Novo Resources Annual Report 2013

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FY2013 Annual Report · Novo Resources

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Novo Nordisk A/S

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novo nordisk
annual report
2013

The one rule we
have to break
– the Rule of Halves

Is obesity
a disease?
– without doubt it
is a growing threat
to global health

One size
doesn’t fi t all
– when it comes to
diabetes treatment

If Novo Nordisk’s
business strategy
were to be described
in one word,
it would have
to be ‘focus’

Cover photo: A resident of Philadelphia, Jesse Crumpler has something

in common with 3.7 billion other people: he lives in a big city that is

becoming bigger by the day. And like 246 million people living in urban

areas, he has diabetes. Sadly, urban living and diabetes go hand in hand.

And not much is known about how to change the situation.

6 2013 performance

and 2014 outlook

The one rule we
have to break

Business strategy:
‘Our focus is our strength’

Risks to be
aware of

One size
doesn’t fit all

Novo Nordisk’s
five regions

Contents

Accomplishments
and results 2013

1
2
4
6

Letter from the Chairman
Letter from the CEO
Novo Nordisk at a glance
2013 performance
and 2014 outlook
14 Performance highlights

Our business

Business strategy:
‘Our focus is our strength’
Pipeline overview
The one rule we have to break

20
22
24 One size doesn’t fit all
26 Changing diabetes

28
30
31
36

where it matters most
Is obesity a disease?
An important factor of life
Novo Nordisk’s five regions
The complexity of
insulin production
A question of trust

38
42 Risks to be aware of

Governance, leadership and shares

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

Financial, social and
environmental statements

104

109

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

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
version. In the event of any discrepancies, the Danish version
shall prevail.

Letter from
the Chairman

Last year, at Novo Nordisk’s Annual General Meeting in March,
I was named Chairman of the Board of Directors of which I have
been a member since 2005. I feel honoured by and proud of this
appointment, and will do my best to live up to the responsibilities
that come with it.

The Board has also reviewed the company’s long-term strategy and
outlook as we do every year. Is it realistic? Is it ambitious? Does the
company have the skills and resources to execute it? And if so, does
it provide Novo Nordisk with the competitive advantages needed to
be successful in a very competitive industry? We believe it does.

As a board member I’ve followed Novo Nordisk’s development
during a very difficult period for the pharmaceutical industry. It has
been an exciting journey: in terms of both financial value creation
for our shareholders and positive impact on people with diabetes,
Novo Nordisk has delivered outstanding results.

I and the other members of Novo Nordisk’s Board are confident
that Novo Nordisk will continue to do very well despite having been
through a year that, frankly, will be remembered for a number of
negative events: a Warning Letter from the US Food and Drug
Administration (FDA), a delay for Tresiba® (insulin degludec) in the
US, a safety scare around the class of products to which Victoza®
belongs, and a major product recall.

Our Chief Executive Officer, Lars Rebien Sørensen, will give you
more details and share his reflections on these events on the
following pages. What’s

important for me to say
is that the Board has

followed up

meticulously on
each and every one
of these events to
ensure that
management
has responded
appropriately
to them to
minimise the
negative effects
and the risk of
reoccurrence.
And we firmly
believe that it has.

Chairman of the Board of
Directors Göran Ando at
the Novo Nordisk R&D
Summit in November 2013.

We’ve also evaluated the strength of the company’s executive
leadership and senior management and reviewed the succession
preparedness for key positions. Together with the executive team
we’ve assessed the company’s organisational strengths and
weaknesses. Whenever we’ve identified issues that could become
a significant obstacle to meeting the company’s long-term goals,
we’ve agreed on a plan of action.

We’re confident that in Lars Rebien Sørensen and his Executive
Management team we have the leadership needed to execute Novo
Nordisk’s strategy and execute it well. It has been a pleasure to see
how two new members of Executive Management have been
smoothly integrated into the team, and how the company’s bench
of senior vice presidents has been expanded with new members,
several of them from our large and very successful affiliate in the US.

The Board is also pleased to announce the promotion of Chief
Operating Officer Kåre Schultz to president. This is a reflection of
the importance and complexity of his organisation and his
successful management hereof. In this role, Kåre will work closely
with Lars on planning Executive Management meetings and board
meetings, and assume a more outward-facing role.

Despite the challenges Novo Nordisk faced in 2013, it met the sales
and profit targets we communicated at the beginning of the year.
Sales grew by 12% and operating profit by 15%, both measured in
local currencies. Furthermore, we made significant progress on the
key development projects, which bodes well for future growth and
for the company’s ability to achieve its long-term targets.

