nordisk hopes to bring to the market
some years from now.

Prices
Novo Nordisk has experienced increasing
pressure on prices in recent years
when bidding for large contracts with
managed care organisations and with the
government, and Kåre Schultz predicts
this will continue. “I still think the US
will remain the most attractive market in
the world for a company such as ours,
which is able to bring new and innovative
products to the market.

”Unlike many other countries, the US is
willing to pay for innovation. This means
that new products get a higher premium
than elsewhere. But once they go off
patent, a competitive market for generics
ensures that prices drop to a fraction
of what they were before. And since
many blockbuster drugs have lost patent
protection in recent years, the net effect
is that the total spend on pharmaceuticals
isn’t growing.”

When asked what – apart from good

products – is the key to success in the
US market, Kåre Schultz highlights the
importance of having good people and
a strong organisation. “Furthermore, we
learned the hard way 10–20 years ago
that if you don’t know every detail of how
the US market functions, you don’t have a
chance, because it’s extremely complex,”
he says. “First you have to realise that it’s
not one market, it’s a myriad of market
segments. The largest segment, where
prices are highest, is the managed care
segment, which is financed through
private health insurance paid by employers

or individuals. Then there is ‘Medicare
Part D’, the government-subsidised health
insurance for the elderly, operated by
the same managed care organisations,
where prices are lower. And Medicaid, the
government-funded health offering for
people with a low income. These are just
a few of the segments. The point is that
each segment has its own way of working,
which you must really understand and
respond well to. I think it’s fair to say that
this is what we’re doing now.”

Europe

Sales in Europe

DKK billion

+3%

2008 2009 2010 2011 2012

The sluggish economy in most European
countries and the short-term cost
containment measures that followed
have made Europe a tough place for most
pharmaceutical companies. In the largely
publicly funded European healthcare
systems, governments have been driving
down prices, making it very challenging
to obtain a price for new products that
justifies the research and development
costs. In addition, reimbursement
restrictions often prevent innovative
medicines from reaching patients. As a
result, pharmaceutical companies have laid
off thousands of employees in Europe in
recent years. Novo Nordisk has been hit,
too, with a total of 350 jobs cut in the
European organisation in 2011 and 2012.
“I don’t agree with the argument that,
in the current economic climate, European
countries can’t afford to pay for new and
better products,” says Kåre Schultz. “To
me, it’s a matter of priority. The most

NOVO NORDISK ANNUAL REPORT 2012Rutha Gordon from Somerset,
New Jersey, USA, has type 2
diabetes. It is estimated that
more than 24 million people in
the United States have diabetes.

worrying thing is that if nobody wants to
pay a premium for innovation, then there’ll
be no innovation, and Europe desperately
needs innovative industries to drive future
growth.”

However, even in this difficult economic

climate, Novo Nordisk managed to grow
European sales by approximately 3% in
2012. Victoza® is the key growth driver
in most European markets and it is likely
to stay that way in the coming years.
Longer term, Tresiba® (insulin degludec),
which Novo Nordisk is launching in some
European markets in 2013, will create
additional growth, but it will take time for
this product to penetrate the market – as
it does for all new insulin products.

Future growth rates
Kåre Schultz cannot see how Novo Nordisk
can grow its business in Europe much
more than it is doing right now. In the near
term there are no signs that the European
economies are improving, so more and
even tougher measures to limit spending
on drugs, especially new drugs, are to
be expected. Furthermore, the diabetes
market is well developed, the diagnosis rate
is high, birth rates low, and Novo Nordisk
has a high insulin market share of around
50% measured by volume. This means that
there are limits to how much Novo Nordisk
can expect to grow.

In recent years there has been much
speculation about whether producers of
biosimilar insulin (insulin which is similar but
not identical to the original) would enter
the European market on a large scale. So

far this has not happened, and Kåre Schultz
doubts it will. “Insulin prices are already
very low in many countries and I think the
biosimilar insulin producers have concluded
that it’s an unattractive market to enter.”

International Operations

Sales in International Operations

DKK billion

+18%

2008 2009 2010 2011 2012

“Thinking of International Operations
as a region requires a stretch of the
imagination,” says Kåre Schultz. “We’re
talking about 149 countries all over the
world with more than 4 billion people –
Latin America, Africa, Middle East, the
Gulf, most of Asia and Australia. Here
you will find some of the world’s poorest
countries and some of the world’s richest
– it’s a region of extraordinary diversity.
This means we must be able to meet
the demand for both standard therapy
in the form of human insulin in vials at
rock-bottom prices and advanced modern
insulin products in sophisticated pen

systems, which are sold at prices similar
to those seen in Europe and the US.”

Even within many of the countries, there

are diverse markets. Brazil, for example,
has both a public tender market for human
insulin vials, a mid-price market where
Novo Nordisk delivers to the social security
system and a private market for high-
end products for people who either have
private insurance or can pay out of pocket.

What the countries have in common is that

the incidence of diabetes is increasing, and
many of them are enjoying economic growth
way above what is seen in the Western world.
This means they can afford to extend the
reach and quality of their healthcare systems.
Indonesia and Brazil are two examples
from different parts of the world. In both
countries, people demand or expect that
some of the economic growth is translated
into better healthcare for them. And there’s
a political will to do so.

Kåre Schultz expects this development

to continue: “I can’t see why not. With
the increasing urbanisation and wealth
in all these countries, diabetes rates
will continue to increase. And most of
the countries have good prospects for
continued economic growth and will
continue to invest in better healthcare,
including diabetes care. Keep in mind
that healthcare spend per capita in most
countries in International Operations is
only a fraction of what it is in Europe
or Japan – both in absolute terms and
relative to GDP”. (See table on p 37.)

CONTINuED

NOVO NORDISK ANNUAL REPORT 2012Liu Jing works as a Novo Nordisk medical
representative in Beijing, China. In China more
than 90 million people are living with diabetes.

Novo Nordisk’s experience is that
when economies develop further, the
healthcare systems offer treatment for
more diseases and conditions. As a result,
sales of NovoSeven® and Norditropin®
(human growth hormone) are showing
growth in many countries in International
Operations. And Kåre Schultz believes
that Victoza® will eventually become a big
product in these countries. “Sure, it will
take years, because initially the product
won’t be reimbursed, so only people who
can afford to pay for it themselves will
be able to get it. But in many countries
it will eventually be reimbursed or partly
reimbursed by the healthcare system, and
then I think we’ll see the same market
penetration for Victoza® as we’re currently
seeing in Europe and North America.”

Growth opportunities
Kåre Schultz sees the biggest business
opportunities for Novo Nordisk in the
countries and regions with large populations
and high economic growth such as Brazil,
Indonesia, India and some countries in the
Middle East. “But frankly, I see a growing
market for years to come in most of the
countries in International Operations; it’s
just a question of when,” he says. “In some
cases it’s happening now, in other countries
it’s just around the corner. In some African
countries, it’ll take years for the market to
grow, but it will happen eventually, I’m sure.”
In terms of organisation, Novo Nordisk’s

strategy is – and has always been – to
establish an organisation very early –
as soon as there are signs of a market

developing. The organisation is expanded
gradually as the market develops. Vietnam
and Peru are examples of countries where
Novo Nordisk is building a bigger presence
right now. “And we do it organically,”
says Kåre Schultz. “Unlike many other
international pharma companies, we’re not
believers in building a presence through
acquisition of local companies. We prefer
to hire our own people and train them to
become the best.”

Japan & Korea

Sales in Japan & Korea

DKK billion

+6%

2008 2009 2010 2011 2012

Japan, the big brother in this two-country
region, was for many years Novo Nordisk’s
largest market in terms of sales. Today, it
is number two after the US, just ahead of
China. But as in Europe, Japan’s economy
is in trouble; the population is ageing, and
Novo Nordisk has a high insulin market
share. Not the best conditions for growing
a business, and Kåre Schultz admits it

will be difficult to achieve more than low
single-digit growth in the coming years.
Nevertheless, despite market share

losses in recent years, Novo Nordisk is the
clear insulin market leader in Japan with
a 55% market share measured in volume.
It is also number one in the growth
hormone market with Norditropin®, which
is delivered in the new-generation pen
system FlexPro®, and the company is doing
well with NovoSeven® and Victoza®.
In the Japanese insulin market,

competition is most intense in the long-
acting (basal) insulin segment, where
competitors have made inroads in recent
years. Soon, Novo Nordisk expects to
launch Tresiba®.

Kåre Schultz is confident that Tresiba®

will help stabilise Novo Nordisk’s
position in the short term and, over
time, grow the company’s insulin market
share in Japan: “Tresiba® changes the
competitive situation,” he says. “Studies
have shown that, when compared with
insulin glargine, Tresiba® gives the same
level of blood glucose reduction with a
significantly lower rate of hypoglycaemia
during the night. In addition, we will
make it available in FlexTouch®, our
latest prefilled insulin pen, which is well
suited for the very sophisticated Japanese
market, where 98% of our insulin is
delivered in pen systems.”

NOVO NORDISK ANNUAL REPORT 2012OUR BUSINESS 37

Region China

Sales in Region China

DKK billion

+28%

2008 2009 2010 2011 2012

China became its own business region
for Novo Nordisk in 2011, reflecting its
large and growing strategic importance
for the company: as a market for diabetes
products, as an attractive production base
and as a source of scientific innovation.

With more than 90 million people with
diabetes, China has the dubious distinction
of being the country with the most people
affected by this disease. It has not always
been that way, but with economic growth
comes urbanisation, with urbanisation
come sedentary lifestyles – and then
diabetes follows. This is the same pattern
seen in other rapidly developing countries,
but obviously on a much larger scale in a

Key regional facts

country with an aging population of 1.3
billion. On top of this, there is another
problem: 20 years ago very few doctors
in China knew how to treat diabetes, and
outside the bigger cities this is often still
the case. Novo Nordisk established its own
affiliate in China in 1994 and to this day,
the company’s main focus has therefore
been to educate doctors and patients on
proper diabetes care, including how to
use insulin effectively and safely. A recent
analysis demonstrated that between 2006
and 2010 Novo Nordisk and partners
trained 55,000 doctors and 280,000
patients in China. Along the way, the
company established itself as the market
leader, today holding a 37% share of the
diabetes market measured in value.
It is a high priority for the Chinese
government to improve the quality and
reach of the country’s healthcare system.
“As a result, many more people today have
access to diabetes care, especially in the
large cities. And the government’s ambition
is to make similar improvements in smaller
cities and in rural areas,” says Kåre Schultz,
noting that, in China, ‘smaller cities’ often
have more than a million inhabitants. “But
it takes time to make these improvements,
because of the size of the country and
because the healthcare system is a complex
environment with many interests and
decision-makers. In China, the central

state government, the provinces, cities and
counties all play a role. Understanding the
structure of China’s healthcare system is
essential.”

Pressure on prices
Many people with diabetes outside the
large cities still do not have access to
proper diabetes care. As this changes,
the market for insulin and other diabetes
products will become bigger. On the other
hand, Novo Nordisk will also face – and is
already facing – an increased pressure on
prices as both the national and provincial
governments try to limit spending on
drugs. One way they have done this is by
creating a list of essential drugs that are
purchased from pharmaceutical companies
in large quantities at very low prices by
provincial governments.

Drugs on the Essential Drug Lists are
primarily older products which have gone
off patent, such as human insulin. But
there will still be a growing market for
newer and higher priced pharmaceuticals
in China, predicts Kåre Schultz: “The health
awareness and purchasing power of many
Chinese families is growing, and they’re
willing to pay for – or have private health
insurance that covers – the newer and more
innovative treatments. That’s why I think
that, over time, a treatment like Victoza®
will become very big in China.”

North America

Europe

International
Operations

Japan & Korea Region China

Population (million)

346

537

4,347

178

1,344

GDP per capita (uSD)1

48,632

35,036

4,594

39,322

5,430

Healthcare spend per capita (uSD)1

8,049

3,373

Physicians per 1,000 people1

Number of people with diabetes (million)2

2.4

3.3

255

1.1

197

3,329

221

2.1

1.4

Diagnosis rate2

78%

64%

46%

53%

43%

Diabetes national prevalence2

11%

Novo Nordisk total sales (DKK billion)

34.2

19.7

11.1

6.6

6.4

Insulin value market share3

38%

48%

51%

56%

60%

Insulin volume market share3

42%

50%

58%

52%

60%

1. The World Bank. 2. International Diabetes Federation. 3. IMS Health, Midas Quantum, version November 2012.

NOVO NORDISK ANNUAL REPORT 2012Sustainable growth
– can it be done?

Entering into 2012, Novo Nordisk was cited by Forbes magazine as ‘The most sustainable
company on Earth’. A prestigious position, hard-earned and tough to defend. What does
it take to win? And is it possible at all to be a sustainable business?

Novo Nordisk’s projected growth trajectory
puts the company’s sustainability aspirations
to the stress test. How can it increase
production while keeping environmental
impacts down? How can it expand access
to care where public healthcare’s financial
means are limited or healthcare services
are inadequate? Novo Nordisk has given
itself the challenge to demonstrate that
sustainable growth is possible.

“Sustainability – in the world and in
business – is an imperative for survival
and continued development. Climate
change, scarcity of resources, population
growth and uneven distribution of
wealth are bound to have an impact
on prospects for the future,” explains
Lise Kingo, executive vice president of
Corporate Relations at Novo Nordisk.
And she knows what she is talking about.
For 20 years she has spearheaded the
development of Novo Nordisk’s Triple
Bottom Line business principle, from
what was initially an interesting idea
to its current centre-stage position as a
beacon for sustainable business practices.
“Managing a business sustainably
requires an ability to reconcile internal
business interests with society’s and
external stakeholder priorities – short

term as well as long term. This is the way
we grow our business while creating
sustainable value for stakeholders. The
Triple Bottom Line business principle is
our way to ensure balanced decisions that
take a broad perspective and consider
both business and societal interests,” says
Lise Kingo.

Lean and green
Eco-productivity – the ratio of environmental
impacts relative to outputs – gave some of
the high scores that brought Novo Nordisk
to the top of the Global 100 Index as ‘The
World’s most sustainable company’. The
index is based on a rigorous benchmark
analysis of leading global companies on
a set of key performance indicators across
all three bottom lines. It aims to recognise
those global corporations that are most
profitable and have been most proactive
in managing environmental, social and
corporate governance issues. On all counts,
Novo Nordisk came out as the winner in 2012.
Over the past 10 years, Novo Nordisk

has more than doubled sales and yet
managed to decrease the use of energy
and water as well as CO2 emissions. The
goal is to continue to decouple growth
in production and environmental impacts.

The long-term target is to reduce,
in absolute terms, production-related
carbon emissions by 10% over a 10-year
period until 2014. This goal has forced
the organisation to think creatively,
explore all opportunities for energy
savings and develop a robust business case.

No trust, no business!
What few people know is that Novo
Novo Nordisk’s sustainability leadership
is borne out of being confronted by
challenges. Over the years, Novo Nordisk
has learnt how to turn difficult issues
such as genetic engineering, animal
testing, clinical development and access
to care into opportunities by listening
and responding to stakeholders.

“Treating people with respect is one
of the essentials in the Novo Nordisk Way
which also speaks to the importance of
building and maintaining good relations
with stakeholders. This is the foundation
for earning their trust and respect. We
want to be respected for putting patients
first, leading in sustainability, being an
outstanding workplace and having an
excellent reputation,” says Lise Kingo.
As Novo Nordisk continues to report
solid growth rates in spite of the economic

Novo Nordisk’s largest production site
in Kalundborg, Denmark, is an example
of sustainable growth in practice.

slowdown, the company attracts more
attention. Accountable and transparent
performance management and reporting
remains an important way to earn the trust
of stakeholders. “We need to walk the
talk in everything we do,” says Lise Kingo.
“There is growing regulatory scrutiny into
pharmaceutical companies’ compliance
with rules and regulations for clinical trials,
patient safety, product quality and business
ethics. And companies must be able to
disclose how they – and their suppliers –
live up to regulatory requirements.”

“That’s why it’s so crucial that every
Novo Nordisk employee understands and
embraces the values on which we build
our business, including the Triple Bottom
Line business principle.”

Health for all
Access to care is a global issue. And
pharmaceutical companies are expected
to do their part in ensuring that people
have access to affordable medicines
and proper care. Novo Nordisk’s global
commitments to Changing Diabetes® and
Changing Possibilities in Haemophilia® are
the umbrellas for the company’s efforts
to improve access to care, complemented
by donations to the World Diabetes
Foundation and the Novo Nordisk
Haemophilia Foundation.

In just one generation the prevalence
of type 2 diabetes has risen to epidemic
proportions, and the situation is becoming
unsustainable. Today, 80% of all people
living with diabetes live in low- and middle-

income countries that account for only 20%
of total global healthcare spending. Diabetes
prevalence is growing most rapidly in South-
East Asia and Africa, and is hitting young
people at their most productive age, even
children and adolescents.

“In the face of such a daunting challenge,

the response has to be bold. We have
decided to accelerate our reach, in particular
towards people with diabetes living in low-
and middle-income countries, and have
now set an ambitious long-term target –
Changing Diabetes® 40by20: by 2020, Novo
Nordisk wants to provide medical treatment
for an estimated 40 million people with
diabetes worldwide. This is a doubling from
the 2011 baseline.

“Novo Nordisk has the broadest portfolio
of diabetes care products, including human
insulin and the most advanced modern
treatments. This means that we can serve
people with diabetes in most income
groups, in rich and poor markets. With
our products, global presence and strong
partnerships we believe we can change
diabetes sustainably.

“We can only achieve this ambition if
we pursue volume growth as well as value
market shares,” Lise Kingo stresses. China
and International Operations will be central
to achieving the new 40by20 ambition.
“We’re focusing on eight strategic markets
in International Operations with the biggest
need and potential: Algeria, Argentina,
Australia, Brazil, India, Mexico, Russia and
Turkey. We will also scale up our efforts in
the countries selected by Novo Nordisk as

our ‘NextSix’ markets: Columbia, Egypt,
Indonesia, Malaysia, Vietnam and Ukraine.

“For the past 10 years we’ve been working
with our partners to overcome the barriers to
access to diabetes care in the world’s poorest
countries, through our donations to the
World Diabetes Foundation, our differential
pricing policy, awareness-raising and
education targeting healthcare professionals
and patients. And we’ve learnt a great deal.
We have also realised that we must scale up
to maximise our impact.

“First of all we must ensure that our low-
cost insulin products benefit the patients,”
Lise Kingo explains. “Our pricing policy is
a good offer, but it is not enough.” Novo
Nordisk is therefore piloting a new approach
to building a business model at the base of
the economic pyramid. In Kenya, Nigeria and
India, the company is experimenting with
new types of partnerships and distribution
channels to ensure they reach people living in
urban as well as rural areas. And by printing
the retail price on the packaging, mark-ups
and product diversion can be pre-empted.

“Secondly, we need to improve healthcare

capacity. In many low- and middle-income
countries, there are too few trained diabetes
physicians and nurses to cater for the
growing number of people with diabetes,
not least outside of the cities. On average
a general practitioner will receive two days
of diabetes training during a full medical
curriculum. For many years, the Steno
Diabetes Center has supported education

CONTINuED

20 years in the business
of sustainability
Twenty years ago Novo Nordisk hosted its first meeting with
critical stakeholders at the table to learn how to meet their
expectations without compromising business objectives.
The book 20 years in the business of sustainability tells the
story of Novo Nordisk’s journey, the lessons learnt and the
challenges ahead in becoming a sustainable business.

One key learning has been how to engage with stakeholders
to better understand their priorities, to learn with them, and to
partner up on shaping common solutions to the big issues.

The book was prepared on the occasion of RIO+20, the UN
Conference on Sustainable Development which took place in
Rio de Janeiro in June 2012. Novo Nordisk representatives were
among the more than 50,000 people attending, alongside world
leaders who met to discuss and deal with the big global issues
and point to a more sustainable future – ‘The future we want’.

Novo Nordisk co-hosted an event that dealt with one of the
new challenges: Next Generation Living – the links between
healthy living and sustainability. “In this light we were
particularly pleased to see that prevention, detection and
treatment of non-communicable diseases, such as diabetes,
were included in the outcome document as a priority for
policymakers as part of the sustainability agenda. Just as
importantly, business is now invited to the table to help come
up with solutions to the global issues, and Novo Nordisk
has been invited to team up with other global leaders in the
UN process of defining a set of global sustainability goals.
Partnerships will be the name of the game, and we are keen
to play our part,” says Lise Kingo.

The conference marked the 20th anniversary of the 1992
Earth Summit in Rio, which was a turning point that brought
environmental issues onto the international political agenda.
For Novo Nordisk, it also marked the start of the company’s
commitment to sustainable development.

40 OUR BUSINESS

of healthcare professionals in China, Brazil
and India. Now the time has come to
scale up through a novel train-the-trainer
concept so we can broaden our reach
through education,” Lise Kingo points out.
Finally, the company will put focus on
the next generation. Lise Kingo explains:
“To truly break the curve, we need to
target women and children. Ninety years
after the discovery of insulin there are still
children who die because of lack of access
to diagnosis, treatment and care. We will
continue to provide free insulin and support
children with type 1 diabetes, their families
and their caregivers through our Changing
Diabetes in Children® programme. We also
focus on diabetes during pregnancy, which
in South-East Asia, for example, affects as
many as 16–20% of all pregnant women. It
can cause complications during pregnancy
and birth, and both mother and child are
at higher risk of developing type 2 diabetes
later in life. We work to improve diagnosis,
care and follow-up of women with
gestational diabetes in Nicaragua, India and
Colombia. Another project is looking at
prevention of diabetes at its earliest stage,
namely before a child is born, by improving
health literacy among young couples in
Malaysia getting ready to start a family”.
The patient’s own ability to manage
their diabetes, with the support of the
healthcare professional team, is critical
for successful treatment. “Our ability
to improve outcomes and quality of life
requires that we fully understand patients’
needs. In 2012 we completed the two
largest global studies conducted to date
looking into the psychosocial aspects of life
with diabetes and haemophilia. People with
diabetes and haemophilia, their families
and caregivers have participated in the

surveys. The next step is to translate these
insights into new solutions for improved
care and self-management in collaboration
with global and local partners.”

Engaged people drive performance
What engages people in Novo Nordisk
is the conviction that the company is
improving lives for people with diabetes,
haemophilia and other chronic conditions.
Being patient-centric begins in the lab and
carries on through clinical development
and the entire production and distribution
chain, all the way until the products are in
the hands of the patient.

“Engaged people drive performance.

Therefore, there has to be alignment
between personal values and the values that
define one’s work life. People who choose
to work with Novo Nordisk most often do so
because they see opportunities to put their
talent into play in ways that really make a
difference in people’s lives,” says Lise Kingo,
“We call it life-changing careers.”

As the company onboards more than
5,000 new people each year, it becomes
increasingly important that people
understand and live the Novo Nordisk Way.
“Over the past decade we have been
focused on nurturing a diverse and inclusive
working environment. Diversity fosters
motivation, competitiveness and innovation,”
says Lise Kingo, who does not hide the fact
that she is keen to see Novo Nordisk as an
even more diverse and inclusive workplace.

Documenting value creation
The Triple Bottom Line business principle
is a source of employee pride and external
recognition that has helped safeguard the
company’s reputation and stakeholder
confidence through challenging times. “We

will scale up our efforts to be a sustainable
business, and through the Blueprint for
Change programme we will document how
these activities create value for our business,
society and patients,” says Lise Kingo.

The Blueprint for Change programme

complements the integrated annual
reporting in communicating value creation
by conducting ‘deep dive’ case studies from
different corners of the business. Adding
to the series of case studies on how the
company is Changing Diabetes in different
business environments – China, US and
Bangladesh – the most recent study looks
into business opportunities in Indonesia,
one of Novo Nordisk’s new strategic markets.

The case studies explore how to

document value, measured in both financial
and intangible value, and how to leverage
and increase value for Novo Nordisk and its
stakeholders. In Bangladesh, for example,
a strategic partnership with a patient
organisation resulted in more efficient
distribution and use of Novo Nordisk’s
differential pricing policy, leading to better
treatment offerings for the more than 8
million people in the country that have
diabetes, and stronger relationships and
increased sales for the company.

“Our method has been taken up as an
example of ‘shared value’ thinking. This is
an interesting and fresh perspective that
we think will inspire other companies to
embrace sustainability more strategically.
It speaks in the language of business and
offers a positive and simple way to go,”
says Lise Kingo. “In our view, though,
there is more to it than competitiveness.
In our approach to business we strive to
create long-term, sustainable value in a
bigger picture perspective. For us, the
patient’s well-being is the ultimate goal.”

World Diabetes Day 2012:
People form a blue circle
– the international ‘unite
for diabetes’ symbol – around
the independence monument
El Ángel, Mexico City.

changing
diabetes®
365 days a year

On World Diabetes Day Novo Nordisk
employees around the world took part
in activities to raise awareness about
diabetes, how it can be effectively
treated and how it can be prevented.
This effort goes on throughout the
year, as corporate programmes or local
initiatives, and often with external
partners. Novo Nordisk’s Changing
Diabetes® programmes address needs
for improved access for proper care
to people with diabetes throughout
the world. Learn more at novonordisk.
com/ about_us/changing-diabetes/
CD_programmes.asp.

NOVO NORDISK ANNUAL REPORT 2012In the current economic
landscape, tough decisions
not to launch new products in
some markets may lie ahead.

Whenever investors and financial analysts get depressed about the future, stocks in
pharmaceutical companies are in demand. The thinking is that the pharmaceutical
industry is a safe haven in times of uncertainty. After all, people need medicine in
both good and bad times. But if you think that the pharmaceutical industry is virtually
risk free, think again. Or ask Jesper Brandgaard, Novo Nordisk’s chief financial officer
and chairman of the company’s Risk Management Board.

“If you look at global economic
development in a long-term perspective,
it’s understandable why many consider
pharma stocks a relatively safe bet
compared with other industries,” says
Jesper Brandgaard. “When they look
outside of Europe and North America,
they see many countries which are not
only growing their economy despite
all the financial turmoil in the world,
but which are also spending a rising
proportion of their gross domestic
product on healthcare. This means that
the global demand for medicine and
the willingness and ability to pay for
the newest and best treatments will
be growing.”

That is not to say that the pharma-

ceutical industry is immune to the
economic problems of the world. Far
from it, insists Jesper Brandgaard. “The
contraction in the economy in Europe,
for example, means that governments
are finding new ways of curbing public
spending including cutting the costs

of medicines by forcing down prices
and limiting patients’ access to new
products. And I can’t see this changing
in the foreseeable future. For us this
poses a significant risk when launching
a new product such as Tresiba® (insulin
degludec), our new generation basal
insulin with ultra-long duration of action.
Despite the patient benefits and the data
supporting the health economic benefits
of the product, we will have to fight hard
to obtain what we consider a fair price.
We may even have to make the tough
decision not to launch Tresiba® in some
countries at all, if we can’t agree on a price.”
Jesper Brandgaard notes that with
the arrival of Tresiba®, which is now
approved in the EU and Japan, many
countries will have three generations
of Novo Nordisk insulin products on
the market. The low-priced traditional
human insulins, the mid-priced modern
insulins, which provide additional
benefits to patients, and Tresiba®, which
provides even more benefits at a

premium price: “It’s important to know
that the insulin market is a high-volume,
low-price business compared with many
other pharmaceuticals,” says Jesper
Brandgaard. “Daily treatment cost even
with the best insulin products is modest.
I realise that these are difficult economic
times, but if governments don’t want
to pay a premium for the additional
benefits of a new product like Tresiba®,
I hope they will allow their citizens to do
so. I’m convinced many people would be
willing to pay the difference out of their
own pocket if they had the option.”

Jesper Brandgaard emphasises that
Tresiba® and Ryzodeg® (insulin degludec/
insulin aspart) represent an opportunity
to upgrade two-thirds of the global
insulin market measured in value. As
such these products represent Novo
Nordisk’s biggest growth opportunity in
the coming years – and therefore also the
biggest risk, if the company is unable to
launch them successfully.

CONTINuED

“That’s how it is: with every big
opportunity comes a risk,” says Jesper
Brandgaard. “I would be more worried if
we were unable to continuously develop
new opportunities – if for some reason
our researchers ran out of ideas for new
and better products. Fortunately, I see
no signs of this happening.”

He points to pipeline products such
as IDegLira, semaglutide and FIAsp as
potential new opportunities for both
patients with diabetes and Novo Nordisk
(see pp 30–31 for details). Additionally,
new haemophilia products are under
way, as is the development of liraglutide
for treating severe obesity. The business
risks associated with the latter have
changed over the past year, Jesper
Brandgaard notes:

“The regulatory risk has declined, while

the commercialisation risk has increased.
A couple of years ago, many thought that
it would be all but impossible to obtain
approval from the US Food and Drug
Administration of new drugs for obesity.
Nonetheless, in 2012, the agency approved
two new products for this indication, which
many see as a sign that the regulatory
‘sentiment’ around obesity drugs is
changing in light of the huge problems
obesity is creating. But when we then look
at how the first of these products has done
after its launch, it is clear that approval
doesn’t equal immediate commercial
success. The uptake of this product has so
far been modest. I take it as a sign that the
commercial risk associated with obesity
products is higher than previously believed.”

Competition in the
diabetes care market
With a global insulin market share of
close to 50% and Victoza® (the once-daily

GLP-1 product) being the company’s key
growth driver in 2012, any new moves
by competitors in the insulin and GLP-1
markets may pose new risks for Novo
Nordisk. Jesper Brandgaard mentions a
few developments to which he is paying
particular attention:

“The patents on insulin glargine, (Sanofi’s
long-acting insulin) expire in 2014 in the EU
and in 2015 in the US. This means that the
lion’s share of the segment for long-acting
modern insulins opens up for biosimilar
producers. It is also worth noting that Lilly
has a new long-acting insulin in phase 3
development which, if approved, would also
compete with Tresiba® in this segment.”

In the GLP-1 market, several companies
are developing new products, but it is still
too early to assess the potential commercial
risks they may eventually pose to Victoza®.
“Right now, we are closely watching
exenatide, the GLP-1 product that Bristol
Myers Squibb – BMS – and Astra Zeneca
are now selling after BMS acquired
Amylin,” explains Jesper Brandgaard. “I’m
very confident that the excellent profile
of Victoza® will secure its leadership
position, but BMS has paid a significant
price for this Amylin product and are
pushing hard with a big sales force to
make it a success, so they will have some
impact in the market, that’s for sure.”