Against this background, at the Annual General Meeting on
20 March 2014 the Board of Directors will propose a 25% increase
in dividend to 4.50 Danish kroner per share of 0.20 krone. The
Board of Directors has furthermore decided to initiate a new share
repurchase programme of up to 15 billion kroner.

I’d also like to highlight two important decisions that the Board has
made regarding corporate governance. We established a Nomination
Committee to enhance the process for nominating members to the
Board, and set new targets for the diversity of the Board as regards
gender and nationality. For more information on this, please see p 47.

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

Göran Ando
Chairman of the Board of Directors

Letter from
the CEO

2013 was both a good year and a tough year for Novo Nordisk.

Let me start with the tough part. As I mentioned in my letter in last
year’s Annual Report, we began the year with the unsettling fact
of having received a Warning Letter from the US Food and Drug
Administration (FDA), following an inspection of one of our insulin-
filling plants in Denmark.

To make matters worse, a debate emerged in March in which
some scientists questioned whether the incretin class of diabetes
medications – the class to which our very successful product
Victoza® belongs – had an increased risk of side effects in the
pancreas. Although the authorities later concluded that the data
currently available don’t confirm the concerns, the debate did
create anxiety among some patients using these products.

Unrelated to this, in February we received a Complete Response
Letter from the FDA in which the agency requested additional
cardiovascular safety data before it could complete its review of the
New Drug Application for Tresiba® (insulin degludec). Tresiba® is our
new-generation basal insulin with an ultra-long duration of action
of more than 42 hours.

In October, we had to recall a number of batches of NovoMix®
insulin in some European countries as our analysis had shown
that a small percentage of the products in these batches didn’t
meet the specifications for insulin strength.

Not the kind of events we’d hoped for in our 90th anniversary
year – or in any other year for that matter. For Novo Nordisk’s
employees, who take immense pride in the safety and efficacy
of our products, such events are downright painful.

They are, however, also a good opportunity for learning and
reflection, and we have learned from these events and are still
learning. To mention just two examples: we’re improving our
measures to ensure compliance with the latest and ever-evolving
standards for good manufacturing practice, and we’re collecting
more data than ever regarding cardiovascular safety to rule out
that our products are associated with unacceptable risks.

I wish I could say that events such as the ones I’ve described will
never happen again, but I’m not naive. Bad things happen, even
to good companies; however, I firmly believe we’re coming out
of these events wiser and stronger.

Allow me to turn to the brighter part
of my account of 2013. I’m glad to
report that our strategic products
are doing well in the market.
Tresiba® was launched in
Japan as the first country
in February 2013 and by
the end of the year
had claimed 8.6%

President and Chief Executive Officer Lars
Rebien Sørensen at the Novo Nordisk
Capital Markets Day in December 2013.

of the segment for long-acting insulin (basal insulin) measured in
value. Several other countries launched Tresiba® during the year and
in all countries where the product is competing on an equal footing
with other insulin products, it’s gaining significant market shares.

Our established key products did well, too: sales of our modern
insulins grew 14%, Victoza® 27%, NovoSeven® 8% and Norditropin®
16%, all measured in local currencies. I think it’s fair to say that this is
a solid performance in a global pharmaceutical market characterised
by all forms of cost-containment measures. To me it shows that
there’s a large and growing need for our products.

From a regional perspective, North America was again the main
contributor to our growth, followed by International Operations
and Region China. It’s 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 7% reported and 15% in local
currencies. Growth in net profit was 18% and measured on an
earnings per share basis, the increase was 20% – all in all a very
robust financial performance in 2013.

Several products in our development pipeline passed important
milestones in 2013:
• The cardiovascular outcomes trial for Tresiba® designed to

provide the data requested by the FDA was initiated in October.
• IDegLira, a fixed combination of liraglutide and insulin degludec
for the treatment of type 2 diabetes, was filed for regulatory
review in the EU.

• We started the phase 3a programme for the faster-acting

formulation of insulin aspart.

• A 3 mg dose of liraglutide, the active substance in Victoza®,

was filed for regulatory review in both the US and the EU as a
potential new obesity treatment.

• Semaglutide, a once-weekly GLP-1 analogue, started phase 3

trials.

• FDA approved our insulin injection pens FlexTouch® and NovoPen

Echo® for use with certain insulin products.

• Within haemophilia, turoctocog alfa, our new factor VIII product
for people with haemophilia A, was approved in the US, the EU
and Japan. Turoctocog alfa will be marketed under the brand
name NovoEight® in most countries.