The threat of biosimilars?
In recent years there has been much
speculation about how much of a risk
biosimilar products may pose to Novo
Nordisk. In the human growth hormone
market, the arrival of biosimilar products
has led to price erosion in some markets.
And after the patents for NovoSeven®
expired in many markets, biosimilar versions
have been launched in Russia and Iran.

“The regulatory hurdles of getting a
complex molecule such as factor VIIa, the
active molecule of NovoSeven®, approved
in Europe, the US and Japan are high, so I
don’t see biosimilar producers as a major
threat in these markets,” says Jesper
Brandgaard. “Competition will primarily
come from established producers such
as Baxter and Bayer, who are developing
their own versions of factor VIIa.
However, we will continue to improve our
product through new formulations and
better injection devices to ensure we have
a competitive edge.”

In the insulin market, biosimilar

competition is not a new phenomenon
for Novo Nordisk. For decades there have
been and still are local insulin producers
in some countries, but their attempts to
grow internationally have so far failed.
The insulin market is very different
from those for other biologic medicines,
Jesper Brandgaard reiterates: “Insulin is
a high-volume, low-price business, so it
doesn’t have the same appeal to biosimilar
producers as other biologic medicines.
Even when some of the modern insulins
lose their patents it will be very difficult
for biosimilar producers to achieve the
economies of scale that established
insulin producers have. Furthermore, to
be successful a new producer with global
ambitions must also be able to deliver the
products in sophisticated pen systems,
which further adds to the up-front
investments needed and increases the
total manufacturing costs.”
For information on patent expiration of
Novo Nordisk’s main products, see p 99.

Risk overview

Listed below are the main types of risks
that Novo Nordisk faces. Many are an
inherent part of being a pharmaceutical
company. For some specific risks, reference
is made to notes in the consolidated
statements.

Market risks
The principle market risks Novo Nordisk
faces are:
• Negative effects on sales from pricing
and reimbursement reforms enacted
by governments. Europe, China and
the US are all main markets for Novo
Nordisk where such reforms are being
implemented.

• New products from established

competitors.

• Increased competition from producers
of biosimilar medicines in key markets.

In addition, in some countries in the
International Operations region (see pp
35–36), political instability or war may
pose a risk to Novo Nordisk’s business
for varying lengths of time.

Delays or failure of pipeline products
Development of a new pharmaceutical
product is an expensive undertaking that
can take more than 10 years. It includes
extensive non-clinical tests and clinical
trials as well as an elaborate regulatory
approval process, including approval of
production facilities. During the process
obstacles may delay the development of
a potential product candidate and add
substantial expense. In some cases, it
could lead to abandoning the potential
product candidate altogether.

In Novo Nordisk’s experience, there
is a less than 35% chance of a diabetes
product candidate in phase 1 clinical trials
ultimately being approved for marketing,
while the chance of success is around
40% for products in phase 2 trials and
rises to around 70% for products in phase
3 trials, although there remains significant
uncertainty regarding the timing and
success of the regulatory approval process.

Supply disruptions
Failure or breakdown in one of the
company’s or its key suppliers’ vital
production facilities could adversely
affect 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
all aim to mitigate this risk. To spread
this risk geographically and optimise

costs and supply logistics, Novo Nordisk
has established production capacity on
five continents.

Quality and safety issues
Quality and safety issues may arise if,
for example, a production facility is not
approved, a product is not produced
according to specifications or if side
effects, which were not detected in
clinical trials, become apparent when a
product is used for long periods of time.
Novo Nordisk proactively manages such
risks through its global quality system, a
key priority of which is to minimise risks
to patient safety and product quality.
The quality management system aims to
ensure that all regulatory requirements
are in compliance and it includes
standard operating procedures, quality
audits, quality improvement plans and
systematic senior management reviews.
For information on Novo Nordisk’s
product recalls from 2008 to 2012, see
pp 13 and 100.

Financial risks
Novo Nordisk’s main financial risks relate
to exchange rates and tax disputes.

Novo Nordisk’s reporting currency
and the functional currency of corporate
operations is the Danish krone, which
is closely linked to the European euro in
a narrow range of ±2.25%. However,
the majority of the company’s sales 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 4.3 and 4.4
on pp 76–80.

In the course of conducting business
globally, transfer pricing disputes with
tax authorities may occur. Novo Nordisk’s
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.

To manage uncertainties regarding tax,

Novo Nordisk has negotiated multi-year
agreements with tax authorities in key
markets. For details on taxes paid by the
company in 2012, see p 67.

Business ethics and legal risks
Business ethics violations and patent
disputes are the main risks in this area.
The pharmaceutical industry is
tightly regulated in many respects,
including when it comes to the claims
it may make about its products and
how it may interact with doctors and
other healthcare professionals. To
minimise the risk of violation of such
regulations, over the past decade Novo
Nordisk has strengthened its global and
regional business ethics compliance
programmes. Global governance,
a business ethics policy and global
business ethics procedures, together
with elaborate training programmes and
tests for employees, close monitoring of
performance, reporting requirements,
and audits, all aim to mitigate business
ethics risks.

In June 2011, Novo Nordisk settled
two civil cases with the US Department
of Justice regarding alleged improper
marketing of NovoSeven®. As part of the
settlement, Novo Nordisk paid 25 million
US dollars, but denied any wrongdoing.
In addition to the financial settlement
related to marketing practices in the US
regarding NovoSeven®, as part of the
agreement with the US Department of
Justice, our US affiliate entered into a
five-year Corporate Integrity Agreement
with the Office of the Inspector General
of the US Department of Health and
Human Services. Under that agreement,
our US affiliate has added additional
reporting and other procedures to its
already robust compliance programme.
Protection of intellectual property in
the form of patents is a very important
tool for promoting innovation and
stimulating long-term economic growth
and job creation. Novo Nordisk’s
business model is based on developing
new, innovative products and when
the company makes significant new
inventions it will typically seek to patent
them. Intellectual property risks occur
if, for example, a government does not
recognise the validity of patents or is
unable to uphold patent rights, or if
a competitor infringes a Novo Nordisk
patent or challenges its validity.

For information on Novo Nordisk’s

risk policy and risk management
process, please visit novonordisk.com/
about_us/corporate_governance/risk_
management.asp.

44 GOVERNANCE, LEADERSHIP AND SHARES

Shares and capital structure

Novo Nordisk has two classes of shares,
A shares and B shares. All A shares
are owned by Novo A/S – a wholly
owned subsidiary of the Novo Nordisk
Foundation. Novo Nordisk’s B shares are
listed on NASDAQ OMX Copenhagen,
and on the New york Stock Exchange
as American Depository Receipts
(ADRs). Through open and proactive
communication, the company seeks to
provide the basis for fair and efficient
pricing of Novo Nordisk’s B shares.

Share capital and ownership
Novo Nordisk’s total share capital of DKK
560,000,000 is divided into A share capital
of nominally DKK 107,487,200 and B share
capital of nominally DKK 452,512,800, of
which Novo Nordisk A/S and its wholly
owned affiliates held nominal DKK
17,416,676 as treasury shares as of 31
December 2012. The company’s A shares are
not listed and are held by Novo A/S, a Danish
public limited liability company wholly owned

Breakdown of shareholders
% of capital (% of votes)

■ Novo A/S, Bagsværd,

Denmark 25.5% (73.5%)

■ Novo Nordisk A/S 3.1% (0.0%)
■ Other 71.4% (26.5%)

Geographic distribution
of shareholders1
% of share capital

■ Denmark 40.4%
■ North America 34.0%
■ UK 12.9%
■ Other 12.7%

1. Calculated using shareholders’ registered home country.

by the Novo Nordisk Foundation. The Novo
Nordisk Foundation has a dual objective:
to provide a stable basis for commercial
and research activities conducted by the
companies within the Novo Group (of which
Novo Nordisk is the largest), and to support
scientific and humanitarian purposes. More
information on share capital is included in
note 4.1 on pp 75–76. According to the
Articles of Association of the Foundation,
the A shares cannot be divested. As of
31 December 2012, Novo A/S also held
nominal value DKK 35,312,800 of B share
capital. Each A share (nominal value 1 Danish
krone) carries 1,000 votes, and each B share
(nominal value 1 Danish krone) carries 100
votes. With 25.5% of the total share capital,
Novo A/S controls 73.5% of the total number
of votes, excluding Novo Nordisk’s stock of
treasury shares.

Novo Nordisk’s B shares are traded
in units of DKK 1 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’s B shares are in bearer
form, no official record of all shareholders
exists. Based on available sources of
information about the company’s
shareholders as of 31 December 2012, it
is estimated that shares were distributed
as shown in the charts on this page. As of
31 December 2012, the free float of listed
B shares was 88.3%, which excludes the
Novo A/S holding and treasury shares.

The capital structure
Novo Nordisk’s Board of Directors and
Executive Management find that the current
capital and share structure of Novo Nordisk
serves the interests of the shareholders and
the company well, as it provides strategic
flexibility to pursue Novo Nordisk’s vision
and a good balance between long-term
shareholder value creation and competitive
shareholder return in the short term. Novo
Nordisk’s guiding principle is that any excess
capital, after the funding of organic growth
opportunities and potential acquisitions, is
returned to investors. The company applies
a pharmaceutical industry payout ratio
to dividend payments complemented by
share repurchase programmes. As decided
at the 2012 Annual General Meeting, a
reduction of the company’s B share capital,
corresponding to approximately 3.4% of
the total share capital, was implemented in
April 2012 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 equivalent
to 10% of the total share capital. During
the 12-month period since the release of
the financial results for 2011, Novo Nordisk
repurchased shares worth DKK 12 billion, in
line with the share repurchase programme

implemented in the previous 12-month
period. 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). In this
programme Novo Nordisk appoints financial
institutions as lead managers to execute
a part of its share repurchase programme
independently and without influence from
Novo Nordisk. For the next 12 months,
Novo Nordisk has decided to implement a
new share repurchase programme with an
expected total repurchase value of B shares
amounting to a cash value of up to DKK 14
billion. Novo Nordisk expects to implement
the majority of the new share repurchase
programme according to the Safe Harbour
Regulation. At the 2013 Annual General

Price development and monthly
turnover of Novo Nordisk’s B shares
on NASDAQ OMX Copenhagen 2012

Novo Nordisk’s B share closing prices (left)

■ Turnover of B shares (right)

DKK billion

DKK

1,000

800

600

400

200

Jan Feb Mar Apr May

Jun Jul

Aug Sep Oct Nov Dec

Dividend payments
and payout ratio

■ Dividend per share for the year (left)

Payout ratio1 (right)

DKK

20082 2009 20103 2011 2012E4

1. Dividend for the year as a percentage of net profit.
2. Adjusted for costs related to the discontinuation of

pulmonary diabetes projects.

3. Adjusted for impact from divestment of shares in

ZymoGenetics.

4. Proposed dividend for the financial year 2012.

NOVO NORDISK ANNUAL REPORT 2012GOVERNANCE, LEADERSHIP AND SHARES 45

Meeting, the Board of Directors will propose
a further reduction of the company’s B share
capital, corresponding to approximately
1.8% of the total share capital, by
cancellation of 10 million treasury shares.
After implementation of the share capital
reduction, Novo Nordisk’s share capital will
amount to DKK 550,000,000 divided into
an A share capital of DKK 107,487,200 and
a B share capital of DKK 442,512,800.

2013 restricted stock
unit programme
2013 marks the 90th anniversary of the
first diabetes patients being treated with
insulin from the company that is now Novo
Nordisk. To commemorate the occasion,
employees in the company will be offered
20 restricted stock units. The programme
includes all employees as of 1 January 2013,
apart from employees in the separately
operating affiliates NNE Pharmaplan and
NNIT. A restricted stock unit gives the right
to receive one Novo Nordisk B share free of
charge on 1 April 2016 subject to continued
employment and average sales growth of at
least 5% per year measured in DKK in the
period 2012–2015.

It is estimated that 474,000 shares will
be needed for the programme. The costs
of the programme – approximately DKK
440 million – will be amortised over the
period 1 January 2013 to 1 April 2016. No
dividends will be paid on the restricted
stock units and the holders will have no
voting rights until the restricted stock
units are converted to shares in 2016.

Share price performance
Novo Nordisk’s share price increased by
39% from its 2011 close of DKK 660 to its
31 December 2012 close of DKK 916.50.

The company’s share price development
reflects a leading position in the growing
diabetes care market, coupled with a
continued improvement in operating margin
and encouraging progress within research
and development (see p 8 for further details
on operating performance and pp 30–31 for
further details on research and development
pipeline developments).

The total market value of Novo Nordisk’s
B shares, excluding treasury shares, was
DKK 399 billion at the end of 2012.

Payment of dividends
As illustrated in the figure on p 44, Novo
Nordisk has continuously increased both
the payout ratio and the dividend paid
over the last five years. The dividend for
2011 recorded in March 2012 was DKK
14 per share of 1 krone.

At the 2013 Annual General Meeting,
the Board of Directors will propose a 29%
increase in the dividend for 2012 to DKK
18 per A and B share of 1 krone, as well
as for ADRs. Novo Nordisk does not pay a
dividend on its holding of treasury shares.
The proposed dividend corresponds to
a payout ratio of 45.3%. For 2011, the
payout ratio was also 45.3%.

Shareholders’ enquiries concerning

dividend payments and shareholder
accounts should be addressed to Investor
Service (see back cover).

Communication
with shareholders
To keep investors updated on
performance and the progress of clinical
development programmes, Novo Nordisk
hosts conference calls with Executive
Management following key events and
the release of financial results. Executive
Management and Investor Relations
also travel extensively to ensure that
all investors with a major holding of
Novo Nordisk shares can meet with
the company on a regular basis and
that a number of smaller investors and
potential investors also have access to
the company’s Management and Investor
Relations.

Analyst coverage
Novo Nordisk is currently covered by
36 sell-side analysts, including the major
global investment banks that regularly
produce research reports on Novo
Nordisk. A list of analysts covering
Novo Nordisk can be found at
novonordisk.com/investors.

Internet
Novo Nordisk’s homepage for investors
is novonordisk.com/investors. It includes
information about Novo Nordisk’s
activities: company announcements
from 1995 onwards, financial, social
and environmental results, a calendar
of investor-relevant events, investor
presentations, background information
and recent annual reports.

20 March 2013

Annual General Meeting

Dividend

21 March 2013

Ex-dividend

25 March 2013

Record date

26 March 2013

Payment, B shares

2 April 2013

Payment, ADRs

Announcement of financial results

1 May 2013

First three months

8 August 2013

Half year

31 October 2013

First nine months

30 January 2014

Full year

Novo Nordisk’s share performance compared with benchmark indexes
Total price development in the period up to 31 December 2012

3 years

1 year

Novo Nordisk’s B shares on NASDAQ OMX, DKK

Novo Nordisk’s ADRs on New york Stock Exchange, uSD

NASDAQ OMX Copenhagen 20 Index

MSCI Europe Health Care Index

MSCI uS Health Care Index

39%

42%

27%

15%

14%

176%

156%

47%

32%

41%

5 years

174%

152%

23%

29%

NOVO NORDISK ANNUAL REPORT 2012Novo Nordisk’s Executive Management team and the
chairman of the Board of Directors on stage at the
shareholders’ meeting in Copenhagen, March 2012.

Corporate governance

Corporate governance is the system
by which companies are directed and
controlled. For Novo Nordisk, this
includes securities laws and corporate
governance standards in both Denmark
and the uS, the two countries in which
the company’s shares are listed. The
company’s corporate governance also
includes the internal values-based
management system called the Novo
Nordisk Way.

Novo Nordisk’s B shares are listed on
NASDAQ OMX Copenhagen, and on the
New York Stock Exchange as American
Depository Receipts (ADRs). 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
discloses its mandatory corporate governance
report at novonordisk.com/about_us/
corporate_governance/compliance.asp.

Novo Nordisk adheres to the majority

of the Danish Corporate Governance
Recommendations, with the following
exceptions:

• The Board of Directors has not

established a remuneration committee.

• The Board of Directors has not

established a nomination committee.

• Current employment contracts for

Novo Nordisk’s Executive Management
allow in some instances for severance
payments of more than 24 months’ fixed
base salary plus pension contribution.

The reasons for deviating from these re-
commendations are given on pp 48 and 51.
Novo Nordisk is a foreign listed private

issuer and is in compliance with the
corporate governance standards of the
New York Stock Exchange applicable to
foreign listed private issuers.

The Novo Nordisk Way outlines the

company’s ambitions and the values
that characterise the way Novo Nordisk
does business and interacts with its
stakeholders. Furthermore, it sets the
direction for and applies to all employees
in Novo Nordisk. See p 19 for more
information about the Novo Nordisk Way.
Novo Nordisk is part of the Novo Group
(see p 44) and 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 of Directors and
Executive Management of Novo Nordisk.

Governance structure
Shareholders
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. Novo Nordisk is not aware
of the existence of any agreements with or
between shareholders on the exercise of
votes or control of the company.

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.

Novo Nordisk’s share capital is divided
into A shares and B shares. Special rights

NOVO NORDISK ANNUAL REPORT 201247

attached to A shares include pre-emptive
subscription rights in the event of an
increase of the A share capital, pre-
emptive purchase rights in the event of
a sale of A shares and priority dividend if
the dividend is below 0.5%. B shares take
priority for dividends between 0.5% and
5% and for liquidation proceedings.

Board of Directors
Novo Nordisk has a two-tier management
structure consisting of the Board of
Directors and Executive Management.
The two bodies are separate and no one
serves as a member of both. The Board
of Directors determines the company’s
overall strategy on behalf of shareholders
and actively contributes to developing
the company as a focused, sustainable,
global pharmaceutical company. The
Board of Directors supervises Executive
Management in its decisions and
operations. The Board of Directors 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 annual general meeting, see
novonordisk.com/about_us.

The Board of Directors has 12 members,
eight of whom are elected by shareholders
at general meetings and four by employees
in Denmark. Shareholder-elected board

members serve a 1-year term and may be
re-elected. Members must retire at the first
general meeting after reaching the age of
70. Four of the eight shareholder-elected
board members are independent as defined
by the Danish Corporate Governance
Recommendations. See p 53.

A proposal for nomination of board

members is presented by the Chairmanship
to the Board of Directors, taking into
account required competences as defined
by the Board of Directors’ competence
profile and reflecting the result of a self-
assessment process facilitated by internal
or external consultants. The assessment
process is based on written questionnaires
and evaluates the Board of Directors’
composition and the skills of its members,
including whether each board member
and executive participates actively in
board discussions and contributes with
independent judgement. The self-
assessment and the Board of Directors’
competence profile are used in the
nomination process.

resulted in a further development of the
strategy process and a continued focus
on succession preparedness. In order to
support continued fulfilment of the Novo
Nordisk Way, criteria for board members
include integrity, accountability, fairness,
financial literacy, commitment 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 the
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
– three male and one female, all Danes.
Board members elected by employees
serve a 4-year term and have the same
rights, duties and responsibilities as
shareholder-elected board members.

To ensure that discussions include multiple

Novo Nordisk’s Board of Directors met

perspectives representing the complex,
global pharmaceutical environment, the
Board of Directors aspires to be diverse
in gender and nationality. Currently, one
shareholder-elected board member is female
and five of the eight shareholder-elected
board members are non-Danes.

The self-assessment conducted in 2012

seven times during 2012.

Chairmanship
The annual general meeting directly elects
the chairman and vice chairman of the

CONTINuED

NOVO NORDISK ANNUAL REPORT 201248 GOVERNANCE, LEADERSHIP AND SHARES

Board of Directors. 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. Other tasks include reviewing
the fixed asset investment portfolio,
recommending the remuneration of board
members and Executive Management, and
proposing candidates for election at
a general meeting.

In practice, the Chairmanship has the
roles and responsibilities of nomination
and remuneration committees, and
presents recommendations to the Board of
Directors. The Board of Directors has not
formally established separate committees,
and as a result does not conform to
the Danish Corporate Governance
Recommendations. This is due to the fact
that the Board of Directors finds that each
board member must have the opportunity
to contribute actively to discussions and
have access to all relevant information on
nomination and remuneration.

In March 2012, the annual general
meeting re-elected Sten Scheibye as
chairman and Göran Ando as vice chairman.
See novonordisk.com/about_us for a report
on the Chairmanship’s activities.

Audit Committee
The three members of Novo Nordisk’s
Audit Committee are elected by the Board
of Directors 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.

The Audit Committee assists the Board
of Directors with oversight of the external
auditors, the internal audit function,
complaints regarding fraud or violations
of business ethics, the financial, social and
environmental reporting process, business
ethics compliance and post-investment
reviews, and in 2012 it was agreed that the
Audit Committee also assists with oversight
of long-term incentive programmes. In
March 2012, the Board of Directors elected
Hannu Ryöppönen as chairman and Kurt
Anker Nielsen and Liz Hewitt as members
of the Audit Committee. See novonordisk.
com/about_us for a report on the Audit
Committee’s activities.

Executive Management
The Board of Directors has delegated
responsibility for day-to-day management of
Novo Nordisk to its Executive Management.
Executive Management consists of the
president & chief executive officer plus
four executives. They are responsible for
organisation of the company as well as
allocation of resources, determination and
implementation of strategies and policies,
direction-setting, and ensuring timely
reporting and provision of information to
the Board of Directors and Novo Nordisk’s
stakeholders. Executive Management meets
at least once a month and often more
frequently. The Board of Directors 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
independent auditor elected at the annual
general meeting. The auditor acts in the
interest of shareholders and expresses
an audit opinion on the annual report
as well as reporting any significant audit
findings to the Audit Committee and
the Board of Directors. As part of Novo
Nordisk’s commitment to its social and
environmental responsibility, the company
voluntarily includes an assurance report
for social and environmental reporting
in the annual report. The assurance
provider reviews whether the social and
environmental performance information
covers aspects deemed to be material and
verifies the internal control processes for
the information reported.

Internal audit
Novo Nordisk’s internal audit function,
Group Internal Audit, reports to the
company’s 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
Executive 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 assurance activities
– quality audits, organisational audits and
values audits, called facilitations – help
ensure that the company adheres to
high-quality standards and operates in
accordance with the Novo Nordisk Way.

Corporate governance codes and practices

Compliance

Governance structure

Assurance

Danish and foreign
laws and regulations

Corporate
governance
standards

Novo Nordisk Way

Shareholders

Board of Directors

Chairmanship

Audit Committee

Executive Management

Organisation

Audit of financial data
and review of social
and environmental data
(internal and external)

Facilitation and
organisational audit
(internal)

Quality audit
(internal)

NOVO NORDISK ANNUAL REPORT 2012GOVERNANCE, LEADERSHIP AND SHARES 49

Remuneration

Novo Nordisk aims to attract, retain
and motivate talented individuals.
The company’s remuneration is
therefore designed to be competitive.
Remuneration rewards short- and
long-term performance and is aligned
with shareholder interests.

approval of the annual report, the
Board of Directors endorses the actual
remuneration for the past financial year
and the recommendation on remuneration
levels for the current financial year. These
are then presented to the annual general
meeting for approval.

Remuneration of the Board of Directors
and Executive Management is assessed
on an annual basis against a benchmark
of Nordic companies as well as European
pharmaceutical companies that are
similar to Novo Nordisk in size and
complexity. The results are presented
to Novo Nordisk’s Board of Directors by
the chairman at its October meeting.
The company strives for simplicity when
composing the remuneration package,
and its remuneration principles provide
guidance for remuneration of the Board
of Directors and Executive Management.
These principles are available at
novonordisk.com/about_us/corporate_
governance/remuneration.asp.

Board of Directors’
remuneration
The remuneration of Novo Nordisk’s
Board of Directors comprises a fixed base
fee, a multiplier of the fixed base fee for
the Chairmanship and members of the
company’s Audit Committee, fees for ad
hoc tasks and a travel allowance.

At the December meeting, the Board
of Directors agrees on recommendations
for remuneration levels for the next
financial year. In connection with the

Travel and other expenses
All board members who reside outside
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-based board members. Expenses
such as travel and accommodation
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.

Executive Management’s
remuneration
The remuneration of Novo Nordisk’s
Executive Management is proposed by the
Chairmanship and approved by the Board
of Directors. 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 per formance, 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 is intended to attract
and retain executives with the professional
and personal competences required to
drive the company’s performance.

Cash-based incentive
The cash-based incentive is designed to
incentivise individual performance and
short-term achievements of individualised
targets 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
evaluates the degree of achievement for
each member of Executive Management
based on input from the chief executive
officer.

CONTINuED

Board of Directors
In 2012, the base fee for members of the Board of Directors was DKK 500,000 (DKK 500,000 in 2011).

DKK million

Sten Scheibye (chairman of the Board)
Göran Ando (vice chairman of the Board)
Hannu Ryöppönen (chairman of the Audit Committee)
Liz Hewitt1 (member of the Audit Committee)
Kurt Anker Nielsen (member of the Audit Committee)
Bruno Angelici1
Henrik Gürtler
Thomas Paul Koestler1
Anne Marie Kverneland
Ulrik Hjulmand-Lassen
Søren Thuesen Pedersen
Stig Strøbæk
Jørgen Wedel2
Pamela J Kirby2

Total

2012

2011

Fixed
base fee

Fee for
ad hoc tasks and
Fixed
committee work allowance Total base fee

Travel

Fee for
ad hoc tasks and
committee work allowance Total

Travel

1.5
1.0
0.5
0.4
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.1
–

7.5

–
–
0.4
0.2
0.3
–
–
–
–
–
–
–
0.1
–

1.0

–
0.1
0.1
0.1
–
0.1
–
0.3
–
–
–
–
0.1
–

1.5
1.1
1.0
0.7
0.8
0.6
0.5
0.8
0.5
0.5
0.5
0.5
0.3
–

0.8

9.33

1.5
1.0
0.5
–
0.5
0.4
0.5
0.4
0.5
0.5
0.5
0.5
0.5
0.1

7.4

–
0.1
0.3
–
0.5
–
–
–
–
–
–
–
0.3
–

1.2

–
0.1
0.1
–
–
0.1
–
0.2
–
–
–
–
0.3
–

1.5
1.2
0.9
–
1.0
0.5
0.5
0.6
0.5
0.5
0.5
0.5
1.1
0.1

0.8

9.43

1. Bruno Angelici and Thomas Paul Koestler were first elected at the Annual General Meeting in March 2011, and Liz Hewitt was first elected at the Annual General Meeting in March 2012.
2. Pamela J Kirby resigned as of March 2011. Jørgen Wedel resigned as of March 2012.
3. In addition social security taxes have been paid by Novo Nordisk amounting to less than DKK 1 million (less than DKK 1 million in 2011).

NOVO NORDISK ANNUAL REPORT 2012

50 GOVERNANCE, LEADERSHIP AND SHARES

profit, and at least 85% performance on
sustainability targets and research and
development targets respectively, then the
allocation to the joint pool would correspond
to four months’ base salary plus pension
contribution for the Senior Management
Board. The pool is capped at eight months’
base salary plus pension contribution.

This pool is then converted into Novo
Nordisk B shares, which in any given year
are locked up for three years before they are
transferred to the 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.

Further information on Novo Nordisk’s
share-based incentives is available online
at novonordisk.com/about_us.

Pension
Pension contributions are paid to enable
an opportunity for executives to build up
an income for retirement.

Other benefits
Other benefits are added to ensure that
overall remuneration is competitive and
aligned with local practice. Such benefits
are approved by the Board of Directors via
delegation of powers to the Chairmanship.

Composition of remuneration

Maximum performance

■ Fixed base salary 39%
■ Cash bonus 13%
■ Share-based incentive 33%
■ Pensions 13%
■ Beneﬁts 2%

On-target performance

■ Fixed base salary 52%
■ Cash bonus 9%
■ Share-based incentive 22%
■ Pensions 15%
■ Beneﬁts 2%

Share-based incentives
The long-term, share-based incentive
programme is designed to promote the
collective performance of Executive
Management and align the interests of
executives and shareholders. Share-based
incentives are linked to both financial and
non-financial targets.

The long-term incentive programme
is based on a calculation of shareholder
value creation compared with planned
performance. In line 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 invested capital. A proportion
of the calculated shareholder value
creation is allocated to a joint pool for
the participants, who include Executive
Management and other members of the
Senior Management Board.

Non-financial targets are determined on
the basis of an assessment of the objectives
regarded as particularly important to
the fulfilment of the company’s long-
term performance. Non-financial targets
are typically related to achievement of
specific milestones within research and
development, such as execution of trials,
obtainment of product approvals and
product launches, or within sustainability
related to patients, environment, company
reputation and development of employees.
The total number of non-financial targets
varies, but consists typically of 10-15
targets within 5–6 categories.

If the financial target is met for economic

Remuneration package components

Remuneration

Board of
Directors

Executive
Management

Comments relating to Executive Management

Fixed fee/base salary

Accounts for 35–55% of the total value of the remuneration package1

Fee for committee work

Fee for ad hoc tasks

Cash bonus

Up to 4 months’ (and in certain extraordinary cases up to 6 months’)
fixed base salary + pension contribution per year

Share-based incentive

Up to 8 months’ fixed base salary + pension contribution per year

Pensions

25–30% of fixed base salary and cash-based incentive

Travel allowance

Benefits

Non-monetary benefits such as company car and phone

Severance payment

Up to 24 months’ fixed base salary + pension contribution for new employment contracts
while up to 36 months’ fixed base salary + pension contribution for existing contracts

1. The interval 35–55% states the span between “maximum performance” and “on-target performance”.

NOVO NORDISK ANNUAL REPORT 2012GOVERNANCE, LEADERSHIP AND SHARES 51

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.

Current 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’s
employment 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 future employment
contracts for executives, 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.

Remuneration of the Executive Management and other members
of the Senior Management Board

2012

2011

Fixed
base
salary

Cash
bonus

Pension Benefits

Share-
based
incentive

Fixed
base
salary

Share-
Cash
based
bonus Pension Benefits incentive

DKK million

Executive Management
Lars Rebien Sørensen
Jesper Brandgaard
Lise Kingo
Kåre Schultz
Mads Krogsgaard Thomsen

8.4
4.8
4.3
5.2
4.8

2.9
1.6
1.1
1.4
1.6

8.6

2.8
1.6
1.4
1.7
1.6

9.1

0.3
0.3
0.3
0.3
0.3

1.5

7.3
4.5
4.1
4.9
4.5

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

–
–
–
–
–

–

Total

13.4
7.8
7.1
8.6
8.2

45.1

Total

14.4
8.3
7.1
8.6
8.3

–
–
–
–
–

–

Executive Management in total

27.5

46.7

25.3

Other members of the Senior
Management Board in total1

72.13

25.0

22.3

8.4

127.8

70.83

26.3

22.4

10.8

–

130.3

Joint pool2

73.1

56.9

1. The total remuneration for 2012 includes remuneration to 26 senior vice presidents (26 in 2011) of which none has retired or left the company in 2012 (one in 2011). The 2011 remuneration for the

retired senior vice president is included in the table above, whereas a cash settlement of DKK 5 million 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 (2011: 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.

3. Including social security taxes paid amounting to DKK 1.5 million (DKK 1.7 million in 2011).

Management’s long-term incentive programme
The shares allocated to the joint pool for 2009 (177,066 shares) were released to the individual participants subsequent to the approval
of the Annual Report 2012 by the Board of Directors and the announcement on 31 January 2013 of the full-year financial results for
2012. Based on the share price at the end of 2012, the value of the released shares is as follows:

Value as at 31 December 2012 of shares released on 31 January 2013

Executive Management
Lars Rebien Sørensen
Jesper Brandgaard
Lise Kingo
Kåre Schultz
Mads Krogsgaard Thomsen

Executive Management in total

Other members of the Senior Management Board in total2

1. The market value of the shares released in 2013 is based on the Novo Nordisk B share price of DKK 916.50 at the end of 2012.
2. In addition, 13,450 shares (market value: DKK 12.3 million) were released to retired members of the Senior Management Board.

Number Market value1
(DKK million)
of shares

15,764
10,501
10,501
10,501
10,501

57,768

105,848

14.5
9.6
9.6
9.6
9.6

52.9

97.0

Lars Rebien Sørensen serves as a board member of Danmarks Nationalbank, from which he received remuneration of DKK 22,012 in 2012 (DKK 21,841 in 2011), as a board member of DONG Energy A/S
until 18 April 2012, from which he received remuneration of DKK 87,500 in 2012 (DKK 175,000 in 2011), as a member of the Supervisory Board of Bertelsmann AG, from which he received remuneration
of EUR 129,000 in 2012 (EUR 85,000 in 2011) and as board member of Thermo Fisher Scientific Inc, from which he received remuneration of USD 219,840 in 2012 (USD 58,022 in 2011; adjusted by USD
58,022 after final confirmation of 2011 remuneration). Jesper Brandgaard serves as chairman of the Board of Directors of SimCorp A/S, from which he received remuneration of DKK 801,846 in 2012 (DKK
753,455 in 2011). Kåre Schultz serves as a board member of LEGO A/S, from which he received remuneration of DKK 300,000 in 2012 (DKK 300,000 in 2011). Kåre Schultz also serves as chairman of the
Board of Directors of Royal Unibrew A/S, from which he received remuneration of DKK 625,000 in 2012 (DKK 625,000 in 2011). Until January 2013, Mads Krogsgaard Thomsen served as a board member
of Cellartis AB, from which he received remuneration of SEK 50,000 in 2012 (SEK 50,000 in 2011). As of 1 January 2012, Mr Thomsen also serves as a board member of Copenhagen University,
from which he received remuneration of DKK 79,800 in 2012.

NOVO NORDISK ANNUAL REPORT 2012

52 GOVERNANCE, LEADERSHIP AND SHARES

Board of Directors

Sten Scheibye (chair)

Bruno Angelici

Liz Hewitt

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 Danish Fulbright
Commission (vice chair), member of the
boards of the Novo Nordisk Foundation,
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, all
in Denmark.
Special competences: Knowledge of the
healthcare industry, particularly in relation
to patients requiring chronic care, and
managerial skills relating to international
organisations.
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.

Formerly executive vice president of
AstraZeneca (retired). Member of the Board
of Novo Nordisk A/S since 2011.
Management duties: Member of the
boards of Smiths Group plc, UK, and
Wolters Kluwer, the Netherlands. Member
of the Global Advisory Board at Takeda
Pharmaceutical Company Limited, Japan.
Special competences: Extensive global
experience with two companies in the
fields of pharmaceuticals and medical
devices, 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 a 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: MSc in Chemical Engineering
(1976) from the Technical University of
Denmark.

Göran Ando (vice chair)

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), member of the boards
of Novo A/S, Denmark, and Molecular
Partners AG, Switzerland. Member of
the Scientific Advisory Board of Bausch
& Lomb, US, and senior advisor 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.

Formerly Group Director Corporate Affairs
for Smith & Nephew plc, UK (retired).
Member of the board of Novo Nordisk A/S
since 2012. Member of the Audit Committee
of Novo Nordisk A/S since 2012.
Management duties: Member of the
board and audit committee (chair) of Synergy
Health plc, UK. External member of the audit
committee of the House of Lords, UK.
Education: BSc (Econ) (Hons) (1977) from
University College London, UK, and FCA
(Institute of Chartered Accountants) (1982).
Special competences: Extensive experience
within the field of medical devices, significant
financial knowledge and knowledge of how
large international companies operate.

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
boards of Momenta Pharmaceuticals Inc.,
ImmusanT Inc., Arisaph Pharmaceuticals
Inc., Rib-X Pharmaceuticals Inc., and Pearl
Therapeutics Inc., all in the US. Chairman

NOVO NORDISK ANNUAL REPORT 2012GOVERNANCE, LEADERSHIP AND SHARES 53

of the Scientific Advisory Board of Bausch
& Lomb, USA.
Special competences: Extensive 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.

Mindelegat (chair), Novozymes A/S (vice
chair), and member of the boards 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.

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.

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.
Education: BSc in Chemical Engineering
(1988) from the Engineering Academy of
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.
Member of the Audit Committee of Novo
Nordisk A/S since 2004 (chair 2004–2012).
Management duties: Dalhoff Larsen
& Horneman A/S (chair), Collstrop’s

Hannu Ryöppönen

Formerly CFO and deputy CEO of Stora
Enso Oyj, Finland (retired). Member of the

Board of Novo Nordisk A/S since 2009.
Chairman of the Audit Committee of Novo
Nordisk A/S since 2012 (member 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, Channel Islands. Hakon
Invest AB (chair), BillerudKorsnäs AB (chair),
both in Sweden. Member of the board of
Amer Sports Oyj, Finland, and the private
equity fund Value Creation Investments
Limited, Jersey, Channel Islands. Chairman
of the audit committee of Amer Sports Oyj,
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).

Name (male/female)

First elected

Term

Nationality

Date of birth

Independence1

Sten Scheibye (m)
Göran Ando (m)
Bruno Angelici (m)
Henrik Gürtler (m)
Liz Hewitt (f)
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)

2003
2005
2011
2005
2012
2010
2011
2000
2000
2006
2009
1998

2013
2013
2013
2013
2013
2014
2013
2014
2013
2014
2013
2014

Danish
Swedish
French
Danish
British
Danish
American
Danish
Danish
Danish
Finnish
Danish

October 1951
March 1949
April 1947
August 1953
November 1956
April 1962
June 1951
July 1956
August 1945
December 1964
March 1952
January 1964

Not independent2
Not independent2
Independent
Not independent2
Independent4,5
Not independent
Independent
Not independent
Not independent2,4
Not independent
Independent4,5
Not independent

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 Ryöppönen, Mr Nielsen and Ms Hewitt qualify as independent Audit Committee members as defined by the US Securities and Exchange Commission (SEC).
5. Mr Ryöppönen and Ms Hewitt qualify as independent Audit Committee members as defined under part 8 of the Danish Act on Approved Auditors and Audit Firms.

NOVO NORDISK ANNUAL REPORT 201254 GOVERNANCE, LEADERSHIP AND SHARES

Executive Management

Lars Rebien Sørensen
Chief executive officer

Lise Kingo
Chief of staffs

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.
Other management duties: Member
of the boards of Danmarks Nationalbank,
Denmark, and Thermo Fisher Scientific
Inc., US. 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.
Date of birth: October 1954.

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
Corporate Relations. She is adjunct professor
at the Medical Faculty, Vrije Universiteit,
Amsterdam, the Netherlands.
Other management duties: Chairman of
the board of Steno Diabetes Center A/S and
chairman of the Danish Council on Corporate
Social Responsibility, both in Denmark.
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.
Date of birth: August 1961.

Mads Krogsgaard Thomsen
Chief science officer

Mads Krogsgaard Thomsen joined Novo
Nordisk in 1991. He was appointed
executive vice president and chief science
officer in November 2000. He is a member
of 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 Health
and Medical Sciences of the University of
Copenhagen), Denmark.
Other management duties: Member
of the board of the University of
Copenhagen, Denmark.
Education: DSc (1991), PhD (1989) and
DVM (1986) from the Royal Veterinary and
Agricultural University (now the Faculty
of Health and Medical Sciences of the
University of Copenhagen), Denmark.
Date of birth: December 1960.

New members of
Executive Management

Effective 31 January 2013, Executive
Management was expanded with
two new members: Jakob Riis was
appointed executive vice president
with responsibility for Marketing &
Medical Affairs, and Lars Fruergaard
Jørgensen was appointed executive
vice president with responsibility for
IT, Quality & Corporate Development.
Their biographies can be found on
novonordisk.com/about_us.

Jesper Brandgaard
Chief financial officer

Kåre Schultz
Chief operating officer

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.
Other management duties: Chairman of
the boards of SimCorp A/S and NNIT A/S,
both in Denmark.
Education: MBA (1995) and MSc in
Economics and Auditing (1990) from
Copenhagen Business School, Denmark.
Date of birth: October 1963.

Kåre Schultz joined Novo Nordisk in 1989
as an economist in Health Care, Economy
& Planning. In November 2000, he was
appointed executive vice president and
chief of staffs. In March 2002, he took over
the position of executive vice president and
chief operating officer.
Other management duties: Chairman of
the board of Royal Unibrew A/S and member
of the board of LEGO A/S, both in Denmark.
Education: MSc in Economics (1987) from
the University of Copenhagen, Denmark.
Date of birth: May 1961.

NOVO NORDISK ANNUAL REPORT 2012Consolidated financial, social and
environmental statements 2012

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)
95 Statement of social performance
96 Notes to the Consolidated social statement

Consolidated environmental statement (supplementary information)
101 Statement of environmental performance
102 Notes to the Consolidated environmental statement

Shareholders’ meeting in
Copenhagen, March 2012.

56 CONSOLIDATED FINANCIAL STATEMENTS

Income statement and Statement of comprehensive income
for the year ended 31 December

DKK million

Income statement

Sales
Cost of goods sold

Gross proﬁ t

Sales and distribution costs
Research and development costs
Administrative costs
Licence fees and other operating income, net

Operating proﬁ t

Financial income
Financial expenses

Proﬁ t before income taxes

Income taxes

Net proﬁ t for the year

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

Statement of comprehensive income

Net proﬁ t for the year

Other comprehensive income:
Items that will not be reclassiﬁ ed subsequently to the Income statement:
Remeasurements on deﬁ ned beneﬁ t plans

Items that will be reclassiﬁ ed subsequently to the Income statement,
when speciﬁ c conditions are met:
Exchange rate adjustments of investments in subsidiaries
Cash ﬂ ow hedges, realisation of previously deferred (gains)/losses
Cash ﬂ ow hedges, deferred gains/(losses) incurred during the period
Other items
Tax on other comprehensive income, income/(expense)

Other comprehensive income for the year, net of tax

Note

2012

2011

2010

2.1, 2.2
2.2, 2.3

78,026
13,465

66,346
12,589

64,561

53,757

2.2, 2.3
2.2, 2.3
2.2, 2.3
2.2, 5.6

21,544
10,897
3,312
666

19,004
9,628
3,245
494

29,474

22,374

4.8
4.8

125
1,788

514
963

60,776
11,680

49,096

18,195
9,602
3,065
657

18,891

1,452
2,057

27,811

21,925

18,286

2.4

6,379

4,828

3,883

21,432

17,097

14,403

4.1
4.1

39.09
38.85

30.24
29.99

24.81
24.60

21,432

17,097

14,403

3.7

(281)

–

(172)
1,182
849
35
(587)

1,026

(173)
658
(1,170)
(20)
190

(515)

300
(422)
(643)
4
346

(415)

2.4

Total comprehensive income for the year

22,458

16,582

13,988

NOVO NORDISK ANNUAL REPORT 2012

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Balance sheet at 31 December

DKK million

Assets

Intangible assets
Property, plant and equipment
Deferred income tax assets
Other ﬁ nancial assets

Total non-current assets

Inventories
Trade receivables
Tax receivables
Other receivables and prepayments
Marketable securities
Derivative ﬁ nancial instruments
Cash at bank and on 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 beneﬁ t obligations
Provisions

Total non-current liabilities

Current debt
Trade payables
Tax payables
Other liabilities
Derivative ﬁ nancial instruments
Provisions

Total current liabilities

Total liabilities

Total equity and liabilities

CONSOLIDATED FINANCIAL STATEMENTS 57

Note

2012

2011

3.1
3.2
2.4
4.7

3.3
3.4

3.5
4.7
4.4
4.5

4.1
4.1

4.2
2.4
3.7
3.6

4.2
4.7

3.8
4.4
3.6

1,495
21,539
2,244
228

25,506

9,543
9,639
1,240
2,705
4,552
931
11,553

40,163

1,489
20,931
2,414
273

25,107

9,433
9,349
883
2,376
4,094
48
13,408

39,591

65,669

64,698

560
(17)
39,001
1,088

580
(24)
37,111
(219)

40,632

37,448

–
732
760
1,907

3,399

500
3,859
593
8,982
48
7,656

502
3,206
439
2,324

6,471

351
3,291
1,171
8,534
1,492
5,940

21,638

25,037

20,779

27,250

65,669

64,698

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NOVO NORDISK ANNUAL REPORT 2012

58 CONSOLIDATED FINANCIAL STATEMENTS

Statement of cash ﬂ ows for the year ended 31 December

DKK million

Net proﬁ t 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 ﬁ nancial assets
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Net purchase of marketable securities

Net cash used in investing activities

Repayment of loans
Purchase of treasury shares, net
Dividends paid

Note

2012

2011

2010

21,432

17,097

14,403

11,253
274
207
(61)
(10,891)

9,117
434
332
(215)
(5,391)

8,449
297
218
(252)
(3,436)

22,214

21,374

19,679

–
(250)
53
(3,372)
(501)

–
(259)
70
(3,073)
(197)

(4,070)

(3,459)

(502)
(11,896)
(7,742)

(507)
(10,595)
(5,700)

1,155
(513)
68
(3,376)
(2,913)

(5,579)

–
(8,820)
(4,400)

5.3
4.6

2.4

3.2

4.2
4.1
4.1

Net cash used in ﬁ nancing activities

(20,140)

(16,802)

(13,220)

Net cash generated from activities

(1,996)

1,113

880

Cash and cash equivalents at the beginning of the year
Exchange gains/(losses) on cash and cash equivalents

4.5

13,057
(8)

11,960
(16)

Cash and cash equivalents at the end of the year

4.5

11,053

13,057

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 purchase of marketable securities

Free cash ﬂ ow

11,034
46

11,960

11,960
3,926
4,473

20,359

4.5
4.7

11,053
4,552
4,849

13,057
4,094
4,832

20,454

21,983

22,214
(4,070)
501

21,374
(3,459)
197

19,679
(5,579)
2,913

18,645

18,112

17,013

1. Additional non-IFRS measures. Please refer to p 93 for deﬁ nitions.
2. The undrawn committed credit facility is a EUR 650 million (EUR 650 million in 2011 and EUR 600 million in 2010) facility committed by a portfolio of international banks.

The facility matures in 2016.

NOVO NORDISK ANNUAL REPORT 2012

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CONSOLIDATED FINANCIAL STATEMENTS 59

Statement of changes in equity at 31 December

DKK million

Share
capital

Treasury
shares

Retained
earnings

Other reserves

Exchange
rate
adjust-
ment

Cash
ﬂ ow
hedges

Tax and
other
items

Total
other
reserves

Total

2012
Balance at the beginning of the year

580

(24)

37,111

398

(1,184)

567

(219)

37,448

Net proﬁ t for the year
Other comprehensive income for the year1

21,432
(281)

(172)

2,031

(552)

1,307

21,432
1,026

Total comprehensive income for the year

21,151

(172)

2,031

(552)

1,307

22,458

Transactions with owners:
Dividends (note 4.1)
Share-based payments (note 5.1)
Tax credit related to share option scheme
Purchase of treasury shares (note 4.1)
Sale of treasury shares (note 4.1)
Reduction of the B share capital (note 4.1)

Balance at the end of the year

(20)

560

(7,742)
308
56
(12,147)
264

(15)
2
20

(7,742)
308
56
(12,162)
266
–

(17)

39,001

226

847

1,088

40,632

DKK million

Share
capital

Treasury
shares

Retained
earnings

Other reserves

Exchange
rate
adjust-
ment

Cash
ﬂ ow
hedges

Tax and
other
items

Total
other
reserves

Total

2011
Balance at the beginning of the year

600

(28)

36,097

571

(672)

397

296

36,965

Net proﬁ t for the year
Other comprehensive income for the year1

17,097

(173)

(512)

Total comprehensive income for the year

17,097

(173)

(512)

170

(515)

17,097
(515)

(515)

16,582

Transactions with owners:
Dividends (note 4.1)
Share-based payments (note 5.1)
Purchase of treasury shares (note 4.1)
Sale of treasury shares (note 4.1)
Tax on sale of treasury shares
Reduction of the B share capital (note 4.1)

Balance at the end of the year

1. Please refer to Statement of comprehensive income p 56.

(20)

580

(5,700)
319
(10,821)
242
(123)

(18)
2

(5,700)
319
(10,839)
244
(123)
–

(24)

37,111

398

(1,184)

567

(219)

37,448

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NOVO NORDISK ANNUAL REPORT 2012

60 CONSOLIDATED FINANCIAL STATEMENTS

Notes

As Novo Nordisk’s business continues to develop, the company remains focused on simplifying and streamlining its
integrated reporting. In 2012 Novo Nordisk has restructured the Consolidated ﬁ nancial, social and environmental statements
to increase focus on what drives the company’s performance in accordance with the Triple Bottom Line business principle.

Within each of the ﬁ nancial, social and environmental statements, the notes have been grouped into sections based on
how Novo Nordisk views its business. Each of the statements includes an overview of the sections and notes, and each
of the sections has an introduction explaining the link between how the company does business and how this is reﬂ ected in
Novo Nordisk’s ﬁ nancial, social and environmental statements. The disclosures in the notes are structured to provide full
transparency on the disclosed amounts, describing the relevant accounting policy, key accounting estimates and numerical
disclosure for each note.

Sections in the Consolidated ﬁ nancial statements

Section 1 ‘Basis of preparation’
Introduces our ﬁ nancial accounting policies in general and an overview of
Management’s key accounting estimates.

1.1 Summary of signiﬁ cant accounting policies, p 61
1.2 Other accounting policies, p 62
1.3 Other general accounting policies, p 62

Section 2 ‘Results for the year’
Comprises the notes related to the result for the year including operating
segments, taxes and employee beneﬁ ts.

2.1 Sales and sales rebates, p 63
2.2 Segment information, p 64
2.3 Employee costs, p 67
2.4 Income and deferred income taxes, p 67

Section 3 ‘Operating assets and liabilities’
Relates to the assets that form the basis for the activities of Novo Nordisk,
and the related liabilities.

3.1 Intangible assets, p 69
3.2 Property, plant and equipment, p 70
3.3 Inventories, p 71
3.4 Trade receivables, p 71
3.5 Other receivables and prepayments, p 72
3.6 Provisions, p 72
3.7 Retirement beneﬁ t obligations, p 73
3.8 Other liabilities, p 74

Section 4 ‘Capital structure and ﬁ nancing items’
Encompasses notes related to capital structure and ﬁ nancing items.

4.1 Share capital and earnings per share, p 75
4.2 Debt, p 76
4.3 Financial risk, p 76
4.4 Derivative ﬁ nancial instruments, p 78
4.5 Cash and cash equivalents, p 81
4.6 Change in working capital, p 81
4.7 Financial assets and liabilities, p 81
4.8 Financial income and expenses, p 84

Section 5 ‘Other disclosures’
Includes other statutory notes and notes of secondary importance from
the perspective of the company.

5.1 Share-based payment schemes, p 85
5.2 Management’s holdings of Novo Nordisk shares, p 87
5.3 Adjustments for non-cash items, p 88
5.4 Commitments and contingencies, p 89
5.5 Related party transactions, p 91
5.6 Licence fees and other operating income, p 91
5.7 Fee to statutory auditors, p 91
5.8 Companies in the Novo Nordisk Group, p 92
5.9 Financial deﬁ nitions, p 93

NOVO NORDISK ANNUAL REPORT 2012

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CONSOLIDATED FINANCIAL STATEMENTS 61

Section 1
Basis of preparation of the Consolidated ﬁ nancial statements

Novo Nordisk presents its Consolidated ﬁ nancial statements on the basis of the latest developments in international ﬁ nancial
reporting, and the company strives for early adoption of EU endorsed IFRS accounting standards.

All afﬁ liates in the Novo Nordisk Group follow the same Group accounting policies. This section describes the signiﬁ cant
accounting policies and other accounting policies in general, including Management’s key accounting estimates and the new
IFRS requirements. A detailed description of accounting policies and key accounting estimates related to speciﬁ c reported
amounts is presented in each note to the relevant ﬁ nancial items.

1.1 Summary of signiﬁ cant accounting policies

The Consolidated ﬁ nancial statements included in this Annual Report 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 annual reports of listed
companies.

Measurement basis
The Consolidated ﬁ nancial statements have been prepared on the historical
cost basis except for the revaluation of available-for-sale ﬁ nancial assets
such as derivative ﬁ nancial instruments measured at fair value through
the income statement, and equity investments and marketable securities
measured at fair value through other comprehensive income.

The principal accounting policies set out below have been applied
consistently in the preparation of the Consolidated ﬁ nancial statements for
all the years presented.

Principal accounting policies
Novo Nordisk’s accounting policies are described in relation to the
individual notes to the Consolidated ﬁ nancial statements. Considering all
the accounting policies applied in the preparation of the Consolidated
ﬁ nancial statements, Management regards the following as the most
signiﬁ cant accounting policies for the recognition and measurement of
reported amounts:

• Sales and sales rebates (notes 2.1 and 3.6)

Revenue is only recognised when, in Management’s judgement, the
signiﬁ cant risks and rewards of ownership have been transferred and
when the Group does not retain managerial involvement in or effective
control over the goods sold. Our gross sales are subject to various
deductions that are composed primarily of rebates and discounts to
retail customers, government agencies, wholesalers, health insurance
companies and managed healthcare organisations. These deductions
represent estimates of the related obligations, requiring the use of
judgement when estimating the effect of these sales deductions on gross
sales for a reporting period.

• Research and development (note 3.1).

Internal research costs are fully charged to the consolidated income
statement in the period in which they are incurred, consistent with
industry practice. Novo Nordisk considers that regulatory and other
uncertainties inherent in the development of new products preclude the
capitalisation of internal development costs as an intangible asset until
marketing approval from the regulatory authority is obtained (highly
probable) in a relevant major market.

• Derivative ﬁ nancial instruments (note 4.4).

Novo Nordisk hedges commercial exposures, with foreign exchange risk
being the principal ﬁ nancial risk for the Group. The overall objective of
foreign exchange risk management is to limit the short-term negative
impact on earnings and cash ﬂ ow from exchange rate ﬂ uctuations,
thereby increasing the predictability of the ﬁ nancial results. The purpose
of hedge accounting is to match the impact of the hedged item and the
hedging instrument in the consolidated income statement. Management
has chosen to present the result of hedging activities as part of ﬁ nancial
items. Thus, as the majority of Novo Nordisk’s sales are in EUR, USD,
JPY, CNY and GBP, Sales will be impacted by exchange rate ﬂ uctuations
whereas the impact from exchange rate ﬂ uctuations on Proﬁ t before
income taxes depends on the results of the hedging activities.

In addition, the following other accounting policies are considered relevant
to an understanding of the Consolidated ﬁ nancial statements:

• Income taxes (note 2.4)
• Intangible assets and Property, plant and equipment including impairment

(notes 3.1 and 3.2)
• Inventories (note 3.3)
• Trade receivables and allowances for doubtful trade receivables (note 3.4)
• Provisions for legal disputes (note 3.6).

Key accounting estimates
The use of reasonable estimates is an essential part of the preparation of
consolidated ﬁ nancial statements. Given the uncertainties inherent in our
business activities, Management must make certain estimates and
judgements that affect the application of accounting policies and reported
amounts of assets, liabilities, sales, costs, cash ﬂ ow and related disclosures
at the date(s) of the Consolidated ﬁ nancial statements.

Management bases its estimates on historical experience and various
other assumptions that are held to be reasonable under the circumstances.
The estimates 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 considers the carrying amounts
recognised in relation to the key accounting estimates mentioned below
to be reasonable and appropriate based on currently available information.
However, the actual amounts may differ from the amounts estimated as
more detailed information becomes available.

Management regards the following as the key accounting estimates
and assumptions used in the preparation of the Consolidated ﬁ nancial
statements:

• Rebates and sales discounts and provisions for sales rebates

(notes 2.1 and 3.6)

• Indirect production costs (note 3.3)
• Allowance for doubtful trade receivables (note 3.4)
• Deferred income tax assets and liabilities (note 2.4)
• Provisions for legal disputes (note 3.6).

Please refer to the speciﬁ c notes for further information on the key
accounting estimates and assumptions applied.

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62 CONSOLIDATED FINANCIAL STATEMENTS

1.2 Other accounting policies

1.3 Other general accounting policies

Changes in accounting policies and disclosures

Early adoption of new or amended IFRSs
IAS 19R ‘Employee beneﬁ ts’ was revised by IASB in June 2011 with an
effective date on or after 1 January 2013 and endorsed by the EU in June
2012. Novo Nordisk has early adopted the amendment in 2012 and is
thus not utilising the option to defer the recognition of actuarial gains and
losses from deﬁ ned beneﬁ t post-employment plans, known as the corridor
approach, and is instead recognising all actuarial gains and losses in
Other comprehensive income as these occur. Early adoption also involves
immediate recognition of all past service costs, and replacing interest cost
and expected return on plan assets with a net interest amount that is
calculated by applying the discount rate used to discount to the net deﬁ ned
beneﬁ t obligation (asset).

As retrospective application of these changes would have only an
immaterial impact on each previous ﬁ nancial year, Novo Nordisk has fully
adopted the amendment in 2012 without restating previous years’
comparable amounts and disclosures. Thus, while the adoption has not
had an initial impact on the Income statement in 2012, the implementation
decreased Other comprehensive income and Equity by DKK 250 million,
decreased Deferred income tax liabilities by DKK 31 million and increased
Retirement beneﬁ t obligation by DKK 281 million.

Please refer to note 3.7 for a detailed description of the new accounting
policy for retirement beneﬁ t obligations.

Furthermore, Novo Nordisk has early adopted the amendment to IAS 1
‘Presentation of ﬁ nancial statements’, effective for annual periods
beginning on or after 1 July 2012. The amendment requires items of Other
comprehensive income, classiﬁ ed by nature, to be grouped into those that
will be reclassiﬁ ed subsequently to the Income statement when speciﬁ c
conditions are met and those that will not.

Adoption of new or amended IFRSs
Based on an assessment of new or amended and revised accounting
standards and interpretations (‘IFRSs’) issued by IASB and IFRSs endorsed
by the European Union effective on 1 January 2012, it has been assessed
that the application of the new IFRSs has not had a material impact on the
Consolidated ﬁ nancial statements in 2012 and Novo Nordisk does not
anticipate any signiﬁ cant impact on future periods from the adoption of
these new IFRSs.

New or amended IFRSs that have been issued but have not yet come
into effect and have not been early adopted
In addition to the above, IASB has issued a number of new or amended and
revised accounting standards and interpretations that have not yet come
into effect. The following are the most signiﬁ cant:

• IASB has issued IFRS 9 ‘Financial Instruments’, which is applicable for

reporting periods starting on or after 1 January 2015. This is part of the
IASB’s project to replace IAS 39, and the new standard will substantially
change the classiﬁ cation and measurement of ﬁ nancial instruments and
hedging requirements. The new standards and the amendment have not
yet been endorsed by the European Union. Novo Nordisk has assessed
the impact of the standard and determined that it, in its current wording,
will not have any signiﬁ cant impact on the Consolidated ﬁ nancial
statements.

• IASB has issued re-exposure drafts on IAS 18 ‘Revenue’ and IAS 17

‘Leasing’. The revised IAS 18 is expected to have only immaterial impact
on the Consolidated ﬁ nancial statements. The change in lease accounting
is expected to require capitalisation of the majority of the Group’s lease
contracts, which will have some impact on the Group’s assets, liabilities
and ﬁ nancial ratios, but no signiﬁ cant impact on net proﬁ t. However,
the ﬁ nal impact may change depending on the ﬁ nal wording of the
standards.

Deﬁ ning materiality
Novo Nordisk’s Consolidated ﬁ nancial 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
transactions are presented in classes of similar items in the Consolidated
ﬁ nancial 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.

There are substantial disclosure requirements throughout IFRS. Novo
Nordisk provides speciﬁ c disclosures required by IFRS unless the information
is considered immaterial to the economic decision-making of the users of
these ﬁ nancial statements or not applicable.

Principles of consolidation
The Consolidated ﬁ nancial statements incorporate the ﬁ nancial statements
of Novo Nordisk A/S and entities controlled by Novo Nordisk A/S.

Where necessary, adjustments are made to the ﬁ nancial statements
of subsidiaries to bring their accounting policies into line with Novo Nordisk
policies. All intra-Group transactions, balances, income and expenses are
eliminated in full when consolidated.

Translation of foreign currencies
Functional and presentation currency
Items included in the ﬁ nancial 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 ﬁ nancial
statements are presented in Danish kroner (DKK), which is also 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 ﬁ nancial assets
classiﬁ ed as available for sale including equity investments, are recognised
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
statement items.

All effects of exchange rate adjustment are recognised in the Income
statement, with the exception of exchange rate adjustments of investments
in subsidiaries 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 above exchange rate adjustments are recognised in Other
compre hensive income.

Statement of cash ﬂ ows
The Statement of cash ﬂ ows is presented in accordance with the indirect
method commencing with Net proﬁ t for the year.

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CONSOLIDATED FINANCIAL STATEMENTS 63

Section 2
Results for the year

This section comprises notes in relation to the results for the year, including disclosure on operating segments, and provides
additional information related to two of Novo Nordisk’s four long-term ﬁ nancial targets: Operating proﬁ t margin and
Growth in operating proﬁ t.

Continued growth in the number of patients and innovative new products drive Novo Nordisk’s growth in sales. Novo Nordisk
expects growth in operating proﬁ t to be higher than sales growth, thereby increasing operating margin. This is expected to
be enabled by gross margin expansion from both product mix and pricing as well as further productivity improvements in
the manufacturing areas. For non-production related activities, the operating margin expansion is expected to be supported
by a modest development in administrative costs and scale advantages within sales and marketing, whereas continued
investment is envisioned for the research and development activities, which are expected to grow at least in line with sales.
Novo Nordisk continues to invest in innovation while contributing to society by paying corporate taxes in the countries where
it operates. The Management review section ‘2012 performance and 2013 outlook’ on p 6 gives a detailed description of the
results for the year.

2.1 Sales and sales rebates

Accounting policies
Revenue from goods sold is recognised when all the following conditions
are met:

• Novo Nordisk has transferred the signiﬁ cant risks and rewards of

ownership of the goods to the buyer.

• 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 beneﬁ ts associated with the transaction

will ﬂ ow to the entity.

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

measured reliably.

Sales are measured at the fair value of the consideration received or
receivable. When sales are recognised, Novo Nordisk also records estimates
for a variety of sales deductions, including rebates, discounts, refunds,
incentives and product returns. Sales deductions are reported as a reduction
of revenue. Where contracts contain customer acceptance provisions,
Novo Nordisk recognises sales when the acceptance criteria are satisﬁ ed.

Revenue recognition for new product launches is based on speciﬁ c facts
and circumstances relating to those products, including estimated demand
and acceptance rates for well-established products with similar market
characteristics. Where shipments of new products are made on a sale or
return basis, without sufﬁ cient historical experience for estimating sales
returns, revenue is only recorded when there is evidence of consumption or
when the right of return has expired.

Key accounting estimates – rebates and sales discounts
Sales discounts and sales rebates are predominantly issued in Region North
America. In this region, signiﬁ cant sales rebates are paid in connection
with US public healthcare insurance programmes, namely Medicare and
Medicaid, as well as rebates to managed healthcare plans. The most
signiﬁ cant discounts are offered under contracts with institutions, mostly
hospitals and government agencies. In addition, political pressure to contain
healthcare costs has led several other countries to impose signiﬁ cant price
reductions on pharmaceutical products. Concerted austerity measures have
been implemented by governments in countries in Region Europe, while
government-mandated price cuts have been introduced in Region China,
Japan and major countries in Region International Operations.

Medicaid and Medicare rebates have been calculated using a combination
of historical experience, product and population growth, price increases,
the impact of contracting strategies and speciﬁ c terms in the individual
agreements. For Medicaid, the calculation of rebates involves interpretation
of relevant regulations that are subject to challenge or change in
inter pretative 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 speciﬁ c sale will typically be invoiced to
Novo Nordisk up to nine months later. Due to the time lag, the rebate
adjustments to sales in any particular period may incorporate adjustments
of accruals for prior periods.

Rebates are offered to a number of managed healthcare plans. These rebate
programmes allow the customer to receive a rebate after attaining certain
performance parameters relating to formulary status and pre-established
market share milestones relative to competitors. Since they are contractually
agreed upon, rebates are estimated according to the speciﬁ c terms in each
agreement, historical experience, anticipated channel mix, product growth
rates and market share information. Novo Nordisk considers the sales
performance of products subject to managed healthcare rebates and other
contract discounts, and adjusts the provision periodically to reﬂ ect actual
experience.

Wholesaler charge-backs relate to contractual arrangements existing
between Novo Nordisk and indirect customers, mainly in the US, whereby
products are sold at contract prices lower than the list price originally
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 the liability being incurred.

In certain non-US countries, Novo Nordisk also provides rebates to
governments and other entities mandated by laws or government
regulations. Furthermore, Novo Nordisk enters into pay-for-performance
arrangements with certain healthcare providers. Under these agreements,
Novo Nordisk may be required to make refunds to the healthcare providers
if anticipated treatment outcomes do not meet predeﬁ ned targets.
Potential refunds are estimated and recorded as a reduction of revenue at
the time the related revenues are recorded.

Provisions for sales deductions are adjusted to actual amounts as rebates
and discounts are processed. Please refer to section 3.6 for further
information on sales-related provisions.

Gross-to-net sales reconciliation

DKK million

Gross sales

2012

2011

2010

103,948

84,386

75,811

US Medicaid and Medicare rebates
US managed healthcare rebates
US wholesaler charge-backs
Non-US healthcare plans and
programme rebates
Sales returns and discounts

(7,519)
(4,390)
(8,196)

(5,075)
(2,551)
(5,894)

(4,124)
(2,494)
(4,994)

(901)
(4,916)

(695)
(3,825)

(543)
(2,880)

Total gross-to-net sales adjustments

(25,922)

(18,040)

(15,035)

Total net sales

78,026

66,346

60,776

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64 CONSOLIDATED FINANCIAL STATEMENTS

2.2 Segment information

Accounting policies
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 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, inﬂ ammation
therapy and other therapy areas.

Segment performance is evaluated on the basis of operating proﬁ t
consistent with the Consolidated ﬁ nancial 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 speciﬁ c
allocation with the addition of a minor number of corporate overhead costs
allocated systematically between the segments. Licence fees and other
operating income have 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 ﬁ nancial 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)

2012

2011

2010

2012

2011

2010

2012

2011

2010

Diabetes care

Biopharmaceuticals

Total

15,693
9,342
9,786
34,821
11,302
9,495
2,511
2,758

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

Diabetes care total sales

60,887

50,425

45,710

NovoSeven®
Norditropin®
Hormone replacement therapy
Other products

Biopharmaceuticals total sales

Segment key ﬁ gures
Total sales
Change in DKK (%)
Change in local currencies (%)

Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative costs
Licence fees and other operating
income, net
Operating proﬁ t

Depreciation, amortisation and
impairment losses included in costs
Additions to Intangible assets
and Property, plant and equipment

Assets allocated to business segments
Assets not allocated to business
segments1
Total assets

8,933
5,698
2,163
345

8,347
5,047
2,054
473

8,030
4,803
1,892
341

17,139

15,921

15,066

60,887
20.7%
14.5%

11,435
18,894
7,322
2,604

464
21,096

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

2,167

2,051

1,887

2,800

2,654

3,068

17,139
7.7%
2.4%

15,921
5.7%
7.6%

15,066
11.0%
5.4%

2,030
2,650
3,575
708

202
8,378

526

770

1,827
2,528
3,226
760

209
7,789

686

678

1,549
3,380
2,858
805

315
6,789

580

795

78,026
17.6%
11.6%

13,465
21,544
10,897
3,312

666
29,474

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

2,693

2,737

2,467

3,570

3,332

3,863

36,030

34,853

34,947

9,119

8,998

7,906

45,149

43,851

42,853

20,520
65,669

20,847
64,698

18,549
61,402

1. The part of total assets that has not been allocated to either of the two business segments includes Cash at bank and on hand, Marketable securities, Derivative ﬁ nancial

instruments and tax assets.

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2.2 Segment information (continued)

Geographical segments

Novo Nordisk operates in ﬁ ve 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

CONSOLIDATED FINANCIAL STATEMENTS 65

Sales are attributed to geographical regions according to the location of the
customer. Allocation of property, plant and equipment, trade receivables,
allowances for trade receivables 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

Sales by business segment:
NovoRapid® / NovoLog®
NovoMix® / NovoLog®Mix
Levemir®
Modern insulins (insulin analogues)
Human insulins
Victoza®
Other diabetes care

Diabetes care total

NovoSeven®
Norditropin®
Other biopharmaceuticals

Biopharmaceuticals total

2012

2011

2010

2012

2011

2010

North America

Europe

9,033
2,488
5,290
16,811
1,959
5,930
1,998

6,934
2,088
3,711
12,733
1,762
3,716
1,705

6,501
2,099
3,229
11,829
2,156
1,457
1,646

3,707
2,544
2,833
9,084
2,642
2,427
965

3,464
2,623
2,577
8,664
3,032
1,620
1,210

3,258
2,562
2,410
8,230
3,532
753
1,536

26,698

19,916

17,088

15,118

14,526

14,051

4,397
1,721
1,404

3,951
1,394
1,325

4,043
1,320
1,158

2,206
1,741
642

2,310
1,705
627

2,180
1,823
610

7,522

6,670

6,521

4,589

4,642

4,613

Total sales by business and geographical segment

34,220

26,586

23,609

19,707

19,168

18,664

Underlying sales growth in local currencies1
Currency effect (local currency impact)

19.2%
9.5%

17.9%
(5.3%)

22.4%
6.8%

2.0%
0.8%

2.4%
0.3%

4.6%
1.8%

Total sales growth as reported

28.7%

12.6%

29.2%

2.8%

2.7%

6.4%

Property, plant and equipment
Trade receivables
Allowance for doubtful trade receivables
Total assets

1. Additional non-IFRS measure. Please refer to p 93 for deﬁ nitions.

1,500
2,278
(18)
5,867

1,329
2,081
(22)
5,465

987
1,689
(19)
3,680

16,200
3,688
(239)
47,663

15,681
3,652
(333)
47,202

15,669
3,437
(200)
46,654

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NOVO NORDISK ANNUAL REPORT 2012

66 CONSOLIDATED FINANCIAL STATEMENTS

2.2 Segment information (continued)

Geographical segments

DKK million

Sales by business segment:
NovoRapid® / NovoLog®
NovoMix® / NovoLog®Mix
Levemir®
Modern insulins (insulin analogues)
Human insulins
Victoza®
Other diabetes care

Diabetes care total

NovoSeven®
Norditropin®
Other biopharmaceuticals

Biopharmaceuticals total

2012

2011

2010

2012

2011

2010

International Operations

Japan & Korea

1,408
1,708
1,106
4,222
3,073
613
632

8,540

1,526
780
234

1,100
1,482
942
3,524
2,581
322
583

7,010

1,485
651
221

965
1,377
843
3,185
2,588
37
553

6,363

1,245
530
197

1,175
1,028
386
2,589
768
455
493

4,305

646
1,442
224

1,057
970
363
2,390
960
327
430

4,107

482
1,285
349

987
913
349
2,249
1,101
70
394

3,814

461
1,120
265

2,540

2,357

1,972

2,312

2,116

1,846

Total sales by business and geographical segment

11,080

9,367

8,335

6,617

6,223

5,660

Underlying sales growth in local currencies1
Currency effect (local currency impact)

16.2%
2.1%

17.1%
(4.7%)

22.3%
(0.4%)

(1.5%)
7.8%

5.1%
4.8%

3.3%
12.5%

Total sales growth as reported

18.3%

12.4%

21.9%

6.3%

9.9%

15.8%

Property, plant and equipment
Trade receivables
Allowance for doubtful trade receivables
Total assets

1,508
2,177
(710)
6,660

1,672
2,052
(535)
6,419

1,929
1,995
(408)
6,327

174
335
(3)
989

207
377
(2)
1,388

213
446
0
1,158

DKK million

2012

2011

2010

2012

2011

2010

Sales by business segment:
NovoRapid® / NovoLog®
NovoMix® / NovoLog®Mix
Levemir®
Modern insulins (insulin analogues)
Human insulins
Victoza®
Other diabetes care

Diabetes care total

NovoSeven®
Norditropin®
Other biopharmaceuticals

Biopharmaceuticals total

Region China

Total

370
1,574
171
2,115
2,860
70
1,181

249
1,115
90
1,454
2,450
6
956

189
870
49
1,108
2,450
0
836

15,693
9,342
9,786
34,821
11,302
9,495
5,269

12,804
8,278
7,683
28,765
10,785
5,991
4,884

11,900
7,821
6,880
26,601
11,827
2,317
4,965

6,226

4,866

4,394

60,887

50,425

45,710

158
14
4

176

119
12
5

136

101
10
3

8,933
5,698
2,508

8,347
5,047
2,527

8,030
4,803
2,233

114

17,139

15,921

15,066

Total sales by business and geographical segment

6,402

5,002

4,508

78,026

66,346

60,776

Underlying sales growth in local currencies1
Currency effect (local currency impact)

16.3%
11.7%

11.7%
(0.7%)

19.9%
7.6%

11.6%
6.0%

11.4%
(2.2%)

13.0%
6.0%

Total sales growth as reported

28.0%

11.0%

27.5%

17.6%

9.2%

19.0%

Property, plant and equipment
Trade receivables
Allowance for doubtful trade receivables
Total assets

1. Additional non-IFRS measure. Please refer to p 93 for deﬁ nitions.

2,157
1,161
(54)
4,490

2,042
1,187
0
4,224

1,709
933
0
3,583

21,539
9,639
(1,024)
65,669

20,931
9,349
(892)
64,698

20,507
8,500
(627)
61,402

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2.3 Employee costs

2.4 Income and deferred income taxes

CONSOLIDATED FINANCIAL STATEMENTS 67

Accounting policies
Wages, salaries, social security contributions, annual leave and sick leave,
bonuses and non-monetary beneﬁ ts are recognised in the year in which
the associated services are rendered by employees of Novo Nordisk. Where
Novo Nordisk provides long-term employee beneﬁ ts, the costs are accrued
to match the rendering of the services by the employees concerned.

Income taxes

Accounting policies
The tax expense for the period comprises current and deferred tax and
interest on tax cases ongoing or settled during the year, including
adjustments to previous years. Tax is recognised in the income statement,
except to the extent that it relates to items recognised in other
comprehensive income.

Employee costs

DKK million

2012

2011

2010

Income taxes expensed

Wages and salaries
Share-based payment costs (note 5.1)
Pensions – deﬁ ned contribution plans
Pensions – retirement beneﬁ t
obligations (note 3.7)
Other social security contributions
Other employee costs

17,301
308
1,302

16,127
319
1,155

150
1,358
1,779

(2)
1,189
1,491

14,520
463
1,052

210
1,067
1,510

Total employee costs for the year

22,198

20,279

18,822

DKK million

2012

2011

2010

Current tax on proﬁ t for the year
Deferred tax on proﬁ t for the year

6,001
645

4,534
257

3,477
495

Tax on proﬁ t for the year
Adjustments related to previous years –
current tax
Adjustments related to previous years –
deferred tax

6,646

4,791

3,972

4,042

277

504

(4,309)

(240)

(593)

Employee costs included
in property, plant and equipment1
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 costs
Licence fees and other operating
income, net

(533)

(496)

(559)

(70)

(37)

Income taxes in the
Income statement

21,595

19,746

18,339

4,627
8,784
4,298
2,205

4,302
7,961
3,980
1,993

4,006
7,240
3,697
2,059

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

6,379

4,828

3,883

25.0%

(2.1%)

(3.0%)

(2.5%)

0.1%
(0.1%)

(0.2%)
0.2%

(1.2%)
(0.1%)

1,681

1,510

1,337

Effective tax rate

22.9%

22.0%

21.2%

Total employee costs

21,595

19,746

18,339

1. This reﬂ ects annual gross employee costs included in property, plant and equipment,

which subsequently will be included in depreciation of tangible ﬁ xed assets.

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

33,061
34,286

31,499
32,136

29,423
30,014

Tax on other comprehensive income
for the year, (income)/expense

587

(190)

(346)

Tax on other comprehensive income for the year relates to tax on deferred
(gains)/losses on cash ﬂ ow hedges and internal proﬁ t. In addition
DKK 12 million has been recognised as current tax in other comprehensive
income in 2012.

Remuneration to Executive Management and
Board of Directors

Income taxes paid

Income taxes paid in Denmark
Income taxes paid outside Denmark

7,895
2,996

2,825
2,566

1,826
1,610

Total income taxes paid

10,891

5,391

3,436

The income taxes of DKK 7,895 million paid in Denmark in 2012 include
adjustments arising from tax disputes primarily related to transfer pricing.

DKK million

2012

2011

2010

Salary and cash based incentive
Pension
Other beneﬁ ts

Executive Management in total1

Fee to Board of Directors2

37
9
1

35
9
1

32
8
1

1. Excluding share-based payments, as these are allocated in the joint pool between
Executive Management and other members of the Senior Management Board.
Please refer to note 5.1 and ’Remuneration’ pp 49 – 51, for further information on
remuneration to the Board of Directors, Executive Management and other members
of Senior Management Board.

2. Excluding social security taxes paid amounting to less than DKK 1 million (less than

DKK 1 million in 2011).

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68 CONSOLIDATED FINANCIAL STATEMENTS

2.4 Income and deferred income taxes (continued)

Deferred income taxes

Accounting policies
Deferred income taxes arise from temporary differences between the accounting 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 generally retained by subsidiaries for
reinvestment, hence no provision is made for income taxes that would be payable upon the distribution of such earnings unless a concrete distribution of
earnings is planned.

Key accounting estimate – deferred income tax assets and liabilities
Novo Nordisk is subject to income taxes around the world. Signiﬁ cant 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
sufﬁ cient taxable income will be available in the future against which the temporary differences and unused tax losses can be utilised. Management has
considered future taxable income in assessing whether deferred income tax assets should be recognised.

Development in deferred income tax assets and liabilities

DKK million

2012

2011

At the beginning of the year
Reclassiﬁ cation from Other liabilities (note 3.8)
Deferred tax on proﬁ t for the year
Adjustment relating to previous years
Deferred tax on items recognised in Other comprehensive income
Exchange rate adjustments

Total deferred tax assets/(liabilities), net

DKK million

2012
Net deferred tax asset/(liability) at 1 January
Reclassiﬁ cation from Other liabilities
Income/(charge) to the Income statement
Income/(charge) to Other comprehensive income
Exchange rate adjustment

(3)

Net deferred tax asset/(liability) at 31 December

(997)

Classiﬁ ed as follows:
Deferred tax asset at 31 December
Deferred tax liability at 31 December

2011
Net deferred tax asset/(liability) at 1 January
Income/(charge) to the Income statement
Income/(charge) to Other comprehensive income
Exchange rate adjustment

176
(1,173)

(1,279)
227

(8)

Net deferred tax asset/(liability) at 31 December

(1,060)

Classiﬁ ed as follows:
Deferred tax asset at 31 December
Deferred tax liability at 31 December

173
(1,233)

Property,
plant and
equipment

Intangible
assets

Inventories

Tax-loss
carry-
forward

(1,060)

244

1,599

(17)

(4)

66
–

113
(21)

(5)

(185)
(78)
–

1,336

2,560
(1,224)

1,431
127
41
–

1,599

(106)

(5)

133

436
(303)

545
(316)

244

550
(306)

(792)
(739)
(645)
4,309
(575)
(46)

1,512

Offset
within
countries

–

Other

(1,662)
(739)
3,906
(497)
(34)

974

1,421
(447)

(2,415)
2,415

(1,828)
(34)
149
51

(1,662)

–

(1,018)
–
(257)
240
190
53

(792)

Total

(792)
(739)
3,664
(575)
(46)

1,512

2,244
(732)

(1,018)
(17)
190
53

(792)

2,880
(1,281)

87
–

980
(2,642)

(2,256)
2,256

2,414
(3,206)

Further to the above, the tax value of tax-loss carry-forward of DKK 208 million (DKK 221 in 2011) 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 3 million expires within one year,
DKK 11 million between two to ﬁ ve years and DKK 194 million after more than ﬁ ve years.

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CONSOLIDATED FINANCIAL STATEMENTS 69

Section 3
Operating assets and liabilities

This section speciﬁ es the operating assets that form the basis for the activities of Novo Nordisk, and related liabilities.
These net assets impact Novo Nordisk’s long-term target for ‘Operating proﬁ t after tax to net operating assets (OPAT/NOA)’.

Novo Nordisk operates with a relatively high OPAT/NOA due to a low level of acquired intangible assets and a stable
operating asset base despite signiﬁ cant business growth. This is driven by Novo Nordisk’s organic growth strategy with
limited acquisition of rights or businesses, and reﬂ ects the fact that, in line with industry practice, Novo Nordisk does not
capitalise internal development costs until regulatory approval is highly probable. The overall approach to managing
operating assets is to retain assets for research, development and production activities under the company’s own control,
and generally to lease non-core assets related to administration and distribution. Furthermore, to maintain high quality
in the company’s products and the capability at all times to deliver products to customers, Novo Nordisk ensures that the
total production capacity and inventory levels reﬂ ect this priority.

3.1 Intangible assets

Accounting policies
Patents and licences, including acquired patents and licences for in-process
research and development projects, are carried at historical cost less
accumulated 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 amortisation
of patents and licences begins, at the earliest, on production of pre-launch
inventory or after regulatory approval has been obtained.

Internal development of computer software and other development costs
related to major IT projects for internal use that are directly attributable
to the design and testing of identiﬁ able and unique software products
controlled by Novo Nordisk are recognised as intangible assets if the
recognition criteria are met. The computer software has to be a signiﬁ cant
business system and the expenditure must lead to the creation of a durable
asset. 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.

Impairment of assets
Intangible assets with an indeﬁ nite useful life and intangible assets not yet
available for use are not subject to amortisation and are tested annually
for impairment irrespective of whether there is any indication that they may
be impaired.

Assets that are subject to amortisation, such as intangible assets in use
or with deﬁ nite useful life, and other non-current assets are reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. Factors considered material
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

treatments

• Lower-than-predicted sales
• Adverse impact on reputation and/or brand names
• Changes in the economic lives of similar assets
• Relationship with other intangible assets or property, plant and

equipment

• Changes or anticipated changes in participation rates or reimbursement

policies.

If the carrying amount of intangible assets exceeds the recoverable amount
based upon the existence of one or more of the above indicators of
impairment, any impairment is measured based on discounted projected
cash ﬂ ows. Impairments are reviewed at each reporting date for possible
reversal.

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

2012

2011

2,538
198
(18)
(6)

2,277
259
(1)
3

2,712

2,538

1,049
160
32

(18)
(6)

819
107
125

(1)
(1)

1,217

1,049

Carrying amount at the end of the year

1,495

1,489

Speciﬁ ed as:
Patents and licenses
Internally developed software
Other intangible assets

Total

762
532
201

696
518
275

1,495

1,489

Hereof intangible assets not yet in use amount to DKK 669 million
(DKK 980 million in 2011), primarily patents and licences in relation to
development projects.

In 2012, an impairment loss of DKK 32 million (DKK 125 million in 2011)
related to patents has been recognised due to discontinuation of
development projects. Impairment tests in 2012 and 2011 of assets not
yet in use were based upon Management’s projections and anticipated net
present value of future cash ﬂ ows 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 ﬂ ow over that period, and the useful life of the
underlying assets.

Amortisation and impairment losses

DKK million

2012

2011

2010

Cost of goods sold
Sales and distribution costs
Research and development costs
Licence fees and other operating
income, net

Total amortisation and
impairment losses

81
50
47

47
35
139

192

232

42
13
19

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70 CONSOLIDATED FINANCIAL STATEMENTS

3.2 Property, plant and equipment

Accounting policies
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 beneﬁ ts associated with the item will ﬂ ow to Novo Nordisk and the cost of the item
can be measured reliably. In general, constructions of major investments are self-ﬁ nanced and thus no material interest on loans 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 –10 years
• Land: not depreciated.

The depreciation 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.

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 (please refer to note 3.1 for a description of
impairment of assets). Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Income
statement.

Property, plant and equipment

DKK million

2012
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

Payments on
account and
assets in
course of
construction

14,600
171
(287)
1,020
(159)

17,845
136
(350)
553
(162)

3,080
220
(111)
192
(22)

4,815
2,845
–
(1,765)
(17)

Total

40,340
3,372
(748)
–
(360)

15,345

18,022

3,359

5,878

42,604

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

5,525
655
18
(263)
(54)

11,888
1,445
68
(315)
(111)

1,996
313
2
(91)
(11)

Depreciation and impairment losses at the end of the year

5,881

12,975

2,209

–
–
–
–
–

–

19,409
2,413
88
(669)
(176)

21,065

Carrying amount at the end of the year

9,464

5,047

1,150

5,878

21,539

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

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

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

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3.2 Property, plant and equipment (continued)

3.4 Trade receivables

CONSOLIDATED FINANCIAL STATEMENTS 71

Accounting policies
Trade receivables are, if collection is expected within one year (or in the
normal operating cycle of the business if longer), classiﬁ ed as Current
assets. If not, they are presented as Non-current assets.

Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less
allowances for doubtful trade receivables.

The allowances are 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.

Key accounting estimate –
Allowance for doubtful trade receivables
Novo Nordisk maintains allowances for doubtful trade receivables in
anticipation of estimated losses resulting from the subsequent inability
of customers to make required payments. If the ﬁ nancial circumstances of
customers were to deteriorate, resulting in an impairment of their ability
to make payments, additional allowances could be required in future
periods. When evaluating the adequacy of the allowance for doubtful
trade receivables, Management analyses trade receivables and examines
historical bad debt, customer concentrations, customer creditworthiness,
current economic trends and changes in customer payment terms.
Please refer to note 4.3 for a general description of credit risk.

As a result of the generally troubled economic climate in Europe and
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.

Furthermore, as a result of the signiﬁ cant increase in sales to countries
within Region International Operations, and the fact that many of these
countries have low credit ratings, the relative impact of Region International
Operations on the allowance for doubtful trade receivables is increasing.
Hence, Novo Nordisk continues to monitor the credit exposure related to
this region.

Please refer to note 2.2 for a geographical split of trade receivables and
allowances for doubtful trade receivables.

Depreciation and impairment

DKK million

2012

2011

2010

Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative costs
Licence fees and other operating
income, net

Total depreciation and
impairment losses

1,909
46
416
53

1,833
60
494
58

1,790
47
441
56

2,501

2,505

2,387

3.3 Inventories

Accounting policies
Inventories are stated at the lower of cost and net realisable value. Cost
is determined using the ﬁ rst-in, ﬁ rst-out method. Cost comprises direct
production costs such as raw materials, consumables and labour as well as
indirect production costs (IPC). Production costs for work in progress and
ﬁ nished goods include IPC such as employee costs, depreciation,
maintenance etc.

If the expected sales prices less completion costs to execute sales (net
realisable value) are 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 of inventory 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.

Key accounting estimate – Indirect production costs
IPC are measured using 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 IPC could have an impact on the gross margin and the overall valuation
of inventories.

Inventories

DKK million

Raw materials
Work in progress
Finished goods

Total inventories (gross)

Inventory write-downs at year-end

Total inventories (net)

Indirect production costs included in work
in progress and ﬁ nished goods (net)
Share of total inventories (net)

2012

2011

1,512
4,910
3,985

1,432
5,035
3,781

10,407

10,248

864

815

9,543

9,433

4,894
51%

5,125
54%

Movements in the inventory
write-downs
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

815
845
(532)
(264)

1,301
303
(500)
(289)

Inventory write-downs at the end of the year

864

815

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72 CONSOLIDATED FINANCIAL STATEMENTS

3.4 Trade receivables (continued)

3.6 Provisions

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 45 days (51 days in 2011).

Age analysis of trade receivables
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

2012

2011

10,663
1,024

10,241
892

9,639

9,349

Accounting policies
Provisions for sales rebates and discounts granted to government agencies,
wholesalers, retail pharmacies, managed care and other customers
are recorded at the time the related revenues are recorded or when
the incentives are offered. They are calculated on the basis of historical
experience and the speciﬁ c terms in the individual agreements.

Provisions for legal disputes are recognised where a legal or constructive
obligation has been incurred as a result of past events and it is probable
that there will be an outﬂ ow of resources that can be reliably estimated. In
this case, Novo Nordisk arrives at an estimate on the basis of an evaluation
of the most likely outcome. Disputes for which no reliable estimate can be
made are disclosed as contingent liabilities.

8,950
629
60
0

8,503
712
134
0

Novo Nordisk issues credit notes for expired goods as a part of normal
business. Where there is historical experience or a reasonably accurate
estimate of expected future returns can otherwise be made, a provision for
estimated product returns is recorded. The provision is measured at gross
sales value.

Trade receivables with credit risk exposure

9,639

9,349

Impaired trade receivables

Trade receivables (gross)

1,024

892

10,663

10,241

Provisions are measured at the present value of the anticipated expenditure
for settlement of the legal or constructive obligation using a pre-tax rate
that reﬂ ects current market assessments of the time value of money and
the risks speciﬁ c to the obligation. The increase in the provision due to the
passage of time is recognised as interest expense.

Movement in allowances for
doubtful trade receivables
Carrying amount at the beginning of the year
Conﬁ rmed losses
Reversal of allowances for conﬁ rmed losses
Allowances for possible losses during the year
Effect of exchange rate adjustment

892
(35)
(13)
189
(9)

Allowances at the end of the year

1,024

627
(66)
(18)
361
(12)

892

Key accounting estimate – Provisions for sales rebates
Novo Nordisk records provisions and accruals for expected sales rebates,
wholesaler charge-backs and other rebates, including Medicaid and
Medicare in the US and similar rebates in other countries.

Such estimates are based on analyses of existing contractual or legal
obligations, historical trends and the Group’s experience. They are
calculated on the basis of a percentage of sales for each product as deﬁ ned
by the contracts with the various customer groups.

3.5 Other receivables and prepayments

Accounting policies
Other receivables and prepayments are recognised initially at fair value
and subsequently measured at amortised cost using the effective interest
method.

Other receivables comprise miscellaneous duties and work in progress for
third parties etc. Prepayments are payments made to ongoing research and
development activities and concerning subsequent ﬁ nancial years etc.

Other receivables and prepayments

DKK million

2012

2011

Prepayments
Interest receivable
Amounts owed by related parties
Deposit
VAT receivable
Other receivables

1,033
87
184
524
185
692

935
113
88
558
122
560

Total other receivables and prepayments

2,705

2,376

Provisions for sales rebates are adjusted to actual amounts as rebates,
discounts and returns are processed. Please refer to note 2.1 for further
information on sales rebates and provision.

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.

Key accounting estimate – Provisions for 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 input of external counsels on
each case, as well as known outcomes in case law.

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.

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CONSOLIDATED FINANCIAL STATEMENTS 73

3.6 Provisions (continued)

Provisions

DKK million

Provisions
for sales
rebates

Provisions
for legal
disputes1

Provisions
for product
returns

Other
provisions2

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

5,666
12,912
(10,954)
(187)
(85)

1,554
41
–
(513)
(25)

At the end of the year

7,352

1,057

Classiﬁ ed as follows:
Non-current liabilities
Current liabilities

–
7,352

1,057
–

1. Please refer to note 5.4 for further information on commitments and contingencies.
2. Other provisions consist of various types of provision including employee beneﬁ ts such as jubilee beneﬁ ts etc.

555
263
(238)
–
2

582

349
233

489
203
(63)
(68)
11

572

501
71

2012
Total

8,264
13,419
(11,255)
(768)
(97)

2011
Total

6,667
10,511
(8,228)
(782)
96

9,563

8,264

1,907
7,656

2,324
5,940

3.7 Retirement beneﬁ t obligations

Retirement beneﬁ t obligations

Accounting policies
Novo Nordisk operates a number of deﬁ ned contribution plans throughout
the world. Novo Nordisk’s contributions to the deﬁ ned contribution plans
are charged to the Income statement in the year to which they relate. In
a few countries, Novo Nordisk still operates deﬁ ned beneﬁ t plans; these are
primarily located in Japan, Germany, the US and Switzerland. The costs for
the year for deﬁ ned beneﬁ t plans are determined using the projected unit
credit method. This reﬂ ects services rendered by employees to the valuation
dates and is based on actuarial assumptions primarily regarding discount
rates used in determining the present value of beneﬁ ts and projected rates
of remuneration growth. Discount rates are based on the market yields of
high-rated corporate bonds in the country concerned.

Actuarial gains and losses arising from experience adjustments and changes
in actuarial assumptions are charged or credited to other com prehensive
income in the period in which they arise.

DKK million

2012

2011

Pension
plans

Medical
beneﬁ ts

Total

At the beginning of the year
Current service costs
Interest costs
Remeasurement (gains)/losses1
Past service costs
Beneﬁ ts paid
Curtailments2
Exchange rate adjustment
Other

1,125
111
37
188
–
(75)
–
(36)
20

238
21
10
35
–
(5)
–
(4)
(1)

1,363
132
47
223
–
(80)
–
(40)
19

1,452
155
52
(29)
(27)
(75)
(241)
43
33

At the end of the year

1,370

294

1,6643

1,3633

Past service costs are recognised immediately in the Income statement.

Pension assets are only recognised to the extent that Novo Nordisk is
able to derive future economic beneﬁ ts such as refunds from the plan or
reductions of future contributions.

1. Remeasurement relates primarily to change in ﬁ nancial assumptions.
2. Curtailment relates to changes in deﬁ ned beneﬁ t plans in Japan and the US in 2011.
3. Present value of partly funded retirement beneﬁ t obligations amounts to DKK 1,229
million (DKK 1,071 million in 2011). Present value of unfunded retirement beneﬁ t
obligations amounts to DKK 435 million (DKK 292 million in 2011).

The Group’s deﬁ ned beneﬁ t plans are pension plans and medical plans and
are usually funded by payments from Group companies and by employees
to funds independent of Novo Nordisk. Where a plan is unfunded, a liability
for the retirement obligation is recognised in the balance sheet. Costs
recognised for post-employment beneﬁ ts are included in Cost of goods
sold, Sales and distribution costs, Research and development costs, and
Administrative costs.

Other post-employment beneﬁ ts mostly comprise post-retirement
healthcare plans, principally in the US.

Please refer to note 1.2 for a description of the changed accounting policy
for retirement beneﬁ t obligations.

Fair value of plan assets

DKK million

2012

2011

At the beginning of the year
Interest income
Remeasurement gains/(losses)
Employer contributions
Beneﬁ ts paid to employees
Exchange rate adjustment
Other

At the end of the year

859
31
7
93
(80)
(23)
17

904

766
28
(20)
128
(75)
20
12

859

Net retirement beneﬁ t obligations
at the end of the year (unfunded)1

760

504

1. Unrecognised remeasurements in 2011 amounted to DKK 65 million. Net retirement

beneﬁ t obligation recognised in the Balance sheet in 2011 amounted to
DKK 439 million.

The amount recognised in the Balance sheet is reported as non-current
liabilities.

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74 CONSOLIDATED FINANCIAL STATEMENTS

3.7 Retirement beneﬁ t obligations (continued)

3.8 Other liabilities

Net retirement beneﬁ t obligations

Other liabilities

DKK million

2012

2011

DKK million

At the beginning of the year
Costs recognised in the Income statement1
Remeasurements recognised in
Other comprehensive income2
Exchange rate adjustment recognised in
Other comprehensive income3
Employer contributions

439
150

281

(17)
(93)

569
(25)

–

23
(128)

Employee costs payable
Accruals
VAT and duties payable
R&D clinical trials
Other payables2

Total other liabilities

2012

2011

3,748
3,697
703
229
605

3,369
2,9921
537
211
1,425

8,982

8,534

1. Including reclassiﬁ cation to deferred income tax liabilities of DKK 739 million in 2012

(note 2.4).

2. Other payables primarily relates to royalty payments and deferred income.

At the end of the year

760

439

1. Costs in Income statement include service costs, net interests, curtailments and

other.

2. Remeasurements charged to Other comprehensive income including effect of

change in accounting policy in 2012 amounting to DKK 65 million.

3. Recognised in Other comprehensive income as part of Exchange rate adjustments

of investments in subsidiaries.

Please refer to note 5.4 for maturity analysis of net retirement beneﬁ t
obligation.

Novo Nordisk does not expect the contributions over the next ﬁ ve years to
differ signiﬁ cantly from current contributions.

Weighted average asset allocation of funded
retirement obligations

2012

67%
7%
24%
1%
1%

DKK
million

575
49
152
75
8

2011

67%
5%
18%
9%
1%

DKK
million

607
67
214
9
7

Coverage insurance1
Equities
Bonds
Cash at bank
Property

Total

904

100%

859

100%

1. Novo Nordisk’s deﬁ ned beneﬁ t plans in Germany and Switzerland are reimbursed
by the international insurer Allianz regardless of the value of the plan assets. The
risk related to the funding in these countries is therefore counterparty risk against
Allianz.

Assumptions used for valuation

Discount rate
Projected future remuneration increases
Medical cost trend rate
Inﬂ ation rate

2012

2011

3%
2%
3%
2%

4%
2%
3%
2%

Actuarial valuations are performed annually for all major deﬁ ned beneﬁ t
plans. Assumptions regarding future mortality are based on actuarial advice
in accordance with published statistics and experience in each country.

Signiﬁ cant actuarial assumptions for the determination of the retirement
beneﬁ t obligation are discount rate and expected future remuneration
increases. The sensitivity analyses below have been determined based on
reasonably likely changes in the assumptions occurring at the end of the
period.

DKK million

Discount rate
Future remuneration

1%-point
increase

1%-point
decrease

(237)
77

309
(57)

NOVO NORDISK ANNUAL REPORT 2012

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CONSOLIDATED FINANCIAL STATEMENTS 75

Section 4
Capital structure and ﬁ nancing items

This section encompasses notes related to Novo Nordisk’s capital structure and ﬁ nancing items. Further information on the
company’s capital structure can be found in ‘Shares and capital structure’ on pp 44 – 45.

Novo Nordisk’s guiding principle on capital structure is that excess cash ﬂ ow – after funding of organic growth opportunities,
research and development, and potential licensing and acquisitions – is returned to the company’s shareholders. Novo
Nordisk applies a pharmaceutical industry average payout ratio to dividend payments, complemented by share repurchase
programmes. The main ﬁ nancial risk is foreign exchange exposure, where Novo Nordisk intends to reduce the short-term
impact from the movement in key currencies by hedging future cash ﬂ ows.

4.1 Share capital and earnings per share

Share capital

DKK million

Development in share capital:
2008
2009
2010
2011

At the beginning of the year

2012

At the end of the year

A share
capital

B share
capital

Total share
capital

107
–
–
–

107

–

107

527
(14)
(20)
(20)

473

(20)

453

634
(14)
(20)
(20)

580

(20)

560

At the end of 2012, the share capital amounted to DKK 107 million in A share capital (equal to 107 million A shares of DKK 1) and DKK 453 million
in B share capital (equal to 453 million B shares of DKK 1).

Treasury shares

Accounting policies
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 to
acquire or received for disposing of, treasury shares are deducted from Retained earnings.

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

4.2%
(3.4%)

0.8%

16,131
(13,200)

2,931
12,162
(266)
1,135

15,962

0.8%
2.6%
(0.3%)

3.1%

2012

Number of
B Shares
of DKK 1
(million)

2011

Number of
B Shares
of DKK 1
(million)

24
(20)

4
15
(2)
–

28
(20)

8
18
(2)
–

The purchase of treasury shares during the year relates to the remaining part of the 2011 share repurchase programme totalling DKK 1.1 billion and the
DKK 12 billion share repurchase programme of Novo Nordisk B shares for 2012 of which DKK 1 billion remains at year end. The programme ends at
29 January 2013. The purpose of the programmes is to reduce 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.

At year-end the holding of treasury shares amounts to 17,416,676 shares (24,440,186 shares in 2011). At year-end 3.5 million shares of the holding of
treasury B shares are regarded as hedges for the long-term share-based incentive programme and share options to employees.

Dividend

At the end of 2012, proposed dividends (not yet declared) of DKK 9,715 million (DKK 18.00 per share) are included in Retained earnings.
The declared dividend included in Retained earnings was DKK 7,742 million (DKK 14.00 per share) in 2011 and DKK 5,700 million (DKK 10.00 per share)
in 2010. No dividend is declared on treasury shares.

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76 CONSOLIDATED FINANCIAL STATEMENTS

4.1 Share capital and earnings per share (continued)

Earnings per share

Accounting policies
Earnings per share (EPS) is presented as both basic earnings per share and diluted earnings per share.

Basic earnings per share is calculated as net proﬁ t divided by the average number of shares outstanding.

Diluted earnings per share is calculated as net proﬁ t divided by the sum of average number of shares outstanding, including the dilutive effect of share
options ‘in the money’. The dilutive effect of share options ‘in the money’ is calculated as the difference between the following:

1) the number of shares that could have been acquired at fair value with proceeds from the exercise of the share options
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.

DKK million

Net proﬁ t for the year

2012

2011

2010

21,432

17,097

14,403

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

548,338
3,330

565,433
4,699

580,438
5,039

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

in 1,000 shares

551,668

570,132

585,477

Basic earnings per share1
Diluted earnings per share1

DKK
DKK

39.09
38.85

30.24
29.99

24.81
24.60

1. For further information on outstanding share bonus pool and options, refer to note 5.1.

4.2 Debt

4.3 Financial risk

Accounting policies
Loans are recognised initially at fair value, net of transaction costs incurred.
Loans are subsequently stated at amortised cost; any difference between
the proceeds (net of transaction costs) and the redemption value is
recognised in the Income statement over the period of the loans using the
effective interest method. Loans are classiﬁ ed as Current debt unless Novo
Nordisk has an unconditional right to defer settlement of the liability for
at least 12 months after the end of the reporting period.

Debt

DKK million

Loans1
Current debt (bank overdrafts)
Derivative ﬁ nancial instruments (note 4.4)

Total debt

The debt is denominated in the following
currencies:
DKK
EUR
USD
JPY
Other currencies

Total debt

2012

2011

–
500
48

548

20
1
53
0
474

548

502
351
1,492

2,345

82
501
983
404
375

2,345

1. A loan of DKK 502 million with maturity in 2022 has been repaid during 2012.

Novo Nordisk has centralised management of the Group’s ﬁ nancial
risks. The overall objectives and policies for the company’s ﬁ nancial risk
management are outlined in an internal Treasury Policy, which is approved
by the Board of Directors. The Treasury Policy consists of the Foreign
Exchange Policy, the Investment Policy, the Financing Policy and the Policy
regarding Credit Risk on Financial Counterparts, and includes a description
of permitted ﬁ nancial 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 ﬁ nancial 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 ﬁ nancial risk for Novo Nordisk and
as such has a signiﬁ cant impact on the Income statement, Other
comprehensive income, the Balance sheet and the Statement of cash ﬂ ows.

The majority of Novo Nordisk’s sales are in EUR, USD, JPY, CNY and GBP.
Consequently, Novo Nordisk’s foreign exchange risk is most signiﬁ cant in
USD, JPY, CNY and GBP, while the EUR exchange rate risk is regarded as low
due to the Denmark’s ﬁ xed-rate policy towards EUR.

The overall objective of foreign exchange risk management is to limit the
short-term negative impact of exchange rate ﬂ uctuations on earnings and
cash ﬂ ow, thereby increasing the predictability of the ﬁ nancial results.

Novo Nordisk hedges existing assets and liabilities in key currencies as
well as future expected cash ﬂ ows up to a maximum of 24 months forward.
During 2012, the hedging horizon varied between 11 and 13 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 ﬂ ows are continually assessed using historical inﬂ ows,
budgets and monthly sales forecasts. Hedge effectiveness is assessed on a
regular basis.

NOVO NORDISK ANNUAL REPORT 2012

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4.3 Financial risk (continued)

Key currencies

Exchange rate
DKK per 100

2012
Average
End of year
Year-end change

2011
Average
End of year
Year-end change

USD

JPY

CNY

GBP

579
566
-1.6%

7.27
6.57
-11.5%

536
575
2.5%

6.73
7.42
7.7%

92
91
0.0%

83
91
7.1%

918
913
2.6%

859
890
2.7%

The ﬁ nancial contracts existing at the end of the year cover the expected
future cash ﬂ ow for the following number of months:

USD
JPY
CNY1
GBP

2012

2011

12 months
13 months
12 months
12 months

12 months
12 months
12 months
12 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 proﬁ t as outlined in the table below:

DKK million

USD
JPY
CNY
GBP

Estimated for
2013

975
200
110
85

2012

775
170
100
75

A 5% increase/decrease in all other currencies versus EUR and DKK would
affect the hedging instruments’ impact on Other comprehensive income
and the Income statement as outlined in the table below:

DKK million

2012
Other comprehensive income
Income statement

Total

2011
Other comprehensive income
Income statement

Total

5% increase in all
currencies against
DKK and EUR

5% decrease in all
currencies against
DKK and EUR

(1,313)
(117)

(1,430)

(1,011)
54

(957)

1,376
106

1,482

1,026
(38)

988

The higher foreign exchange sensitivities in 2012, compared with 2011, are
primarily a result of higher expected future cash ﬂ ow.

The ﬁ nancial 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 ﬁ nancial 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.

CONSOLIDATED FINANCIAL STATEMENTS 77

Interest rate risk
In general, DKK and EUR interest rates declined in 2012. The Danish
two-year interest rate was 0.53% at the end of 2012, down from 1.08% at
the end of 2011. The three-month Cibor interest rate was 0.28% at the
end of 2012, down from 1.00% at the end of 2011.

Changes in interest rates affect Novo Nordisk’s ﬁ nancial instruments. At the
end of 2012, a 1 percentage point increase in the interest rate level would,
all else being equal, result in a decrease in the fair value of Novo Nordisk’s
ﬁ nancial instruments of DKK 20 million (a decrease in the fair value of
DKK 17 million in 2011).

The ﬁ nancial instruments included in the sensitivity analysis consist of
marketable securities, deposits, current and non-current loans, interest
rate swaps and cross-currency swaps. Not included are foreign exchange
forwards and foreign exchange options due to the limited effect that
a parallel shift in interest rates in all currencies has on these instruments.

Liquidity risk
Novo Nordisk ensures availability of required liquidity through a
com bination of cash management, highly liquid investment portfolios and
uncommitted as well as committed facilities. Novo Nordisk uses cash pools
for optimisation and centralisation of cash management. For non-cash
pool afﬁ liates, surplus cash above the balance required for working capital
management is deposited centrally.

Credit risk
Credit risk arises from the possibility that counterparties to transactions
may default on their obligations, causing ﬁ nancial losses for the Group.
Novo Nordisk considers its maximum credit risk on ﬁ nancial assets to be
DKK 17,036 million (2011: DKK 17,550 million). In addition, Novo Nordisk
considers its maximum credit risk on Trade receivables, Other receivables
less prepayments and Other ﬁ nancial assets to be DKK 11,539 million (2011:
DKK 11,024 million). Please refer to note 4.7 for details of the Group’s total
ﬁ nancial assets.

To manage credit risk on ﬁ nancial counterparties, Novo Nordisk only enters
into derivative ﬁ nancial contracts and money market deposits with ﬁ nancial
counterparties possessing a satisfactory long-term credit rating from both
Standard and Poor’s and Moody’s. Furthermore, maximum credit lines
deﬁ ned 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 below shows Novo Nordisk’s credit
exposure on cash, ﬁ xed-income marketable securities and ﬁ nancial
derivatives.

Credit exposure on Cash at bank or on hand, Marketable securities and
Derivative ﬁ nancial instruments (market value)

DKK million

2012
AAA-range
AA-range
A-range
BBB-range
Not rated or
below BBB-range

Cash at
bank or
on hand

Marketable
securities

Derivative
ﬁ nancial
instruments

6,930
4,011
469

143

4,544

466
180
285

Total

4,544
7,396
4,191
754

151

Total

11,553

4,552

931

17,036

2011
AAA-range
AA-range
A-range
BBB-range
Not rated or
below BBB-range

4,083

6,223
7,156

16
32

4,083
6,239
7,188

Total

13,408

4,094

17,550

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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 remeasured 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 reclassiﬁ cation adjustment under
Financial income or Financial expenses when the hedged transaction is
recognised in the Income statement. Gains and losses on currency options
that do not meet the criteria for hedge accounting are recognised directly
in the Income statement under Financial income or Financial expenses.

The fair value of ﬁ nancial assets and liabilities is measured on the basis of
quoted market prices of ﬁ nancial instruments traded in active markets.
If an active market exists, fair value is based on the most recently observed
market price at the end of the reporting period.

If a ﬁ nancial instrument is quoted in a market that is not active, Novo
Nordisk bases its valuation on the most recent transaction price. Adjustment
is made for subsequent changes in market conditions, for instance by
including transactions in similar ﬁ nancial instruments that are assumed to
be motivated by normal business considerations.

If an active market does not exist, the fair value of standard and simple
ﬁ nancial instruments, such as 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.

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.

78 CONSOLIDATED FINANCIAL STATEMENTS

4.3 Financial risk (continued)

Credit risk on Trade receivables and Other receivables and prepayments
is less material as Novo Nordisk has no signiﬁ cant 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 continues to focus on the development in the outstanding trade
receivables from this region. Novo Nordisk also continues to monitor the
credit exposure in Region International Operations due to the increasing
sales and low credit ratings of many countries in this region.

Please refer to note 2.2 for split of allowance for trade receivables by
geographical segment.

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 reﬂ ects the inherent long-term investment horizons in an
industry with typically more than 10 years’ development time for
pharmaceutical products. Novo Nordisk’s equity ratio, calculated as equity
to total liabilities, was 61.9% at the end of the year (57.9% at the end
of 2011).

4.4 Derivative ﬁ nancial instruments

Accounting policies
The derivative ﬁ nancial instruments are used to manage the exposure to
market risk. None of the derivatives are held for trading. However, not all
derivatives are designated for hedge accounting.

Novo Nordisk uses forward exchange contracts and currency options
to hedge forecast transactions and assets and liabilities. Currently, net
investments in foreign subsidiaries are not hedged.

Upon initiation of the contract, Novo Nordisk designates each derivative
ﬁ nancial contract that qualiﬁ es for hedge accounting as one of:

• hedges of the fair value of a recognised asset or liability or a ﬁ rm

commitment (fair value hedge)

• hedges of the fair value of a forecast ﬁ nancial transaction (cash ﬂ ow

hedge)

• hedges of a net investment in a foreign operation (net investment

hedge).

All contracts are initially recognised at fair value and subsequently
remeasured at their fair values based on current bid prices at the end of the
reporting period.

Forward exchange contracts recognised as hedging 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 designated as
hedges of forecast transactions are recognised directly in Other
comprehensive income, given hedge effectiveness. The cumulative value
adjustment of these contracts is transferred from Other compre hensive
income to the Income statement as a reclassiﬁ cation adjustment under
Financial income or Financial expenses when the hedged transaction is
recognised in the Income statement.

Currency swaps used to hedge net investments in subsidiaries are measured
at fair value based on the difference between the swap exchange rate and
the exchange rate at the end of the reporting period. The value adjustment
is recognised in Other comprehensive income.

NOVO NORDISK ANNUAL REPORT 2012

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CONSOLIDATED FINANCIAL STATEMENTS 79

4.4 Derivative ﬁ nancial instruments (continued)

Hedging activities

DKK million

Forward contracts, cash ﬂ ow hedges
Currency options, cash ﬂ ow hedges
Forward contracts, fair value hedges
Cross-currency swaps, net investment hedges1

Contract
amount
at year-end

25,639
2,755
2,521

2012

Positive
fair value
at year-end

732
134
95

Total currency-related instruments

30,915

961

Interest rate swaps, cash ﬂ ow hedges

Total interest-related instruments

–

Total hedging activities

30,915

961

Total derivatives included in:
Derivative ﬁ nancial instruments (current assets)
Derivative ﬁ nancial instruments (current liabilities)
Equity, Other reserves

931

Negative
fair value
at year-end

Contract
amount
at year-end

2011

Positive
fair value
at year-end

116

Negative
fair value
at year-end

1,256

176
56

116

1,488

–

18,906
4,805
2,534
166

26,411

250

26,661

116

1,492

–

1. No net investment hedge exist at year-end 2012. In 2011, the ﬁ nancial contract existing at the end of the year hedged 13% of the net investments in JPY.

Presentation in the Income statement and Other comprehensive income

DKK million

Cash ﬂ ow hedges for which hedge accounting is not applied
Fair value hedges

Total fair value adjustments through the Income statement

Cash ﬂ ow hedges for which hedge accounting is applied
Net investment hedges (included in exchange rate adjustment)

Total fair value adjustments through Other comprehensive income

Total fair value adjustments

2012

Positive
fair value
at year-end

Negative
fair value
at year-end

19
95

114

847

961

–

2011

Positive
fair value
at year-end

Negative
fair value
at year-end

8
176

184

1,252
56

1,308

116

1,492

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80 CONSOLIDATED FINANCIAL STATEMENTS

4.4 Derivative ﬁ nancial instruments (continued)

Hedging of forecast transactions (cash ﬂ ow hedge)

DKK million

Hedging of forecast transactions qualifying
for hedge accounting

USD
JPY, GBP and other currencies

Total forward contracts (forecasted cash ﬂ ow)

USD
JPY

Total currency options (forecasted cash ﬂ ow)

Total interest rate swaps (variable payments
on debt instruments) EUR /EUR

Total cash ﬂ ow hedges for which hedge
accounting is applied

Other forecast transaction hedges for which
hedge accounting is not applied

Currency options and interest rate swaps
for which hedge accounting is not applied

Total contracts of forecast transactions

Hedging of assets and liabilities (fair value hedge)

DKK million

USD
JPY
GBP
Other

Total forward contracts

Contract
amount
at year-end

2012

Positive
fair value
at year-end

Negative
fair value
at year-end

Contract
amount
at year-end

2011

Positive
fair value
at year-end

Negative
fair value
at year-end

19,939
5,700

25,639

2,402
353

2,755

409
323

732

72
43

115

–

28,394

847

–

28,394

866

Contract
amount
at year-end

698
444
365
1,014

2,521

2012

Positive
fair value
at year-end

14,250
4,656

18,906

4,007
798

4,805

250

896
360

1,256

–

(4)

–

66
2

–

23,961

1,252

–

23,961

116

1,260

–

Negative
fair value
at year-end

Contract
amount
at year-end

2011

Positive
fair value
at year-end

Negative
fair value
at year-end

81
72
7
16

478
731
376
949

2,534

–

176

The table above shows the fair value of fair value-hedging activities for 2012 and 2011 speciﬁ ed by hedging instrument and the major currencies.
All changes in fair values are recognised in the Income statement, amounting to a net gain of DKK 47 million in 2012 (a net loss of DKK 176 million in 2011).
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.

The ﬁ nancial contracts existing at the end of the year hedge the currency exposure on assets and liabilities in the Group’s major currencies other than DKK
and EUR, ie primarily assets and liabilities in USD, JPY and GBP. ‘Other’ comprises AUD at DKK 475 million (DKK 399 million in 2011), CAD at DKK 138 million
(DKK 170 million in 2011) and PLN at DKK 401 million (DKK 380 million in 2011).

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4.5 Cash and cash equivalents

4.7 Financial assets and liabilities

CONSOLIDATED FINANCIAL STATEMENTS 81

Accounting policies
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.

Cash and cash equivalents

DKK million

2012

2011

2010

Cash at bank and on hand (note 4.3)
Bank overdrafts (note 4.2)

11,553
(500)

13,408
(351)

12,017
(57)

Cash and cash equivalents
at the end of the year

11,053

13,057

11,960

4.6 Change in working capital

Accounting policies
Working capital is deﬁ ned as current assets less current liabilities.
It measures how much in liquid assets Novo Nordisk has available for the
business.

Change in working capital

DKK million

2012

2011

2010

Trade receivables
Other receivables and prepayments
Inventories
Trade payables
Other liabilities
Exchange rate adjustments

(290)
(329)
(110)
568
448
(13)

(849)
27
256
385
580
35

(1,437)
(441)
327
664
1,141
43

Total change in working capital

274

434

297

Accounting policies
Novo Nordisk classiﬁ es its investments in the following categories:

• Available-for-sale ﬁ nancial assets
• Loans and receivables
• Financial assets at fair value through the Income statement (derivatives).

The classiﬁ cation depends on the purpose for which the investments were
made. Management determines the classiﬁ cation of its investments on
initial recognition and re-evaluates this at the end of every reporting period
to the extent that such a classiﬁ cation is permitted and required.

Recognition and measurement
Purchases and sales of investments are recognised on the settlement date.
Investments are initially recognised at fair value.

Available-for-sale ﬁ nancial assets and ﬁ nancial assets at fair value
are subsequently carried at fair value. Loans and receivables are carried at
amortised cost using the effective interest method.

Fair value disclosures are made separately for each class of ﬁ nancial
instruments at the end of the reporting period.

Derecognition
Investments are derecognised when the rights to receive cash ﬂ ows from
the investments have expired or have been transferred, and Novo Nordisk
has transferred substantially all risks and rewards of ownership.

Available-for-sale ﬁ nancial assets
Available-for-sale ﬁ nancial assets consist of equity investments and
marketable securities and are included in Other ﬁ nancial assets unless
Management 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
in Other receivables and prepayments.

Unrealised gains and losses arising from changes in the fair value of
ﬁ nancial assets classiﬁ ed as available for sale are recognised in Other
comprehensive income. When ﬁ nancial assets classiﬁ ed as available for sale
are sold or impaired, the accumulated fair value adjustments are included
in the Income statement.

The fair values of quoted investments (including bonds) are based on
current bid prices at the end of the reporting period. Financial assets for
which no active market exists are carried at fair value based on a valuation
methodology or at cost if no reliable valuation model can be applied.

Loans and receivables
Loans and receivables are non-derivative ﬁ nancial assets with ﬁ xed or
deter minable payments that are not quoted in an active market. If
collection is expected within one year (or in the normal operating cycle of
the business if longer), they are classiﬁ ed as Current assets. If not, they are
presented as Non-current assets.

Trade receivables and Other receivables 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.

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NOVO NORDISK ANNUAL REPORT 2012

82 CONSOLIDATED FINANCIAL STATEMENTS

4.7 Financial assets and liabilities (continued)

Financial assets and liabilities

DKK million

2012
Other ﬁ nancial assets
Trade receivables (note 3.4)
Other receivables (note 3.5)
– less prepayments (note 3.5)
Marketable securities (bonds) (note 4.3)1
Derivative ﬁ nancial instruments (note 4.4)
Cash at bank and on hand (note 4.5)

Available-
for-sale
ﬁ nancial
assets at
fair value

147

4,552

Financial
assets
measured at
fair value
through the
Income
statement

Loans
and
receivables

Cash
and cash
equivalents

81
9,639
2,705
(1,033)

931

11,553

Total

228
9,639
2,705
(1,033)
4,552
931
11,553

Total ﬁ nancial assets at the end of the year by category

4,699

931

11,392

11,553

28,575

DKK million

Current debt (note 4.2)
Trade payables
Other liabilities (note 3.8)
– less VAT and duties payable (note 3.8)
Derivative ﬁ nancial instruments (note 4.4)

Total ﬁ nancial liabilities at the end of the year by category

DKK million

2011
Other ﬁ nancial assets
Trade receivables (note 3.4)
Other receivables (note 3.5)
– less prepayments (note 3.5)
Marketable securities (bonds) (note 4.3)1
Derivative ﬁ nancial instruments (note 4.4)
Cash at bank and on hand (note 4.5)

DKK million

Loans (note 4.2)
Current debt (note 4.2)
Trade payables
Other liabilities (note 3.8)
– less VAT and duties payable (note 3.8)
Derivative ﬁ nancial instruments (note 4.4)

Total ﬁ nancial liabilities at the end of the year by category

12,638

–

12,686

Financial
liabilities
measured at
fair value
through the
Income
statement

Financial
liabilities
measured at
fair value
through Other
comprehensive
income

Financial
liabilities
measured at
amortised
cost

500
3,859
8,982
(703)

Financial
assets
measured at
fair value
through the
Income
statement

Available-
for-sale
ﬁ nancial
assets at
fair value

230

4,094

Loans
and
receivables

Cash
and cash
equivalents

43
9,349
2,376
(935)

13,408

Financial
liabilities
measured at
fair value
through the
Income
statement

Financial
liabilities
measured at
fair value
through Other
comprehensive
income

Financial
liabilities
measured at
amortised
cost

502
351
3,291
8,534
(537)

1,308

184

12,141

1,308

13,633

Total

500
3,859
8,982
(703)
48

Total

273
9,349
2,376
(935)
4,094
48
13,408

Total

502
351
3,291
8,534
(537)
1,492

Total ﬁ nancial assets at the end of the year by category

4,324

10,833

13,408

28,613

1. Including Danish AAA-rated mortgage bonds issued by Danish credit institutions governed by the Danish Financial Supervisory Authority of DKK 4,544 million (DKK 4,083 million

in 2011); refer to note 4.3. Redemption yield on the bond portfolio is 0.73%.

For a description of the credit quality of ﬁ nancial assets such as Trade receivables, Cash at bank and on hand, Marketable securities, Current debt and
Derivative ﬁ nancial instruments, refer to notes 4.3 and 4.4.

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4.7 Financial assets and liabilities (continued)

Maturity analysis

DKK million

2012
Other ﬁ nancial assets
Trade receivables (note 3.4)
Other receivables (note 3.5)
– less prepayments (note 3.5)
Marketable securities (bonds) (note 4.3)
Derivative ﬁ nancial instruments (note 4.4)
Cash at bank and on hand (note 4.5)

CONSOLIDATED FINANCIAL STATEMENTS 83

Equity
investments

Maturity
< 1 year

Maturity
> 1 year
< 5 years

Maturity
> 5 years

Total

147

9,639
2,705
(1,033)
3,318
845
11,553

1,234
86

228
9,639
2,705
(1,033)
4,552
931
11,553

Total assets at the end of the year by maturity

147

27,027

1,320

28,575

Current debt (note 4.2)
Trade payables
Other liabilities (note 3.8)
- less VAT and duties payable (note 3.8)
Derivative ﬁ nancial instruments (note 4.4)

500
3,859
8,982
(703)
48

Total liabilities at the end of the year by maturity

12,686

–

12,686

2011
Other ﬁ nancial assets
Trade receivables (note 3.4)
Other receivables (note 3.5)
– less prepayments (note 3.5)
Marketable securities (bonds) (note 4.3)
Derivative ﬁ nancial instruments (note 4.4)
Cash at bank and on hand (note 4.5)

230

9,349
2,376
(935)
2,311
48
13,408

1,783

273
9,349
2,376
(935)
4,094
48
13,408

Total assets at the end of the year by maturity

230

26,557

1,783

28,613

Loans (note 4.2)
Current debt (note 4.2)
Trade payables
Other liabilities (note 3.8)
– less VAT and duties payable (note 3.8)
Derivative ﬁ nancial instruments (note 4.4)

Total liabilities at the end of the year by maturity

Fair value measurement hierarchy

DKK million

2012
Total ﬁ nancial assets at fair value

Total ﬁ nancial liabilities at fair value

2011
Total ﬁ nancial assets at fair value

Total ﬁ nancial liabilities at fair value

196

306

288

306

13,633

351
3,291
8,534
(537)
1,400

13,039

Active
market
data

4,625

–

Directly or
indirectly
observable
market data

Not based on
observable
market data

931

–

4,153

1712

–

1,492

–

502
351
3,291
8,534
(537)
1,492

Total

5,630

4,372

1,492

2. Including reclassiﬁ cation of DKK 39 million regarding investment in associated company.

Financial assets and liabilities measured at fair value can be categorised using the fair value measurement hierarchy above. There have not been any transfers
between the categories ’Active market data’ and ’Directly or indirectly observable market data’ during 2012 or 2011.

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NOVO NORDISK ANNUAL REPORT 2012

84 CONSOLIDATED FINANCIAL STATEMENTS

4.8 Financial income and expenses

Accounting policies
The activity of the ﬁ nancial assets and liabilities and borrowings generates
the ﬁ nancial income and expenses in Novo Nordisk. For 2012, ‘Share of
proﬁ t or loss of associated companies’ has been reclassiﬁ ed as part of
ﬁ nancial income, disclosed as ‘Income from other ﬁ nancial assets’. The net
ﬁ nancials in the Income statement are mainly related to foreign exchange
elements and can be speciﬁ ed as follows:

Financial income

DKK million

2012

2011

2010

Interest income
Foreign exchange gain (net)
Foreign exchange gain on
derivatives (net)
Income from other ﬁ nancial assets

Total ﬁ nancial income

124
–

–
1

125

274
–

240
–

514

235
86

61
1,070

1,452

Financial expenses

DKK million

2012

2011

2010

Interest expenses
Foreign exchange loss (net)
Forward contracts loss (net)1
Loss on currency options (net)
Loss on investments etc.
Other ﬁ nancial expenses
Cash ﬂ ow hedge transferred from
other comprehensive income (net)1

58
161
39
147
118
83

275
256
1,276
200
27
99

500
–
2,049
82
23
46

1,182

(1,170)

(643)

Total ﬁ nancial expenses

1,788

963

2,057

1. Comparative ﬁ gures for 2011 and 2010 have been adjusted to align with the 2012

presentation. Total ﬁ nancial expenses are unchanged for 2011 and 2010.

NOVO NORDISK ANNUAL REPORT 2012

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CONSOLIDATED FINANCIAL STATEMENTS 85

Section 5
Other disclosures

This section includes other statutory notes or notes that are of secondary importance for understanding the ﬁ nancial
performance of Novo Nordisk. A list of subsidiaries in the Novo Nordisk Group is also included here.

5.1 Share-based payment schemes

Accounting policies
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 ﬁ xed at
the 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
statement 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.

Share-based payment

DKK million

2012

2011

2010

Employee shares
Long-term share-based incentive
programme (Senior Management Board)
Long-term share-based incentive
programme and share options
(Management group below
Senior Management Board)1

241

185

166

158

Share-based payment expensed
in the Income statement

308

319

463

1. Includes long-term share-based incentive programme for 2007–2012.

Employee shares
In 2010, a general employee share programme was implemented in
Denmark with exercise in the same year. Outside Denmark the programme
was structured as share options with the same initial beneﬁ t 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 ‘Remuneration’ in
‘Governance, leadership and shares’, pp 49 –51.

On 30 January 2013, the Board of Directors approved the establishment,
for members of the Senior Management Board, of a joint pool for the
ﬁ nancial year 2012 by allocating a total of 97,381 Novo Nordisk B shares.
This allocation amounts on average to eight months’ ﬁ xed base salary plus
pension contribution per participant, corresponding to a value at launch of
the programme of DKK 73 million. This amount was expensed in 2012. The
share price used for the conversion was the average share price (DKK 751)
for Novo Nordisk B shares on NASDAQ OMX Copenhagen in the period
2–16 February 2012. 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 2009 (177,066 shares),
corresponding to a value at launch of the programme of DKK 54 million
expensed in 2009, were released to the individual participants subsequent
to the approval of the Annual Report 2012 by the Board of Directors
and after the announcement of the 2012 full-year ﬁ nancial results on
31 January 2013.

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 2009 (605,218 shares),
corresponding to a value at launch of the programme of DKK 186 million
amortised over the period 2009 –2012, were released to the individual
participants subsequent to the approval of the Annual Report 2012 by the
Board of Directors and after the announcement of the 2012 full-year
ﬁ nancial results on 31 January 2013. The number of shares to be transferred
(541,321) 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.

The total number of shares in the joint pools relating to the years 2010,
2011 and 2012 is as follows:

Year allocated to pool

Senior Management Board
2010
2011
2012

Management group below
Senior Management Board
2010
2011
2012
Cancelled

Total

Number
of shares

Amount
DKK million

Vesting

64
57
73

208
188
234

2014
2015
2016

168,576
89,712
97,381

355,669

548,936
297,133
311,847
(35,428)

1,122,488

1,478,157

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NOVO NORDISK ANNUAL REPORT 2012

86 CONSOLIDATED FINANCIAL STATEMENTS

5.1 Share-based payment schemes (continued)

Share options
Each option gives the right to purchase one Novo Nordisk B share. All share
options are hedged by treasury shares. No ordinary share 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 ﬁ nancial 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 historical 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)

2012

2011

2010

1
21%
18.00

2
23%
14.00

4
21%
10.00

0.00%

0.20%

2.00%

916.50

660

629

Outstanding share options in Novo Nordisk

Outstanding at the end of 2010

Exercised in 2011 – ordinary share option plans
Exercised in 2011 – employee share options
Cancelled in 2011

Outstanding at the end of 2011

Exercised in 2012 – ordinary share option plans
Exercised in 2012 – employee share options
Cancelled in 2012
Employee share options – NNIT

Outstanding at the end of 2012

Calculated
fair value
per option1
DKK

498

504

Average
exercise price
per option
DKK

110

153

142

Share
options

3,436,894

(624,760)
(506,300)
(126,500)

2,179,334

(835,094)
(1,150)
(63,750)
7,060

1,286,400

130

760

1. The fair value has been calculated using the Black-Scholes model with the parameters existing at year-end of the respective year.

Management’s share options

Share options in Novo Nordisk

Executive Management
Other members of the Senior Management Board

At the
beginning
of the year

–
101,325

Exercised
during
the year

–
44,650

Total

101,325

44,650

56,675

2. The fair value has been calculated using the Black-Scholes model with the parameters existing at year-end of the respective year.

At the end
of the year

Fair value2
DKK million

–
56,675

–
41

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CONSOLIDATED FINANCIAL STATEMENTS 87

5.1 Share-based payment schemes (continued)

Exercisable and outstanding
share options in Novo Nordisk

Issued
share
options

Exercised
share
options

2004 Ordinary share option plan
2005 Ordinary share option plan
2006 Ordinary share option plan

1,618,832
1,640,468
2,229,084

(1,430,166)
(1,178,875)
(1,406,782)

Outstanding/
exercisable
share options

70,666
302,225
635,249

Cancelled

(118,000)
(159,368)
(187,053)

Exercise
price
DKK

134
153
175

Exercise period

31/1/08 – 30/1/13
31/1/09 – 30/1/14
31/1/10 – 30/1/15

Exercisable at the end of 2012

5,488,384

(4,015,823)

(464,421)

1,008,140

2010 Employee share options
Employee share options – NNIT

273,000
7,060

(1,800)
–

–
–

271,200
7,060

0
0

1/12/13
1/12/14

Outstanding at the end of 20123

5,768,444

(4,017,623)

(464,421)

1,286,400

3. 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 2012

2 February – 16 February
27 April – 11 May
9 August – 23 August
31 October – 14 November

Total exercised options

Average
market price
DKK

751
830
944
909

Exercised
share
options

425,594
81,200
174,175
155,275

836,244

5.2 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

Additions
during the year

Sold/transferred
during the year

At the end
of the year

Market value1
DKK million

Sten Scheibye
Göran Ando
Bruno Angelici
Henrik Gürtler
Liz Hewitt
Ulrik Hjulmand-Lassen
Thomas Paul Koestler
Anne Marie Kverneland
Kurt Anker Nielsen
Søren Thuesen Pedersen
Hannu Ryöppönen
Stig Strøbæk

Board of Directors in total

Lars Rebien Sørensen
Jesper Brandgaard
Lise Kingo
Kåre Schultz
Mads Krogsgaard Thomsen

800
1,600
500
–
–
1,057
1,600
2,475
81,704
324
2,250
390

92,700

54,970
27,937
344
51,217
48,605

500

400
24

(54)
(3,300)
(25)

800
2,100
500
–
400
1,081
1,600
2,445
78,404
323
2,250
390

972

(3,379)

90,293

15,578
10,405
10,431
10,405
10,548

(15,578)
(4,700)
(5,381)
(4,598)
(12,705)

54,970
33,642
5,394
57,024
46,448

Executive Management in total

183,073

57,367

(42,962)

197.478

Other members of the Senior Management Board

144,450

144,070

(108,957)

179,563

0.7
1.9
0.5
–
0.4
1.0
1.5
2.2
71.8
0.3
2.1
0.4

82.8

50.4
30.8
4.9
52.3
42.6

181.0

164.5

Joint pool for Executive Management and
other members of the Senior Management Board2

567,012

97,381

(156,240)

508,1533

465.7

Total

987,235

299,790

(311,538)

975,487

894.0

1. Calculation of the market value is based on the quoted share price of DKK 916.50 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, approximately 30% of the pool will be allocated to the members of Executive Management and approximately 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 24,582 shares currently assigned to three retired Senior Management Board members.

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88 CONSOLIDATED FINANCIAL STATEMENTS

5.3 Adjustments for non-cash items

For the purpose of presenting the cash ﬂ ow statement, non-cash items with effect on the Income statement must be reversed to identify the actual cash ﬂ ow
effect from the Income statement. The adjustments are speciﬁ ed as follows:

Adjustments for non-cash items

DKK million

Reversals of non-cash income statement items
Income taxes (note 2.4)
Depreciation, amortisation and impairment losses (notes 3.1 and 3.2)
Interest income and interest expenses, net (note 4.8)
Share-based payment costs (note 5.1)
Other ﬁ nancial income and expenses

Changes in non-cash balance sheet items
Increase/(decrease) in provisions and retirement beneﬁ t obligations (notes 3.6 and 3.7)
Of which remeasurement of retirement beneﬁ t obligations

Other adjustments
(Gains)/losses from sale of property, plant and equipment
Unrealised (gain)/loss from marketable securities
Reclassiﬁ cation from working capital (other liabilities)
Other, including unrealised exchange (gain)/loss etc.

2012

2011

2010

6,379
2,693
(66)
308
–

1,620
(281)

21
43
739
(203)

4,828
2,737
1
319
4

1,467
–

(3)
28
–
(264)

3,883
2,467
265
463
(1,070)

2,382
–

71
(43)
–
31

Total adjustments for non-cash items

11,253

9,117

8,449

NOVO NORDISK ANNUAL REPORT 2012

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CONSOLIDATED FINANCIAL STATEMENTS 89

The operating lease commitments are related to non-cancellable operating
leases primarily related to premises, company cars and ofﬁ ce equipment.
Approximately 70% of the commitments are related to leases outside
Denmark. The lease costs for 2012 and 2011 were DKK 1,100 million and
DKK 1,059 million, respectively.

The purchase obligations primarily relate to contractual obligations in
connection with investments in property, plant and equipment as well as
purchase agreements regarding medical equipment and consumer goods.
Novo Nordisk expects to fund these commitments with existing cash and
cash ﬂ ow from operations.

Research and development obligations entail uncertainties in relation to the
period in which payments are due because a proportion of the obligations
are dependent on milestone achievements. The due periods disclosed
are based on Management’s best estimate. Novo Nordisk has engaged in
research and development projects with a number of external enterprises.
Most of these obligations relate to a post-approval study on the LEADER ®
programme.

5.4 Commitments and contingencies

Commitments

The total contractual obligations and recognised non-current debt as at
31 December 2012 can be speciﬁ ed as follows:

Payments due by period

Less
than
1 year

1–3
years

3 –5
years

More
than
5 years

Total

651

760

651

760

DKK million

Retirement beneﬁ t
obligations

Total non-current
liabilities recognised
in the Balance sheet

Operating leases1
Purchase obligations
Research and develop-
ment obligations

Total obligations
not recognised in the
Balance sheet

Total contractual
obligations

881
1,955

1,311
1,241

884
34

1,968
–

5,044
3,230

DKK million

1,506

1,218

191

–

2,915

4,342

3,770

1,109

1,968

11,189

4,365

3,814

1,151

2,619

11,949

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

2012

2011

635

589

200

1,385

As at 31 December 2011, the contractual obligations and recognised
non-current debt can be speciﬁ ed as follows:

Payments due by period

DKK million

Loans
Retirement beneﬁ t
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

–

1–3
years

3 –5
years

More
than
5 years

306

376

Total

502

439

123

682

941

6
848
1,920

11
1,283
1,975

9
882
4

13
1,999
–

39
5,012
3,899

1,241

1,448

–

2,774

4,015

4,717

980

2,012

11,724

4,028

4,840

1,103

2,694

12,665

1. No material ﬁ nance lease obligations exist in 2012 and 2011.

World Diabetes Foundation
At the Annual General Meeting of Novo Nordisk A/S in 2002, the
shareholders agreed on a donation to the World Diabetes Foundation
(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 ﬁ nancial 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
ﬁ nancial year.

The annual donation in the period 2012–2017 will not exceed the lower
of DKK 80 million or 15% of the taxable income of Novo Nordisk A/S in the
ﬁ nancial year in question.

In 2012, the donation amounts to DKK 64 million (DKK 65 and 69 million in
2011 and 2010), which is recognised in Administrative costs in the Income
statement. The 2012 donation includes an extra donation of DKK 11 million
to support predetermined WDF activities (DKK 14 million in 2011).

Contingencies

Novo Nordisk is currently involved in pending litigations, claims and
investigations arising out of the normal conduct of its business. While
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 ﬁ nancial position, operating proﬁ t or
cash ﬂ ow in addition to the amounts accrued.

See note 3.6 for the principles for accounting estimates and judgements
about pending and potential future litigation outcomes.

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NOVO NORDISK ANNUAL REPORT 2012

90 CONSOLIDATED FINANCIAL STATEMENTS

5.4 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 38 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 Pﬁ zer Inc.). According to information received from Pﬁ zer,
45 individuals (compared with 66 individuals in 2011) currently allege, in
relation to similar lawsuits against Pﬁ zer Inc., that they too have used a
Novo Nordisk hormone therapy product. Novo Nordisk does not expect the
pending claims to have a material impact on Novo Nordisk’s ﬁ nancial
position, operating proﬁ t or cash ﬂ ow.

In November 2006, Novo Nordisk A/S and the Italian afﬁ liate Novo Nordisk
Farmaceutici S.p.A. were sued by A. Menarini Industrie Farmaceutiche
Riunite s.r.l. and Laboratori Guidotti S.p.A. (‘Menarini’) in the Civil Court
in Rome. Menarini 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 2013. Novo Nordisk cannot predict
how long the litigation will take or when it will be able to provide additional
information. Novo Nordisk does not expect the pending claim to have
a material impact on Novo Nordisk’s ﬁ nancial position, operating proﬁ t or
cash ﬂ ow.

Novo Nordisk, along with 93 other defendants, has been named in
a lawsuit ﬁ led in 2009 in the United States by the Republic of Iraq. The
lawsuit alleges damages related to the defendants’ participation in the
United Nations’ defunct Oil for Food Program. Nordisk does not expect the
pending claim to have a material impact on Novo Nordisk’s ﬁ nancial
position, operating proﬁ t or cash ﬂ ow.

In addition to the above, the Novo Nordisk Group is engaged in certain
litigation proceedings. In the opinion of Management, settlement or
continuation of these proceedings is not expected to have a material
effect on Novo Nordisk’s ﬁ nancial position, operating proﬁ t or cash ﬂ ow.

Pending claims against Novo Nordisk and investigations
involving Novo Nordisk
In 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. Novo Nordisk had to comply with the terms of the
DPA in order for the case to be dismissed. Novo Nordisk has subsequently
enacted a detailed programme to ensure compliance with the DPA,
including a reinforced governance structure, enhanced third-party due
diligence systems and periodic testing of systems, policies and procedures.
The DPA expired on 27 June 2012, and the U.S. District Court for the
District of Columbia has dismissed the case. Accordingly, the DPA no longer
imposes any obligations on Novo Nordisk.

In February 2011, the ofﬁ ce 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 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 pending claims to have a material impact on Novo Nordisk’s
ﬁ nancial position, operating proﬁ t or cash ﬂ ow.

In June 2005 Novo Nordisk ﬁ led a patent infringement lawsuit against
Caraco Pharmaceutical Laboratories, Ltd. (‘Caraco’), a generic
pharmaceutical 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. Brieﬁ ng in the appeal is completed; oral
argument is expected to occur in Q1 2013, with a decision mid 2013.

Novo Nordisk is involved in patent infringement litigation with three
additional ANDA applicants for generic versions of Prandin®: Paddock
Laboratories, Aurobindo Pharma Ltd. and Sandoz Inc. The collateral
estoppel decision in the Paddock case has been appealed to the Federal
Circuit and will be taken up by the Federal Circuit as a companion case to
the Caraco appeal, with oral argument following the Caraco oral argument.
The collateral estoppel decision in the Aurobindo case has been appealed
to the Federal Circuit and is stayed pending the Federal Circuit appeal
of the decision on the merits in the Caraco case. Cases involving Sandoz in
the US District Courts for the Eastern District of Michigan and New Jersey
are stayed pending the Federal Circuit appeal of the decision on the merits
in the Caraco case. 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 delaying the entry of generic versions of Prandin®. This case is stayed
pending the Federal Circuit appeal of the decision on the merits in the
Caraco case.

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 ﬁ nancial position, operating proﬁ t
or cash ﬂ ow.

In addition to the above, the Novo Nordisk Group is engaged in various
ongoing tax audits and investigations. In the opinion of Management,
these pending audits and investigations are not expected to have a material
effect on Novo Nordisk’s ﬁ nancial position, operating proﬁ t or cash ﬂ ow.

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 44 – 45. For information on change
of control clauses in share option programmes, please refer to note 5.1,
‘Share-based payment schemes’ and in relation to employee contracts for
Executive Management of Novo Nordisk, please refer to ‘Remuneration’
pp 49 –51.

In addition, Novo Nordisk discloses that the Group does not have signiﬁ cant
agreements 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 takeover bid.

NOVO NORDISK ANNUAL REPORT 2012

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5.5 Related party transactions

5.6 Licence fees and other operating income

CONSOLIDATED FINANCIAL STATEMENTS 91

Accounting policies
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 proﬁ t 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.

5.7 Fee to statutory auditors

DKK million

2012

2011

2010

Statutory audit
Audit-related services
Tax advisory services
Other services

Total fee to statutory auditors

25
4
12
6

24
5
13
3

25
6
15
4

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 73.5%
of the total number of votes, excluding treasury shares. The remaining
shares are widely held. The ultimate parent of the Group is the Novo
Nordisk Foundation (incorporated in Denmark). Both entities are considered
related parties.

Other related parties are considered to be the Novozymes Group due to
joint ownership, associated companies, the directors and ofﬁ cers of these
entities, and Management of Novo Nordisk A/S.

In 2012, Novo Nordisk A/S acquired 5,100,000 B shares, worth DKK 4.2
billion, from Novo A/S as part of the DKK 12.0 billion share repurchase
programme. The transaction price was DKK 823 per share and was
calculated as the average market price from 27 April to 1 May 2012 in the
open window following the announcement of the ﬁ nancial results for the
ﬁ rst quarter of 2012.

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
programme. 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 ﬁ nancial 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
programme. The transaction price was DKK 503 per share and was
calculated as the average market price from 5 to 10 August 2010 in the
open window following the announcement of the ﬁ nancial results for the
second quarter of 2010.

The Group has had the following material transactions with related parties,
(income)/expense:

DKK million

2012

2011

2010

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

(46)

(45)

(38)

(2)
4,198

(2)
2,912

(3)
2,567

–

(2)

(255)
92

(268)
73

(395)
83

There have not been any material transactions with any director or ofﬁ cer
of Novo Nordisk, Novozymes, Novo A/S, the Novo Nordisk Foundation
or associated companies. For information on remuneration to the
Management of Novo Nordisk, please refer to ‘Remuneration’ pp 49 –51,
and note 2.3 ‘Employee costs’. There have not been and are no loans to
the Board of Directors or Executive Management in 2012, 2011 or 2010.

There are no material unsettled transactions with related parties at the end
of the year.

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NOVO NORDISK ANNUAL REPORT 2012

92 CONSOLIDATED FINANCIAL STATEMENTS

5.8 Companies in the Novo Nordisk Group

Percentage of
shares owned

Activity

Company and country

Percentage of
shares owned

Activity

Company and country

Parent company
Novo Nordisk A/S, Denmark

Subsidiaries by region

Europe
Novo Nordisk Pharma GmbH, Austria
SA Novo Nordisk Pharma NV, Belgium
Novo Nordisk Pharma d.o.o., Bosnia-Hercegovina
Novo Nordisk Pharma EAD, Bulgaria
Novo Nordisk Hrvatska d.o.o., Croatia
Novo Nordisk s.r.o., Czech Republic
FeF Chemicals A/S, Denmark
Novo Nordisk Region Europe A/S, Denmark
Steno Diabetes Center A/S, Denmark
Novo Nordisk Farma OY, Finland
Novo Nordisk, France
Novo Nordisk Production SAS, France
Novo Nordisk Pharma GmbH, Germany
Novo Nordisk Hellas Epe., Greece
Novo Nordisk Hungária Kft., Hungary
Novo Nordisk Limited, Ireland
Novo Nordisk S.P.A., Italy
UAB Novo Nordisk Pharma, Lithuania
Novo Nordisk Farma dooel, Macedonia
Novo Nordisk B.V., Netherlands
Novo Nordisk Scandinavia AS, Norway
Novo Nordisk Pharma Sp. z.o.o., Poland
Novo Nordisk Comércio Produtos Farmace˜uticos Lda.,
Portugal
Novo Nordisk Farma S.R.L., Romania
Novo Nordisk Pharma d.o.o. Belgrade (Serbia), Serbia
Novo Nordisk Slovakia s.r.o., Slovakia
Novo Nordisk, trzˇenje farmacevtskih izdelkov d.o.o.,
Slovenia
Novo Nordisk Pharma S.A., Spain
Novo Nordisk Scandinavia AB, Sweden
Novo Nordisk FemCare AG, Switzerland
Novo Nordisk Health Care AG, Switzerland
Novo Nordisk Pharma AG, Switzerland
Novo Nordisk Holding Limited, United Kingdom
Novo Nordisk Limited, United Kingdom

– • • • •

•
• •

•
•

•
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
100

100
100
100
100
100
100
100
100
100

International Operations
Aldaph SpA, Algeria
Novo Nordisk Pharma Argentina S.A., Argentina
Novo Nordisk Pharmaceuticals Pty. Ltd., Australia
Novo Nordisk Pharma (Private) Limited, Bangladesh
Novo Nordisk Produção Farmacêutica do Brasil Ltda.,
Brazil
Novo Nordisk Farmacêutica do Brasil Ltda., Brazil
Novo Nordisk Farmacêutica Limitada, Chile
Novo Nordisk Pharma Operations A/S, Denmark
Novo Nordisk Region International Operations A/S,
Denmark
Novo Nordisk Egypt LLC, Egypt
Novo Nordisk India Private Limited, India
Novo Nordisk Service Centre (India) Pvt. Ltd., India
PT. Novo Nordisk Indonesia, Indonesia
Novo Nordisk Pars, Iran
Novo Nordisk Ltd, Israel
Novo Nordisk Pharma SARL, Lebanon
Novo Nordisk Pharma (Malaysia) Sdn Bhd, Malaysia
Novo Nordisk Pharma Operations (BAOS) Sdn Bhd,
Malaysia
Novo Nordisk Mexico S.A. de C.V., Mexico
100
Novo Nordisk Servicios Profesionales S.A. de C.V., Mexico 100
100
Novo Nordisk Farmacéutica S.A. de C.V., Mexico
100
Novo Nordisk Pharma SAS, Morocco
100
Novo Nordisk Pharmaceuticals Ltd., New Zealand
100
Novo Nordisk Pharma Limited, Nigeria
100
Novo Nordisk Pharma (Private) Limited, Pakistan
100
Novo Nordisk Pharmaceuticals (Philippines) Inc.,
Philippines
Novo Nordisk Limited Liability Company, Russia
Novo Nordisk Production Support LLC, Russia
Novo Investment Pte Limited, Singapore
Novo Nordisk Pharma (Singapore) Pte Ltd., Singapore
Novo Nordisk (Pty) Limited, South Africa
Novo Nordisk Pharma (Thailand) Ltd., Thailand
Novo Nordisk Tunisie SARL, Tunisia
Novo Nordisk Saglik Ürünleri Tic. Ltd. Sti., Turkey
Novo Nordisk Pharma Gulf FZ-LLC, United Arab Emirates
Novo Nordisk Venezuela Casa de Representación C.A.,
Venezuela

100
100 •
100
100
100
49
100
100
100
100

•
•
•
•
•
•
•

•
•

•
• •
•

•
•
•
•
•

•

•
•
•
•
•

•

•
•

•

North America
Novo Nordisk Canada Inc., Canada
Novo Nordisk Region North America II A/S, Denmark
Novo Nordisk US Holdings Inc., United States
Novo Nordisk Pharmaceutical Industries Inc., United States 100 •
Novo Nordisk Inc., United States

100
100
100

100

•

•
•

• •

Region China
Novo Nordisk (China) Pharmaceuticals Co., Ltd., China
Beijing Novo Nordisk Pharmaceuticals Science &
Technology Co., Ltd., China
Novo Nordisk Region China A/S, Denmark
Novo Nordisk Hong Kong Limited, Hong Kong
Novo Nordisk Pharma (Taiwan) Ltd., Taiwan

Japan & Korea
Novo Nordisk Region Japan & Korea A/S, Denmark
Novo Nordisk Pharma Ltd., Japan
Novo Nordisk Pharma Korea Ltd., South Korea

•

100
100 • •
•
100

Other subsidiaries
NNIT A/S1, Denmark
NNE Pharmaplan A/S1, Denmark

100 • •
100

•

100
100
100

100
100

•
•
•

•
•

1. In addition to the listed companies, NNIT A/S and NNE Pharmaplan A/S have their

own subsidiaries.

Activity:
• Production
• Sales and marketing
• Research and development
• Services / investments

NOVO NORDISK ANNUAL REPORT 2012

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CONSOLIDATED FINANCIAL STATEMENTS 93

Non-IFRS ﬁ nancial measures
In the Annual Report, Novo Nordisk discloses certain ﬁ nancial measures
of the Group’s ﬁ nancial performance, ﬁ nancial position and cash ﬂ ows that
reﬂ ect adjustments to the most directly comparable measures calculated
and presented in accordance with IFRS. These non-IFRS ﬁ nancial measures
may not be deﬁ ned and calculated by other companies in the same manner,
and may thus not be comparable with such measures.

The non-IFRS ﬁ nancial measures presented in the Annual Report are:
• Cash to earnings
• Financial resources at the end of the year
• Free cash ﬂ ow
• Operating proﬁ t after tax to net operating assets
• Underlying sales growth in local currencies.

Cash to earnings
Cash to earnings is deﬁ ned as ‘free cash ﬂ ow as a percentage of net proﬁ t’.

Financial resources at the end of the year
Financial resources at the end of the year is deﬁ ned 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 ﬂ ow
Novo Nordisk deﬁ nes free cash ﬂ ow as ‘net cash generated from operating
activities less net cash used in investing activities’ excluding ‘Net change in
marketable securities’.

Operating proﬁ t after tax to net operating assets
(OPAT/NOA)
Operating proﬁ t after tax to net operating assets is deﬁ ned as ‘operating
proﬁ t 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 the
above assets and liabilities at the beginning of the year and at year-end
divided by two)’.

Underlying sales growth in local currencies
Underlying sales growth in local currencies is deﬁ ned as sales for the year
measured at prior year average exchange rates compared with sales for
prior year measured at prior year average exchange rates.

5.9 Financial deﬁ nitions

ADRs
An American Depositary Receipt (or ADR) represents ownership in the
shares of a non-US company and trades in US ﬁ nancial markets.

Basic earnings per share (EPS)
Net proﬁ t divided by the average number of shares outstanding.

Diluted earnings per share
Net proﬁ t divided by 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 proﬁ t before income taxes.

Equity ratio
Total equity at year-end as a percentage of total assets at year-end.

Gross margin
Gross proﬁ t as a percentage of sales.

Net proﬁ t margin
Net proﬁ t as a percentage of sales.

Number of shares outstanding
The total number of shares, excluding the holding of treasury shares.

Operating proﬁ t margin
Operating proﬁ t as a percentage of sales.

Other comprehensive income (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 deﬁ ned beneﬁ t plans
• Changes in fair value of ﬁ nancial instruments in a cash ﬂ ow hedge.

Payout ratio
Total dividends for the year as a percentage of net proﬁ t.

Return on equity (ROE)
Net proﬁ t for the year as a percentage of shareholders’ equity (average).

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NOVO NORDISK ANNUAL REPORT 2012

94 QUARTERLY FINANCIAL FIGURES 2011 AND 2012

Part of Management’s review

Quarterly ﬁ nancial ﬁ gures 2011 and 2012

DKK million

Sales

Sales by business segment:
Modern insulins (insulin analogues)
Human insulins
Victoza®
Protein-related products
Oral antidiabetic products (OAD)

Diabetes care total

NovoSeven®
Norditropin®
Hormone replacement therapy
Other products

Biopharmaceuticals total

Sales by geographical segment:
North America
Europe
International Operations
Japan & Korea
Region China

Gross proﬁ t
Sales and distribution costs
Research and development costs
Administrative costs
Licence fees and other operating income (net)
Operating proﬁ t
Net ﬁ nancials
Proﬁ t before income taxes
Income taxes

2011

2012

15,693

16,001

16,532

18,120

17,751

19,468

19,845

20,962

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

7,867
2,718
1,990
625
716

8,613
2,781
2,293
621
653

8,879
2,794
2,503
644
719

9,462
3,009
2,709
621
670

11,808

12,044

12,613

13,960

13,916

14,961

15,539

16,471

2,032
1,252
492
109

2,140
1,180
513
124

2,044
1,275
501
99

2,131
1,340
548
141

1,909
1,346
500
80

2,451
1,440
530
86

2,153
1,451
600
102

2,420
1,461
533
77

3,885

3,957

3,919

4,160

3,835

4,507

4,306

4,491

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

7,324
4,596
2,734
1,485
1,612

14,348
4,850
2,507
776
170
6,385
(328)
6,057
1,393

8,356
5,081
2,757
1,724
1,550

16,044
5,203
2,563
779
154
7,653
(710)
6,943
1,597

8,981
4,793
2,695
1,710
1,666

16,360
5,299
2,617
766
186
7,864
(505)
7,359
1,692

9,559
5,237
2,894
1,698
1,574

17,809
6,192
3,210
991
156
7,572
(120)
7,452
1,697

Net proﬁ t

4,073

4,134

4,201

4,689

4,664

5,346

5,667

5,755

Depreciation, amortisation and impairment losses

605

825

615

692

638

656

644

755

Total assets
Total equity

Financial ratios

As percentage of sales
Sales and distribution costs
Research and development costs
Administrative costs
Gross margin1
Operating proﬁ t margin1
Equity ratio1

Share ratios

59,001
34,768

61,528
36,966

62,013
35,428

64,698
37,448

61,210
32,358

60,978
31,334

66,620
35,660

65,669
40,632

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%

27.3%
14.1%
4.4%
80.8%
36.0%
52.9%

26.7%
13.2%
4.0%
82.4%
39.3%
51.4%

26.7%
13.2%
3.9%
82.4%
39.6%
53.5%

29.5%
15.3%
4.7%
85.0%
36.1%
61.9%

Basic earnings per share/ADR (in DKK)
Diluted earnings per share/ADR (in DKK)

7.13
7.06

7.26
7.21

7.45
7.39

8.40
8.33

8.38
8.32

9.72
9.67

Average number of shares outstanding (million) – basic
Average number of shares outstanding (million) – diluted

571.6
576.7

569.1
573.8

563.5
568.1

557.6
561.9

556.7
560.5

549.1
552.4

10.40
10.33

544.6
547.8

10.59
10.53

542.9
546.0

Employees

Number of full-time employees at the end of the period

30,867

31,549

32,016

32,136

32,252

32,819

33,501

34,286

1. For deﬁ nitions, please refer to p 93.

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Supplementary information

CONSOLIDATED SOCIAL STATEMENT 95

Statement of social performance
for the year ended 31 December

Patients
Patients reached with diabetes care 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)
People participating in clinical trials
Animals purchased for research
New patent families (ﬁ rst ﬁ lings)

Employees
Employees (total)
Employees (average FTEs)
Employee turnover
Working the Novo Nordisk Way (employee assessment) (scale 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
Business ethics assurance activities
Fulﬁ lment 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 1–7)

Note

2012

2011

2010

2.1
2.2
2.2

2.3

2.4
2.5
2.6

3.1

3.2
3.2
3.3

4.1
4.2
4.3

23
1,274
836

35
64
20
23,018
73,601
65

34,731
33,061
9.1%
4.3
66%
9,951
3.2
2.2%
125,600

99%
48
94%
219
6
1
5.7

21
835
626

36
65
16
22,445
66,401
80

32,632
31,499
9.8%
4.3
62%
10,479
3.4
2.3%
118,700

99%
46
93%
177
5
0
5.6

N/A
373
494

33
69
15
19,361
62,927
62

30,483
29,423
9.1%
N/A
54%
14,207
4.9
2.5%
108,200

98%
35
93%
192
5
0
N/A

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96 CONSOLIDATED SOCIAL STATEMENT

Supplementary information

Notes

As described in the introduction to the ﬁ nancial statements (see p 60), the notes have been reorganised into sections.

In the Consolidated social statement, Novo Nordisk reports on three dimensions of performance – ‘patients’, ‘employees’ and
‘assurance’ – and on progress on the long-term targets to reach more patients with diabetes care products, ensure that the
organisation is working the Novo Nordisk Way and nurture a diverse working environment.

Section 3 ‘Employees’
Covers the social responsibility towards employees, ie offering a healthy and
engaging working environment, which lays the foundation for realisation of
the company’s vision and strategic objectives.

3.1 Employees, p 99
3.2 Frequency of occupational injuries and absence, p 99
3.3 Employment impact (direct and indirect), p 100

Section 4 ‘Assurance’
Covers management processes put in place to ensure that business
practices meet requirements and company standards for ethical
performance, which is a precondition for earning stakeholder conﬁ dence
and trust.

4.1 Supplier audits, p 100
4.2 Product recalls, p 100
4.3 Warning Letters and re-inspections, p 100

• 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
novonordisk.com/annualreport.

In addition, Novo Nordisk reports with reference to the content elements
and guiding principles of the International Integrated Reporting Framework
being developed by the International Integrated Reporting Committee.
The draft framework is currently being piloted by a group of companies,
including Novo Nordisk.

To Novo Nordisk, AA1000APS(2008) is a component in creating a generally
applicable approach to assessing and strengthening the credibility of the
Group’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 business with global reach, Novo Nordisk is committed
to being accountable to those stakeholders that are impacted by the
organisation. Novo Nordisk maps its stakeholders and has processes in
place to ensure inclusion of stakeholder concerns and expectations. In
addition, Novo Nordisk continuously develops its stakeholder engagement
and sustainability capacity at corporate and afﬁ liate levels. Stakeholder
engagement results in stakeholders being involved in developing
and accounting for strategic responses to sustainability challenges.

Sections in the Consolidated social statement

Section 1 ‘Basis of preparation’
Introduces the social accounting policies and standards used for reporting
on social performance.

Basis of preparation, p 96

Section 2 ‘Patients’
Covers the disclosures related to efforts to improve availability, accessibility,
affordability and quality of care through discovery, development and
dissemination of medical treatments and capacity building.

2.1 Patients reached with diabetes care products, p 98
2.2 Healthcare professionals trained or educated in diabetes and people

with diabetes trained, p 98

2.3 Least developed countries where Novo Nordisk sells insulin according

to the differential pricing policy, p 98
2.4 People participating in clinical trials, p 98
2.5 Animals purchased for research, p 98
2.6 New patent families (ﬁ rst ﬁ lings), p 99

Section 1 Basis of preparation

General reporting standards and principles
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
responsibility, reporting on business strategies and activities in the areas
of human rights, labour standards, environment, anti-corruption, and
climate. Companies that subscribe to the UN Global Compact and
annually submit their Communication on Progress will be in compliance
with the FSA, provided that the annual report includes a reference to
where the information has been made publicly available. Novo Nordisk’s
Communication on Progress 2012 can be found at
novonordisk.com/annualreport and on UN Global Compact’s website at
unglobalcompact.org/COP.

Novo Nordisk adheres to the following internationally recognised voluntary
reporting standards and principles (for reporting overview, see p 112):

• 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

strategic policy initiative for businesses that are committed to align their
operations and strategies with 10 universally accepted principles in the
areas of human rights, labour, environment and anti-corruption, Novo
Nordisk reports on progress during 2012 in the Communication on
Progress, which can be found at novonordisk.com/annualreport. As a
member of UN Global Compact LEAD, a platform for a select group of
companies to drive leadership to the next generation of sustainability
performance, Novo Nordisk demonstrates the sustainability governance
and management processes through the Blueprint for Corporate
Sustainability Leadership, which is also part of the Communication on
Progress.

NOVO NORDISK ANNUAL REPORT 2012

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Supplementary information

CONSOLIDATED SOCIAL STATEMENT 97

Materiality
Key issues are identiﬁ ed through ongoing stakeholder engagement and
trendspotting and are addressed by programmes or action plans with clear
and measurable targets. Long-term targets are set to guide long-term
performance in strategic areas. The issues presented in the annual report
are deemed to have a signiﬁ cant impact on the Group’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
speciﬁ c needs and interests. To most stakeholders, however, the annual
report is just one element of interaction and communication with the
company. The annual report reﬂ ects how the company is managing
operations in ways that respond to and consider stakeholder concerns and
interests.

Deﬁ ning materiality
It is Novo Nordisk’s responsibility to ensure that those areas in which the
company has signiﬁ cant impact are addressed. Issues for the social and
environmental reporting are prioritised, and what is included in the printed
annual report are the issues considered most material.

In assessing which information to include in the annual report, legal
requirements and disclosure commitments made by Novo Nordisk are
con sidered. 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.

The conclusion from the external assurance provider is available in the
Independent assurance report on p 111.

Principles of consolidation
The Consolidated social statement and disclosures cover Novo Nordisk A/S
and entities controlled by Novo Nordisk A/S.

Social accounting policies

The accounting policies set out below and in the notes have been applied
consistently in the preparation of the Consolidated social statement for
all the years presented, with the following exception due to changes in the
accounting policy.

Change in accounting policies
The disclosure ‘People with diabetes using Novo Nordisk injectable
products’ has been renamed ‘Patients reached with diabetes care products’
and has been expanded to include all diabetes care products, except devices
and PrandiMet®, for which there is no WHO-deﬁ ned dose. The exclusion
of PrandiMet® is estimated to be immaterial in terms of impact on the
total number reached because volumes sold are limited. Furthermore, the
disclosure was previously calculated by reconciling Novo Nordisk’s annual
sales volume by product, annual product consumption per patient following
different treatment regimens and recommended country-speciﬁ c daily
dose, and the total number of patients in the market by treatment regime.
From this year, the number will be calculated using the volume sold divided
by the WHO average annual usage dose per patient. This is being done
to enhance transparency. Historical data have been restated to reﬂ ect this
change.

Please refer to the accounting policies stated below and in the notes for
further information on the social disclosures.

New disclosures
The following disclosures have been added to align with management
priorities:

• ‘Working the Novo Nordisk Way (employee assessment)’, which replaces

‘Engagement rate (employee engagement)’

• ‘Business ethics assurance activities’

Other accounting policies

Donations to the World Diabetes Foundation
Donations by Novo Nordisk to the World Diabetes Foundation
are recognised as an expense when the donation is paid out or when an
unconditional commitment to donate has been granted. For additional
information, please refer to note 5.4 in the Consolidated ﬁ nancial
statement.

Donations to the Novo Nordisk Haemophilia Foundation
Donations by Novo Nordisk to the Novo Nordisk Haemophilia Foundation
are recognised as an expense when the donation is paid out or when an
unconditional commitment to donate has been granted.

Working the Novo Nordisk Way (employee assessment)
Working the Novo Nordisk Way (employee assessment) is measured on a
scale of 1– 5, with 5 being the best, and is a simple average of respondents’
answers to all mandatory questions in the annual employee survey, eVoice,
covering the Novo Nordisk Way. For 2012, the eVoice response rate was
91% compared with 92% in 2011.

Annual training costs per employee
Training costs cover internal and external training posted in the ﬁ nancial
accounts, calculated per employee.

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
Ofﬁ ce 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, student assistants, PhDs and post docs.
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.

Business ethics assurance activities
The number of business ethics assurance activities is recorded as the
number of conducted business ethics reviews in afﬁ liates, production sites
and headquarter areas. Furthermore, the number includes other business
ethics assurance activities such as design reviews, trend reports and review
of third parties.

Fulﬁ lment of action points from facilitations of the Novo Nordisk Way
For 2012 and 2011, the percentage of fulﬁ lment of action points arising
from facilitations, 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 previous years. The reason for using a three-year average
as the basis for the calculation is that action lead times typically vary from
a couple of months to more than a year. For 2010, the closure of action
points is based on the Novo Nordisk Way of Management.

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 (excluding oral antidiabetic 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 ﬁ rm.

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98 CONSOLIDATED SOCIAL STATEMENT

Supplementary information

Section 2 Patients

2.1 Patients reached with diabetes care products

(million) (estimate)

Accounting policies
Patients reached with diabetes care products, except devices and
PrandiMet®, is estimated by dividing Novo Nordisk’s annual sales volume by
the annual usage dose per patient for each product class as deﬁ ned by
the WHO. PrandiMet® is not included as no WHO-deﬁ ned dosage exists.

Development
The estimated number of patients increased by 10% from 21 million in
2011 to 23 million in 2012. This development is driven by increasing sales
of insulin products (modern insulins and human insulin), particularly in
International Operations, China and North America. The strong penetration
of Victoza® in mature markets contributed by around 1 percentage point.

2.2 Healthcare professionals trained or educated
in diabetes and people with diabetes trained

Accounting policies
Healthcare professionals (HCPs) trained or educated in diabetes is measured
as an estimate based on registrations by afﬁ liates and corporate functions
at Novo Nordisk. The number reﬂ ects the total number of healthcare
professionals participating in Novo Nordisk-sponsored face-to-face and
online training and education activities during the year.

People with diabetes trained is measured as an estimate based on
registra tions by afﬁ liates and corporate functions in Novo Nordisk. The
number reﬂ ects the total number of people with diabetes with whom Novo
Nordisk has engaged during the year for educational purposes. Training is
re cognised as activities conducted, organised or funded by Novo Nordisk.

Development
Training of HCPs and patients increased by 53% and 34% respectively
compared with last year. The signiﬁ cant increases in training are due to
increased activities in several markets and particularly in the US.

2.3 Least developed countries where

Novo Nordisk sells insulin according to the
differential pricing policy

Accounting policies
Novo Nordisk has formulated a differential pricing policy for the least
developed countries (LDCs) as deﬁ ned by the UN. The differential pricing
policy is part of the global initiative to promote access to health for all LDCs
as deﬁ ned by the UN. The purpose of the policy is to offer human insulin
in vials to all LDCs at or below a price of 20% of the average prices for
human insulin in vials in the western world. The western world is deﬁ ned as
Europe (the EU, Switzerland and Norway), the United States, Canada and
Japan. The number of LDCs where Novo Nordisk sells human insulin in vials
according to the differential pricing policy is measured by direct or indirect
sales by Novo Nordisk via government tender or private market sales to
wholesalers, distributors or non-governmental organisations. Historically
the number has been reported as a percentage of the total number
of LDCs, but will from this year on be reported as the actual number of
countries in which the differential price has been accepted. In 2012 and
2010, 49 countries were on the UN LDC list, against 48 in 2011.

Development
In 2012, Novo Nordisk offered the differential price to all 49 LDCs. Novo
Nordisk operates in 37 of these countries and sold insulin to either govern-
ments or the private market in 35 countries according to the differential
pricing policy, compared with 36 countries in 2011. Novo Nordisk operated
in Malawi and Laos 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 2012 was sold
to the private market. The total volume of insulin sold increased by 30%
compared with 2011.

NOVO NORDISK ANNUAL REPORT 2012

In 12 LDCs, Novo Nordisk had no sales in 2012 for various reasons. In
several cases, the government did not respond to the offer, there were no
private wholesalers or other partners to work with, or war or political
unrest made it impossible to do business. While Novo Nordisk prefers to sell
insulin at the differential price through government tenders, the company
is willing to sell to private distributors and agents. Novo Nordisk is unable
to guarantee that the price at which the company sells the insulin will be
reﬂ ected in the ﬁ nal price to the consumer.

2.4 People participating in clinical trials

Accounting policies
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.

By region

2012

2011

2010

North America
Europe
International Operations
Japan & Korea
Region China

7,432
7,950
6,038
873
725

7,741
7,683
5,407
742
872

6,750
6,947
3,215
1,367
1,082

Total

23,018

22,445

19,361

The numbers reﬂ ects the large phase 3 and 4 programmes undertaken by
Novo Nordisk.

2.5 Animals purchased for research

Accounting policies
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.

Animals purchased

2012

2011

2010

Mice and rats
Pigs
Rabbits
Dogs
Non-human primates
Other rodents1
Other vertebrates2

70,668
1,170
691
434
355
283
0

64,056
953
535
344
186
327
0

60,441
1,196
543
328
330
86
3

Total

73,601

66,401

62,927

1. Other rodents are gerbils, guinea pigs and hamsters.
2. Other vertebrates are ﬁ sh, chickens, goats and frogs.

The number of animals purchased for research in 2012 increased by 11%
compared with 2011. 96% of the animals purchased were rodents. The
increase in the number of animals is due to the increased research activities
within early-stage discovery and development of new pharmaceuticals for
diagnosis, care and treatment. The increase in the use of large animal
species reﬂ ects an increase in the diabetes and biopharmaceutical projects
that are in more mature development phases.

2012 is the ﬁ rst year when no live animals were used for ﬁ nal quality batch
testing (biological production control).

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CONSOLIDATED SOCIAL STATEMENT 99

2.6 New patent families (ﬁ rst ﬁ lings)

Accounting policies
New patent families (ﬁ rst ﬁ lings) is recorded as the number of new patent applications that were ﬁ led during the year.

A total of 65 new patent families were established in 2012, a decrease of 19% compared with the ﬁ ling activity in 2011 when 80 patent families were
established. In 2012, Novo Nordisk had 773 active patent families.

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)

Europe

China

Japan

Diabetes care:
NovoRapid ® (NovoLog ®)
NovoMix ® 30 (NovoLog ® Mix 70/30)
Levemir ®
NovoNorm® (Prandin®)
PrandiMet ®
Victoza®

Biopharmaceuticals:
Norditropin® (Norditropin® SimpleXx ®)
NovoSeven®

20141
2014
2019
Expired
20183
2022

Expired1
2014 –15
2018
Expired
Pending
2022

Expired1
Expired
2014
Expired
N/A
2017

Expired1
2014
2019
2016
Pending
2022

20152
Expired4

20172
Expired4

1. Formulation patent until 2017. It has been revoked in China, but the decision has been appealed.
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. Room temperature-stable formulation patent until 2024.

3.2 Frequency of occupational injuries

and absence

Accounting policies
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.

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.

Development
In 2012, the number of occupational accidents with absence increased
by 1% compared with 2011. Despite this slight increase, the frequency
of occupational injuries decreased from 3.4 per million working hours in
2011 to 3.2 per million working hours in 2012. The decrease is due to a
continuous focus on occupational health and safety at Novo Nordisk. The
rate of absence also decreased slightly from 2.3% in 2011 to 2.2% in 2012.

Section 3 Employees

3.1 Employees

Accounting policies
The number of employees is recorded as all employees except externals,
employees on unpaid leave, interns, bachelor and master thesis employees,
and substitutes at year-end.

The rate of turnover is measured as the number of employees, excluding
temporary employees, who left the Group during the ﬁ nancial year
compared with the average number of employees, excluding temporary
employees.

Diverse senior management teams is measured as the percentage of
teams that are diverse in terms of both gender and nationality. A senior
management team includes all managers and executive assistants reporting
directly to an executive vice president/senior vice president.

Employees by region

2012

2011

2010

North America
Europe
International Operations
Japan & Korea
Region China

5,758
18,715
5,143
1,071
4,044

4,870
18,215
4,549
1,010
3,988

4,457
17,752
3,768
995
3,511

Total employees

34,731

32,632

30,483

Employee turnover

9.1%

9.8%

9.1%

Of the people employed in 2012, 14,792 were employed in Denmark
compared with 14,064 in 2011. In 2012 the total number of employees
increased by 2,099 (6%) compared with an increase of 2,149 (7%) in 2011.

Diversity in the company’s senior management teams increased from 62%
(18 of 29 teams) in 2011 to 66% (19 of 29 teams) in 2012. Among all
employees, diversity in terms of gender was 49% women and 51% men.

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NOVO NORDISK ANNUAL REPORT 2012

100 CONSOLIDATED SOCIAL STATEMENT

Supplementary information

3.3 Employment impact (direct and indirect)

Jobs created

2012

2011

2010

Accounting policies
Employment impact worldwide is measured as an estimate of the direct and
indirect jobs created by Novo Nordisk, calculated using ﬁ nancial records and
general statistics from public sources such as Statistics Denmark, Updated
Economic Multipliers for the US Economy (the Economic Policy Institute),
OECD and the China Statistical Yearbook.

Direct impact
Indirect impact – production1
Indirect impact – employee
consumption1

34,300
63,300

32,100
60,400

30,000
54,700

28,000

26,200

23,500

Total

125,600

118,700

108,200

The cash value distribution is calculated based on information from the
Consolidated ﬁ nancial statements including sales, payments to suppliers,
employee costs, payments to the public sector (taxes), payments to
investors and re-investments in the Group.

1. Jobs created in the supply chain.

The overall employment impact increased by 6% compared with 2011.

Cash value distribution

2012

2011

2010

Suppliers
Employees
Investors/funders
Public sector (taxes)
Re-invested in the Group

35%
28%
26%
14%
(3%)

34%
30%
26%
8%
2%

38%
31%
23%
6%
2%

Total

100%

The distribution of cash value to suppliers, employees and investors/
funders remained stable in 2012 compared with 2011. As the cash value
distribution for the year to investors/funders exceeds net cash ﬂ ow
generated from the year’s activities including re-investments, the amount
re-invested in the Group is negative for 2012. For presentation of the
Statement of cash ﬂ ows for the year, please refer to the Consolidated
ﬁ nancial statement on p 58.

Section 4 Assurance

4.1 Supplier audits

4.3 Warning Letters and re-inspections

Accounting policies
The number of supplier audits concluded (audit reports received) is recorded
as the responsible sourcing and quality audits conducted in the areas of
direct and indirect spend on materials.

By type of audit

2012

2011

2010

45
174

219

32
145

177

26
166

192

Responsible sourcing audits
Quality audits

Total

No critical ﬁ ndings were issued.

4.2 Product recalls

Accounting policies
The number of product recalls is recorded as the number of times Novo
Nordisk has instituted a recall and includes recalls in connection with clinical
trials. A recall can affect various countries but only counts as one recall.

Development
In 2012, Novo Nordisk had six instances of product recalls compared
with ﬁ ve product recalls in 2011. Five of the recalls were due to product
defects originating from manufacturing whereas one recall was due to
heat exposure of products in the external distribution chain. None of the
recalled products caused any harm to patients. Local health authorities
were informed in all six instances of recalls to ensure that distributors,
pharmacies, doctors and patients received appropriate information.

Accounting policies
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-certiﬁ ed areas, and the number of signiﬁ cant
re-inspections issued to Novo Nordisk by any health authority globally.
A signiﬁ cant 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.

Development
Novo Nordisk has received a Warning Letter dated 12 December 2012
from the US Food and Drug Administration (FDA) following a current
Good Manufacturing Practice (cGMP) inspection of an aseptic ﬁ lling facility
in Bagsværd, Denmark. The facility inspection took place on 12–20 March
2012, and Novo Nordisk submitted its response to the inspection ﬁ ndings
by the FDA in April 2012.

In the Warning Letter, the FDA cites two speciﬁ c violations. Novo Nordisk
takes the observed violations very seriously and is committed to taking the
appropriate steps to address the concerns raised by the agency. The
company submitted its response to the Warning Letter on 28 December.
Novo Nordisk does not expect the Warning Letter to have an impact on
products currently marketed in the US.

No signiﬁ cant re-inspections were issued to Novo Nordisk by any
authority. In total, 130 inspections were concluded in 2012, compared with
76 in 2011, contributing to continuous adjustments.

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Supplementary information

CONSOLIDATED ENVIRONMENTAL STATEMENT 101

Statement of environmental performance
for the year ended 31 December

Resources
Energy consumption (1,000 GJ)
Water consumption (1,000 m3)

Emissions and waste
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)
Waste (tons)
Non-hazardous waste (of total waste)
Breaches of regulatory limit values

Note

2012

2011

2010

2.1
2.2

3.1
3.1
3.1
3.2
3.2
3.3
3.3
3.4

2,433
2,475

2,187
2,136

2,234
2,047

122
3
55
2,272
723
82,802
84%
27

94
3
53
2,036
446
41,376
70%
22

95
6
57
1,935
555
25,627
54%
18

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NOVO NORDISK ANNUAL REPORT 2012

102 CONSOLIDATED ENVIRONMENTAL STATEMENT

Supplementary information

Notes

As described in the introduction to the ﬁ nancial statements (see p 60), the notes have been reorganised into sections.

In the Consolidated environmental statement, Novo Nordisk reports on two dimensions of performance – ‘resources’ and
‘emissions and waste’ – and progress on long-term targets to continuously reduce environmental impacts.

Sections in the Consolidated environmental statement

Section 1 ‘Basis of preparation’
Introduces the accounting policies and standards used for reporting on
environmental performance.

Basis of preparation, p 102

Section 2 ‘Resources’
Covers performance related to consumption of resources for production.
Disclosures encompass data on realised energy and water consumption as
well as efforts to reduce environmental impacts.

2.1 Energy consumption, p 102
2.2 Water consumption, p 102

Section 1 Basis of preparation

Section 3 ‘Emissions and waste’
Covers performance related to outputs from production. Disclosures
encompass data on realised emissions and waste as well as efforts to
reduce environmental impacts.

3.1 CO2 emissions, p 103
3.2 Wastewater and chemical oxygen demand (COD) in wastewater, p 103
3.3 Waste, p 103
3.4 Breaches of regulatory limit values, p 103

General reporting standards and principles
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 section 1 ‘Basis of
preparation’ of the Consolidated social statement on p 96.

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.

Principles of consolidation
The Consolidated environmental statement covers the impact from
production sites, except for CO2 emissions from transportation, which
covers Novo Nordisk A/S and entities controlled by Novo Nordisk A/S.

Changes in accounting policies
‘CO2 emissions from energy consumption’ was previously reported as a
three-year average of emission factors. From this year, the calculation will
be based on the emission factors from the previous year only in order to
increase accuracy. Historical data have been restated accordingly.

The disclosure of ‘Raw materials and packaging materials’ has been taken
out, as it is not considered material.

Please refer to the accounting policies stated in the notes for information
on the environmental disclosures.

Section 2 Resources

2.1 Energy consumption

2.2 Water consumption

Accounting policies
Energy consumption (direct and indirect supply) is measured as both direct
supply of energy (internally produced energy), which is energy Novo Nordisk
produces from mainly natural gas and wood, 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.

1,000 GJ

Diabetes care
Biopharmaceuticals
Other

Total

2012

2011

2010

1,680
316
437

1,515
280
392

1,513
298
423

2,433

2,187

2,234

Accounting policies
Water consumption is measured based on meter readings and invoices. It
includes drinking water, industrial water and steam.

1,000 m3

Diabetes care
Biopharmaceuticals
Other

Total

2012

2011

2010

2,156
201
118

1,853
142
141

1,719
142
186

2,475

2,136

2,047

In 2012, the consumption of water increased by 16% mainly due to
increasing insulin production and the new insulin ﬁ lling plant in China.

In 2012, the consumption of energy increased by 11% compared with
2011, mainly due to increasing production, especially in diabetes care,
where a new insulin ﬁ lling plant in China has been taken into use.

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Supplementary information

CONSOLIDATED ENVIRONMENTAL STATEMENT 103

Section 3 Emissions and waste

3.1 CO2 emissions

3.3 Waste

Accounting policies
CO2 emissions from energy consumption
The amount of CO2 emissions from energy consumption covers
consumption related to production measured in metric tons. CO2 emissions
from energy consumption is calculated according to the GHG protocol and
based on emission factors from the previous year.

CO2 emissions from refrigerants
CO2 emissions from refrigerants is calculated by converting to metric tons
using standard factors.

CO2 emissions from transport (product distribution)
CO2 emissions from product distribution is calculated as the estimated
emissions from product distribution in metric tons. It is calculated as
the worldwide distribution of semi-ﬁ nished and ﬁ nished products, raw
materials and components by air, sea and road between production sites
and from production sites to afﬁ liates, direct customers and importing
distributors. CO2 emissions from product distribution from afﬁ liates to
pharmacies, hospitals and wholesalers are not included.

Accounting policies
Waste is measured as the sum of non-hazardous and hazardous waste
disposed of based on weight receipts.

Non-hazardous waste is calculated as a percentage of the total amount of
waste disposed.

Tons of waste

2012

2011

2010

Non-hazardous waste
– Organic production waste for biogas1
– Other non-hazardous waste
Hazardous waste
– Ethanol
– Other hazardous waste

69,937
58,193
11,744
12,865
9,825
3,040

29,131
16,765
12,366
12,245
9,179
3,066

13,911
1,841
12,070
11,716
8,995
2,721

Total waste

82,802

41,376

25,627

Non-hazardous waste (of total waste)

84%

70%

54%

1,000 tons

2012

2011

2010

CO2 emissions from energy consumption
– Diabetes care
– Biopharmaceuticals
– Other
CO2 emissions from refrigerants
CO2 emissions from transport

Total

122
95
9
18
3
55

180

94
70
8
16
3
53

95
68
9
18
6
57

Recycling
Incineration with energy recovery
Incineration without energy recovery
Special treatment2
Landﬁ lling

150

158

Total

84%
9%
1%
5%
1%

71%
16%
1%
10%
2%

51%
25%
1%
19%
4%

100%

Waste treatment

2012

2011

2010

CO2 emissions from energy consumption increased by 30% in 2012
compared with 2011, mainly due to increased energy consumption from
increased insulin production in Denmark and the new ﬁ lling plant in China.

CO2 emissions from transport (product distribution) remained stable.

3.2 Wastewater and chemical oxygen demand

(COD) in wastewater

Accounting policies
The volume of wastewater is measured as process wastewater, sanitary
wastewater and drainage water from fortiﬁ ed areas. The total volume of
wastewater 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 is a measure of the level
of pollutants in the water and is calculated based on in-house test results or
standard factors.

Development
The increase in water consumption led to an increase in the total volume of
wastewater of 12%, from 2,036,000 m3 in 2011 to 2,272,000 m3 in 2012.
The quantity of discharged COD in the wastewater increased by 62%, from
446 tons in 2011 to 723 tons in 2012, primarily due to increased insulin
production and the new ﬁ lling plant in China.

1. Before 2011, most of the organic production waste was used as animal feed and

classiﬁ ed as a by-product. From October 2011, all organic production waste is sent
for energy recovery in biogas plants.

2. Waste handled by companies specialised in chemical waste disposal. In 2012, 71%

was either process waste requiring special treatment or medicine waste.

The reclassiﬁ cation of the organic production waste from by-product
(animal feed) to waste is the main reason for the signiﬁ cant increase
in waste. In addition, increased insulin production also contributed to the
increased amounts of organic waste and ethanol. The remaining fractions
decreased by 4%.

3.4 Breaches of regulatory limit values

Accounting policies
Breaches of regulatory limit values covers all breaches reported to the
authorities.

Development
The number of breaches of regulatory limit values increased by 23%, from
22 breaches in 2011 to 27 in 2012, mainly due to breaches related to pH
in wastewater. All breaches were short-term events with no impact on the
environment.

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NOVO NORDISK ANNUAL REPORT 2012

104 FINANCIAL STATEMENTS OF THE PARENT COMPANY

Financial statements
of the parent
company 2012

The following pages encompass the ﬁ nancial statements of the parent company being the legal entity Novo Nordisk A/S.
Besides the ownership of the subsidiaries in the Novo Nordisk Group, the activity within the parent company mainly
comprises research and development, production, corporate activities and support functions.

Income statement for the year ended 31 December

DKK million

Sales
Cost of goods sold

Gross proﬁ t

Sales and distribution costs
Research and development costs
Administrative costs
Licence fees and other operating income, net

Operating proﬁ t

Proﬁ t in subsidiaries, net of tax
Financial income
Financial expenses

Proﬁ t before income taxes

Income taxes

Net proﬁ t for the year

Proposed appropriation of net proﬁ t:
Dividends
Net revaluation reserve according to the equity method
Retained earnings

NOVO NORDISK ANNUAL REPORT 2012

Note

2012

2011

2
3

3
3
3

10
4
4

9
9

49,834
12,271

37,563

11,626
9,071
1,439
796

16,223

9,914
139
1,792

24,484

40,452
11,861

28,591

10,655
7,851
1,531
651

9,205

10,494
437
882

19,254

3,037

2,200

21,447

17,054

9,715
731
11,001

7,742
(1,767)
11,079

21,447

17,054

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Balance sheet at 31 December

DKK million

Assets

Intangible assets
Property, plant and equipment
Financial assets

Total non-current assets

Raw materials
Work in progress
Finished goods

Inventories

Trade receivables
Amounts owed by afﬁ liates
Tax receivables
Other receivables

Receivables

Deferred income tax assets
Marketable securities
Derivative ﬁ nancial instruments
Cash at bank and in hand

Total current assets

Total assets

Equity and liabilities

Share capital
Net revaluation reserve according to the equity method
Retained earnings

Total equity

Deferred income tax liabilities
Other provisions

Total provisions

Loans

Non-current liabilities

Current debt
Derivative ﬁ nancial instruments
Trade payables
Amounts owed to afﬁ liates
Tax payables
Other liabilities

Current liabilities

Total liabilities

Total equity and liabilities

FINANCIAL STATEMENTS OF THE PARENT COMPANY 105

Note

2012

2011

7
8
10

6
12

1,153
14,628
18,046

33,827

1,268
3,824
1,857

6,949

1,509
8,921
1,052
756

1,159
14,257
17,443

32,859

1,262
3,941
1,967

7,170

1,392
7,312
764
756

12,238

10,224

–
4,544
931
10,693

35,355

222
4,082
48
12,399

34,145

69,182

67,004

560
8,771
31,301

40,632

52
704

756

–

137
48
1,764
22,401
–
3,444

27,794

580
8,225
28,643

37,448

–
631

631

502

25
1,492
1,582
22,384
1
2,939

28,423

28,925

69,182

67,004

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106 FINANCIAL STATEMENTS OF THE PARENT COMPANY

Notes

1 Accounting policies

The ﬁ nancial 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
Copenhagen.

The accounting policies for the ﬁ nancial statements of the parent company
are unchanged from the last ﬁ nancial year and are the same as for the
consolid ated ﬁ nancial statements with the following additions. For a
description of the accounting policies of the Group, please refer to the
Consolidated ﬁ nancial statements, pp 60 – 62.

Supplementary accounting policies for the parent company

Financial assets
In the ﬁ nancial statements of the parent company, investments in
sub sidiaries and associated companies are recorded under the
equity method, which is at the respective share of the net asset values in
subsidiaries and associated companies. Any cost in excess of net assets in
the acquired company is capitalised in the parent company under Financial
assets as part of investments in subsidiaries (‘Goodwill’). Amortisation
of goodwill is provided under the straight-line method over a period not
exceeding 20 years based on estimated useful life.

Net proﬁ t of subsidiaries less unrealised intra-Group proﬁ ts is recorded in
the Income statement of the parent company.

To the extent it exceeds declared dividends from such companies, net
revaluation of investments in subsidiaries is transferred to Net revaluation
reserve under Equity according to the equity method.

Fair value adjustments of ﬁ nancial assets categorised as ‘Available for sale’
in the parent company are recognised in the Income statement.

Proﬁ ts in subsidiaries are disclosed as proﬁ t after tax.

Tax
For Danish tax purposes, the parent company is assessed jointly with its
Danish subsidiaries. The Danish jointly taxed companies are included in a
Danish on-account tax payment scheme for Danish corporate income tax.
All current taxes under the scheme are recorded in the individual
com panies.

3 Employee costs

DKK million

Wages and salaries
Share-based payment costs
Pensions
Other social security contributions
Other employee costs

Total employee costs

2012

2011

7,076
167
663
183
264

6,725
126
620
177
257

8,353

7,905

Included in the Balance sheet as change
in employee costs included in Inventories

(7)

(91)

For information regarding remuneration to the Board of Directors and
Executive Management, please refer to ‘Remuneration’ pp 49 –51 and note
2.3 in the Consolidated ﬁ nancial statements.

Average number of full-time
employees in Novo Nordisk A/S

2012

2011

12,003

11,559

4 Financial income and ﬁ nancial expenses

DKK million

2012

2011

Interest income relating to subsidiaries
Other ﬁ nancial income

Total ﬁ nancial income

Interest expenses relating to subsidiaries
Foreign exchange loss (net)
Other ﬁ nancial expenses

Total ﬁ nancial expenses

31
108

139

70
148
1,574

1,792

17
420

437

163
337
382

882

Statement of cash ﬂ ows
No separate statement of cash ﬂ ows has been prepared for the parent
company; please refer to the Consolidated Statement of cash ﬂ ows on p 58.

5 Income taxes

2 Sales

DKK million

Sales by business segment1
Diabetes care
Biopharmaceuticals

Total sales

Sales by geographical segment1
North America
Europe
International Operations
Japan & Korea
Region China

Total sales

2012

2011

49,479
355

39,978
474

49,834

40,452

20,463
13,201
7,986
3,992
4,192

14,018
12,308
6,796
3,699
3,631

49,834

40,452

Sales are attributed to geographical segment based on location of the
customer.

According to the Danish joint taxation regime, all Danish group companies
are automatically taxed on a joint basis. Hence Novo Nordisk A/S and its
Danish subsidiaries are included in the joint taxation scheme of the parent
company, Novo A/S. Novo Nordisk A/S and its Danish subsidiaries’ tax
contribution to the joint taxation in 2012 amounts to DKK 3,527 million
(DKK 2,330 million in 2011).

In 2012, Novo Nordisk A/S paid (cash) income taxes of DKK 4,235 million
related to the current year (DKK 3,075 million in 2011) and DKK 3,620
million in taxes regarding prior years (a refund of DKK 269 million in 2011).
Furthermore, DKK 40 million has been paid in income taxes by Danish
subsidiaries (a payment of DKK 19 million in 2011).

6 Deferred income tax assets/(liabilities)

DKK million

2012

2011

The deferred tax assets/liabilities are allocated
to the various balance sheet items as follows:
Property, plant and equipment
Indirect production costs
Unrealised proﬁ t on intra-Group sales
Other

(912)
(810)
2,024
(354)

(1,018)
(874)
1,945
169

1. For deﬁ nitions of the segments, please refer to note 2.2 in the Consolidated ﬁ nancial

statements.

Total income tax assets/(liabilities)

(52)

222

The deferred income tax has been calculated using a tax rate of 25%.

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7 Intangible assets

DKK million

Cost at the beginning of the year
Additions during the year
Disposals during the year

Cost at the end of the year

Amortisation at the beginning of the year
Amortisation during the year
Impairment losses for the year

Amortisation at the end of the year

Carrying amount at the end of the year

FINANCIAL STATEMENTS OF THE PARENT COMPANY 107

2012

2011

1,872
119
–

1,991

713
97
28

838

1,694
179
(1)

1,872

611
66
36

713

1,153

1,159

Intangible assets primarily relate to patents and licences, 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

Payments
on account
and assets
in course of
construction

2012

2011

10,508
115
(250)
430

14,297
109
(132)
294

1,853
66
(31)
102

2,649
1,887

(826)

29,307
2,177
(413)
0

28,361
1,727
(781)
0

Cost at the end of the year

10,803

14,568

1,990

3,710

31,071

29,307

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

4,191
451
17
(246)

9,618
1,097
67
(124)

1,241
156
2
(27)

–

15,050
1,704
86
(397)

13,943
1,725
93
(711)

Depreciation and impairment losses at the end of the year

4,413

10,658

1,372

–

16,443

15,050

Carrying amount at the end of the year

6,390

3,910

618

3,710

14,628

14,257

9 Statement of changes in equity

DKK million

Balance at the beginning of the year
Appropriated from Net proﬁ t for the year
Proposed dividends
Appropriated from Net proﬁ t for the year to Net revaluation reserve
Effect of hedged forecast transactions transferred to the Income statement
Fair value adjustments of cash ﬂ ow hedges for the year
Dividends paid
Share-based payments (note 3)
Tax credit related to share option scheme
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

580

8,225

731

(20)

(185)

Retained
earnings

28,643
11,001
9,715

1,118
832
(7,742)
167
31
(12,162)
266
20
13
–
(601)

2012

2011

37,448
11,001
9,715
731
1,118
832
(7,742)
167
31
(12,162)
266
0
(172)
–
(601)

36,956
11,079
7,742
(1,767)
658
(1,118)
(5,700)
126
–
(10,839)
244
0
(173)
(123)
363

Balance at the end of the year

560

8,771

31,301

40,632

37,448

Please refer to note 4.1 in the Consolidated ﬁ nancial statements regarding average number of shares.
Please refer to note 4.1 in the Consolidated ﬁ nancial statements regarding total number of A and B shares in Novo Nordisk A/S and treasury shares.

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NOVO NORDISK ANNUAL REPORT 2012

108 FINANCIAL STATEMENTS OF THE PARENT COMPANY

10 Financial assets

DKK million

Cost at the beginning of the year
Investments during the year
Divestments during the year

Cost at the end of the year

Value adjustments at the beginning of the year
Proﬁ t/(loss) before tax
Income taxes on proﬁ t for the year
Dividends received
Divestments during the year
Effect of exchange rate adjustment
Other adjustments

Value adjustments at the end of the year

Unrealised internal proﬁ t at the beginning of the year
Change for the year – charged to Income statement
Change for the year – charged to Equity
Effect of exchange rate adjustment

At the end of the year

Carrying amount at the end of the year

Investments
in subsidiaries

8,805

23,559
13,883
(3,342)
(13,039)

(498)
(365)

20,198

(15,239)
(627)
4,219
313

(11,334)

17,669

Amounts
owed by
afﬁ liates

Other
securities
and
investments

2012

2011

101
257
(124)

234

663
11

9,569
268
(124)

674

9,713

(1)

(445)

23,113
13,883
(3,340)
(13,039)
–
(482)
(468)

15
(103)

9,523
119
(73)

9,569

24,368
13,621
(2,629)
(12,041)
31
11
(248)

–

234

(531)

19,667

23,113

(15,239)
(627)
4,219
313

(14,577)
(498)

(164)

–

(11,334)

(15,239)

143

18,046

17,443

Carrying amount of investments in subsidiaries does not include capitalised goodwill at the end of the year. An investment of DKK 41 million has been
reclassiﬁ ed from associated company to Other securities and investments. The cost was DKK 134 million and value adjustment was DKK (93) million.

A list of companies in the Novo Nordisk Group is found in note 5.8 in the Consolidated ﬁ nancial statements.

11 Non-current liabilities

13 Commitments and contingencies

Non-current liabilities due more than ﬁ ve years from the balance sheet date
amount to DKK 0 million (DKK 306 million in 2011).

DKK million

12 Other provisions

DKK million

Non-current
Current

Total other provisions

2012

2011

480
224

704

474
157

631

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 return statistics.

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 ﬁ ve years
After ﬁ ve years

Total lease commitments

The lease costs for 2012 and 2011 were
DKK 335 million and DKK 308 million respectively.

Security for debt
Land, buildings and equipment etc
at carrying amount

2012

2011

993

987

107
4,523

2,915
2,574

11
4,217

2,774
3,352

191
534
268

993

196
490
301

987

1,374

For information on pending litigation and other contingencies, please refer
to note 5.4 to the Consolidated ﬁ nancial statements.

14 Related party transactions

For information on transactions with related parties, please refer to note 5.5
to the Consolidated ﬁ nancial statements.

NOVO NORDISK ANNUAL REPORT 2012

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Management statement

CONSOLIDATED FINANCIAL STATEMENTS 109

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 2012.

Further, the Consolidated ﬁ nancial statements, the Financial statements of
the parent company and Management’s Review are prepared in accordance
with additional Danish disclosure requirements for listed companies.

In our opinion, the Consolidated ﬁ nancial statements and the Financial
statements of the parent company give a true and fair view of the ﬁ nancial
position at 31 December 2012, the results of the Group and parent

company operations, and consolidated cash ﬂ ows for the ﬁ nancial year
2012. Furthermore, in our opinion, Management’s Review includes a
true and fair account of the development in the operations and ﬁ nancial
circumstances, of the results for the year and of the ﬁ nancial position
of the Group and the parent company as well as a description of the most
signiﬁ cant risks and elements of uncertainty facing the Group and the
parent company.

Novo Nordisk’s consolidated 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, 30 January 2013

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 Ando
Vice chairman

Bruno Angelici

Henrik Gürtler

Liz Hewitt
Audit Committee member

Ulrik Hjulmand-Lassen

Thomas Paul Koestler

Anne Marie Kverneland

Kurt Anker Nielsen
Audit Committee member

Søren Thuesen Pedersen

Hannu Ryöppönen
Chairman of
the Audit Committee

Stig Strøbæk

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NOVO NORDISK ANNUAL REPORT 2012

110 INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Reports

To the Shareholders of Novo Nordisk A/S

Report on Consolidated ﬁ nancial statements and
Financial statements of the Parent Company

We have audited the Consolidated ﬁ nancial statements and the Financial
statements of Novo Nordisk A/S for the ﬁ nancial year 2012, pp 55 – 93
and pp 104 –108, which comprise Income Statement, Balance Sheet,
Statement of Changes in Equity and Notes including accounting policies
for the Group as well as for the Parent Company and Statement of
Comprehensive Income and Cash Flow Statement for the Group.

The Consolidated ﬁ nancial 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 ﬁ nancial statements and the
Financial statements of the Parent Company are prepared in accordance
with additional Danish disclosure requirements for listed companies.

Management’s Responsibility for the Consolidated
ﬁ nancial statements and the Financial statements of the
Parent Company
The Management is responsible for the preparation of the Consolidated
ﬁ nancial 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 ﬁ nancial
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 ﬁ nancial
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 ﬁ nancial 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 ﬁ nancial 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 ﬁ nancial 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 ﬁ nancial statements
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 ﬁ nancial statements and the Financial statements of
the Parent Company.

We believe that the audit evidence we have obtained is sufﬁ cient and
appropriate to provide a basis for our audit opinion.

Our audit has not resulted in any qualiﬁ cation.

Opinion
In our opinion, the Consolidated ﬁ nancial statements give a true and fair
view of the ﬁ nancial position at 31 December 2012 of the Group and of
the results of the Group’s operations and consolidated cash ﬂ ows for the
ﬁ nancial year 2012 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 ﬁ nancial position at 31 December 2012 and of the
results of the Parent Company’s operations for the ﬁ nancial year 2012 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 1– 54 and p 94 in accordance with
the Danish Financial Statements Act.

On this basis, it is our opinion that the information provided in
the Management’s Review is consistent with the Consolidated ﬁ nancial
statements and the Financial statements of the Parent Company.

Bagsværd, 30 January 2013

PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab

Lars Holtug
Danish State Authorised
Public Accountant

Lars Baungaard
Danish State Authorised
Public Accountant

NOVO NORDISK ANNUAL REPORT 2012

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Independent Assurance Report on the social
and environmental reporting for 2012

INDEPENDENT ASSURANCE REPORT 111

To the Stakeholders of Novo Nordisk

We have reviewed the Consolidated social and environmental information
in the Annual Report of Novo Nordisk A/S for the ﬁ nancial year 2012,
which comprises Management’s Review, the social accounting policies and
environmental accounting policies for Consolidated social and environ-
mental information including the Consolidated social and environmental
statement on pp 1– 54, 94 and pp 95 –103.

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 accordance with the social accounting policies and environmental
accounting policies described on pp 96 –100 and pp 102–103.

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 (AA1000AS(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 has competences in respect of assurance engagements
related to Consolidated social and environmental information. In addition,
our team has competences in assessing social and environmental informa-
tion and sustainability management, and thus qualiﬁ es to conduct this
independent assurance engagement. During 2012 we have not performed
any tasks or services to Novo Nordisk or other clients that would conﬂ ict
with our independence, nor have we been responsible for the preparation
of any part of the report; and therefore qualify as independent as deﬁ ned
by in AA1000AS(2008).

Scope, standards and criteria used
We have planned and performed our work in accordance with the
International Standard on Assurance Engagements (ISAE) 3000, “Assurance
Engagements other than Audits or Reviews of Historical Financial
Information”, to obtain limited assurance that the Consolidated social and
environmental information in the Annual Report is free of material mis-
statements 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
engagement with reasonable assurance has been limited to, principally,
inquiries, interviews and analytical procedures related to registration and
communication systems, data and underlying documentation.

Moreover, we have planned and performed our work based on the
AA1000AS(2008), using the criteria in the AA1000APS(2008), to perform a
Type 2 engagement and to obtain a moderate level of assurance regarding
the nature and extent of Novo Nordisk’s adherence to the principles of
inclusivity, materiality and responsiveness.

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, Hillerød and Kalundborg 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 the Executive Management,
Corporate Finance, Diabetes Research, Public Affairs, Corporate Com-
munication, Marketing, Corporate Sustainability, as well as Management in
the Brazilian afﬁ liate, 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 2012 (on pp 1– 54,
94 and pp 95 –103) is free of material misstatements and has been stated
in accordance with the social accounting policies and environmental
accounting 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
We continue to see a strong commitment to accountability within Novo
Nordisk with systems and processes in place to support stakeholder
participation at corporate level. We commend the guidelines developed
during 2012 to advance the stakeholder engagement and sustainability
understanding across the business as well as the organizational set-up
planned to support the implementation.

We recommend that Novo Nordisk speciﬁ cally builds stakeholder
engagement and sustainability capacity at the afﬁ liate level through the
guidelines developed to ensure alignment between the approaches taken
and the level of understanding at corporate and local level.

Regarding materiality
We observe that Novo Nordisk takes the principle of materiality into
consideration in its decision making processes by applying the triple
bottom line principle. Also, Novo Nordisk continues to discuss, evaluate
and determine the materiality of sustainability issues on an ongoing basis
through a number of relevant governance bodies with senior management
representation from across the business. Speciﬁ cally with regards to
external reporting we commend that Novo Nordisk is reﬁ ning the
materiality ﬁ lters applied.

We have no signiﬁ cant recommendations regarding materiality.

Regarding responsiveness
Being responsive to stakeholder needs and concerns is key to Novo Nordisk
and evident from their use of boards, media, forums and communication
channels to engage in dialogue and convey messages. Increasingly we
observe how the focus on the patient is being reﬂ ected in the development
of responses.

We have no signiﬁ cant recommendations regarding responsiveness.

Bagsværd, 30 January 2013

PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab

Lars Holtug
Danish State Authorised
Public Accountant

Lars Baungaard
Danish State Authorised
Public Accountant

NOVO NORDISK ANNUAL REPORT 2012

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112 ADDITIONAL INFORMATION

More information

The Novo Nordisk Annual Report 2012 is available in print, online as a PDF and as an
app for iPad. In addition, Novo Nordisk provides disclosures in separate reports to satisfy
specific legal requirements and stakeholder interests.

Annual report formats

PDF

iPad

Can be ordered at
novonordisk.com/annualreport.

The report can be downloaded at
novonordisk.com/annualreport.

App with easy navigation and enhanced user
experience can be downloaded from Apple’s
App Store by searching on Novo Nordisk
Annual Report (available February 2013).

Additional reporting
Can be downloaded at novonordisk.com/annualreport (available February 2013).

Report

Reason for reporting

Content

Form 20-F

Requirement by US Securities and
Exchange Commission (SEC) for foreign
private issuers with equity shares listed
on exchanges in the United States

Annual reporting to SEC in a
standardised reporting format so that
investors can evaluate the company
alongside US domestic equities

Corporate Governance Report

Requirement according to the
Danish Financial Statements Act

Reporting of compliance with Danish
Corporate Governance Recommendations

united Nations Global Compact

Voluntary commitment to the UN Global
Compact initiative and also serves as
a requirement by the Danish Financial
Statements Act, section 99a

Communication of progress in relation to
the 10 principles in the areas of human
rights, labour, environment and anti-
corruption and UN goals. Additional
progress reporting on corporate
sustainability leadership as a LEAD member
of the UN Global Compact

Global Reporting Initiative

Novo Nordisk has since 2002 voluntarily
provided additional reporting in
accordance with the Global Reporting
Initiative, the most prevalent standardised
sustainability reporting

Disclosure of management approach
and performance for economic,
social and environmental impacts,
as well as human rights, product
responsibility and societal activity

This public filing contains references and links to information posted on the company’s and third-party websites, which are not incorporated by reference into the
public filing. The Management review on pp 1–54 and 94, the supplementary information on pp 95–103 and the Communication on Progress to the UN Global
Compact address the requirements of the Danish Financial Statements Act section 99a; see also p 96.

References for the Annual Report 2012: Strategy is all about choice: 1. International Diebetes Federation. IDF Diabetes Atlas, fifth edition, 2012 update. 2. http://www.who.int/mediacentre/
factsheets/fs311/en/index.html. Diabetes – an emergency in slow motion: 1. UKPDS, Stratten et al. BMJ 2000; vol 321:405–412. 2. Fong DS, Aiello LP, Ferris FL 3rd, Klein R: Diabetic retinopathy.
Diabetes Care 2001;27:2540–2553. 3. International Diabetes Federation. IDF Diabetes Atlas, fifth edition, 2012 update. Insulin treatment is a balancing act: 1. The UK Perspective Diabetes Study
(UKPDS) 1998. Intensive blood glucose control with sulphonylureas or insulin compared with conventional treatment and risk of complications in patients with type 2 diabetes (UKPDS 34). The Lancet
352:837–53. 2. The Diabetes Control and Complications Trial Research Group 1993. The effect of intensive treatment of diabetes on the development and progression of long-term complications in
insulin-dependent diabetes mellitus. N Engl J Med 329:977–986. Prevent bleedings: 1. hemophilia.org/NHFWeb/MainPgs/MainNHF.aspx?menuid=259&contentid=476. 2. http://www1.wfh.org/
publications/files/pdf-1427.pdf. 3. http://www.cdc.gov/Features/HemophiliaDay. Product overview: 1. Not all products approved in all markets.

Design and production: ADtomic Communications. Accounts and notes: Team2Graphics. Printing: Bording PRO as, February 2013. Photography: ADtomic Communications, Idzi Dutkiewicz, Per
Fledelius, Willi Hansen, iStockphoto, Ulrik Jantzen/Das Büro, Martin Juul, Olivier Leroy, Noel Malcolm, Yasu Nakaoka, Kristof Ramon, Mike Rulis, Dominique Schneider, Peter Sørensen, Jesper Westley,
Andrew Wilz and product portfolio.

NOVO NORDISK ANNUAL REPORT 2012ADDITIONAL INFORMATION 113

Product overview

Novo Nordisk has more than 30 products on the market. This page presents an overview
of European trade names with accompanying generic names. Trade and generic names
may differ in other markets.1

10.

11.

12.

13.

14.

15.

16.

17.

20.

21.

22.

23.

30.

24.

25.

26.

31.

32.

18.

19.

27.

28.

29.

33.

DIABETES CARE
Modern insulins: 1. Levemir®, insulin detemir. 2. NovoRapid®, insulin aspart. 3. NovoMix® 30, biphasic insulin aspart. 4. NovoMix® 50, biphasic insulin aspart. 5.
NovoMix® 70, biphasic insulin aspart. Glucagon-Like Peptide-1: 6. Victoza®, liraglutide. Human insulins: 7. Insulatard®, isophane (NPH) insulin. 8. Actrapid®,
regular human insulin. 9. Mixtard® 30, biphasic human insulin. Diabetes devices: 10. FlexTouch®, prefilled insulin delivery system. 11. FlexPen®, prefilled insulin
delivery system. 12. NovoPen® 5, durable insulin delivery system with memory function. 13. NovoPen® 4, durable insulin delivery system with memory function.
14. NovoPen Echo®, durable insulin delivery system with memory function. 15. InnoLet®, prefilled insulin delivery system. 16. NovoFine®, needle. 17. NovoTwist®,
needle. 18. GlucaGen®, glucagon. Oral antidiabetic agents: 19. NovoNorm®, repaglinide. 20. PrandiMet®, repaglinide/metformin.

BIOPHARMACEuTICALS
Haemostasis: 21. NovoSeven®, recombinant factor VIIa, also available with prefilled syringe in an increasing number of countries. 22. NovoThirteen®, recombinant
FXIII. Human growth hormone: 23. Norditropin® , somatropin (rDNA origin). 24. Norditropin® FlexPro®, prefilled multidose delivery system. 25. PenMate®,
automatic needle inserter (available for Norditropin® FlexPro®, NordiFlex® and SimpleXx®). 26. Norditropin NordiFlex®, prefilled multidose delivery system. 27.
NordiPen®, durable multidose delivery system. 28. NordiPenMate®, automatic needle insertion. 29. NordiLet®, prefilled multidose delivery system. Hormone
replacement therapy: 30. Activelle®, estradiol/norethisterone acetate. 31. Estrofem®, estradiol. 32. Novofem®, estradiol/norethisterone acetate. 33. Vagifem®,
estradiol hemihydrate.

Market share data on pp 6, 7, 8, 16, 17, 18, 33, 35, 36 and 37 is from IMS Health, IMS MIDAS Customized Insights (November 2012). Market definition for retail: Algeria, Argentina, Australia, Austria,
Belgium, Brazil, Bulgaria, Canada, Czech Republic, Denmark, Egypt, Estonia, Finland, France, 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 2012Team Novo Nordisk is a global sports team
with more than 100 cyclists, triathletes
and runners who all have diabetes.
The team is spearheaded by the world’s
first all-diabetes pro-cycling team.

Headquarters
Novo Nordisk A/S
Novo Allé
2880 Bagsværd
Denmark
Tel +45 4444 8888
CVR number 24 25 67 90
novonordisk.com

Investor Service
Enquiries and feedback on the Annual
Report should be addressed to:
annualreport@novonordisk.com

Shareholders’ enquiries concerning
dividend payments and shareholder
accounts should be addressed to:
shareholder@novonordisk.com

ADR holders’ enquiries concerning
dividend payments, transfer of
ADR certificates, consolidation
of accounts and tracking of
ADRs should be addressed to:

JP Morgan Chase & Co
PO Box 64504
St Paul, MN 55164-0504, USA
Tel +1 800 990 1135
Tel +1 651 453 2128 (for enquiries
from outside the United States)
jpmorgan.adr@wellsfargo.com