You’ll find more information about these and other significant
product development milestones in the research and development
section on p 10 and in articles in this Annual Report.

In 2014, we’ll maintain a high level of investment in research and
development and in our growth markets and strategic products.
We’ll have special focus on:
• The continued roll-out of Tresiba®
• The first launches of Ryzodeg® – a combination of Tresiba®
and our fast-acting insulin NovoRapid® – and NovoEight®

• The regulatory reviews of IDegLira and liraglutide 3 mg
• Further strengthening our systems and processes for ensuring

compliance with all relevant regulatory standards

• Implementing our strategy for global access to diabetes care
targeted at people who currently don’t have access to the
necessary medical treatment and care.

As you’ll see from the article on the diabetes pandemic later in this
Annual Report, the number of people with diabetes is growing at
an alarming rate. The latest estimates are that by 2035 close to 600
million people will have diabetes and at some point most of them
will require medical treatment. You can read more about this on
pp 22–23.

At Novo Nordisk we have a critical role to play and are committed
to playing our part in the fight against diabetes. We’ve set ourselves
the target that 40 million people will be using our products by
2020. We are, however, keenly aware that our products alone
will not address all the challenges. That’s why we’re working with
partners all over the world to identify and implement local solutions
for improving diabetes care. You’ll find some examples of this in the
article on p 26.

In the coming years we’ll have special focus on how to address
the diabetes challenge in the world’s big cities. All over the world,
people are migrating to big cities and, unfortunately, urbanisation
and type 2 diabetes go hand in hand. Not much is known about
how to change the situation, but we’re determined to work with
partners to find out.

In the face of the challenges that 2013 brought for Novo Nordisk,
I’ve taken great pleasure from the collaboration I’ve had with my
Executive Management team, our Senior Management Board and
the Board of Directors, and from dealing with the challenges we
have encountered. I look forward to an even closer collaboration
with Kåre Schultz in his new role as president. I have worked
with Kåre for almost 20 years and have enjoyed following his
development as leader of increasingly larger and more complex
organisations. His promotion is well-deserved recognition of his
accomplishments and leadership potential.

I’d like to thank everyone in the Novo Nordisk organisation for
their contributions to our results in 2013, 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 six questions at novonordisk.
com/annualreport/feedback.

Novo Nordisk at a glance

ESTABLISHED IN
DENMARK
IN 1923

EMPLOYEES IN

COUNTRIES

PRODUCTS
MARKETED IN

180

COUNTRIES

Novo Nordisk Way

The Triple Bottom Line

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.

83.6
DKK BILLION
IN SALES
(+7%)

25.2
DKK BILLION
IN NET PROFIT
(+18%)

Financially
responsible

Patients

Socially
responsible

Environmentally
responsible

24.3
MILLION PATIENTS
USE OUR DIABETES
CARE PRODUCTS
(+7%)

38,436
EMPLOYEES
WORLDWIDE
(+11%)

125
THOUSAND TONS
CO2 EMISSIONS
(+2%)

2,685
THOUSAND
M3 WATER
CONSUMPTION
(+8%)

2013 progress on strategic focus areas

Expand leadership in diabetes care

65.5
DKK BILLION
IN SALES
(+8%)

Modern insulins
Human insulins
Victoza®

Protein-related products
Oral antidiabetic products

2.6
(+2%)

2.2
(–19%)

11.6
(+23%)

10.9
(–4%)

27%
GLOBAL VALUE
MARKET SHARE
(+1%)

• Tresiba® was launched

in eight countries.

• DEVOTE, a cardiovascular

outcomes trial designed to
provide the data for Tresiba®
requested by the FDA, was
initiated.

• IDegLira was filed for

regulatory review in the EU.

38.2
(+10%)

• Semaglutide, a once-weekly
GLP-1 analogue, started
phase 3a trials.

Pursue leadership in haemophilia

Expand leadership in growth disorders

NovoSeven® sales
DKK BILLION

8.9

2012

(+4%)

9.3

2013

• NovoEight® was approved in the US, the EU and Japan.

• N9-GP successfully completed first phase 3a trial.

• NovoThirteen® was approved in the US.

Norditropin® sales
DKK BILLION

5.7

2012

30%
GLOBAL VALUE
MARKET SHARE
(+2%)

(+7%)

6.1

2013

Establish presence in obesity

Establish presence in inflammation

• Liraglutide 3 mg for obesity completed phase 3a

and was submitted in the EU and the US.

• Five compounds in clinical trials with three in phase 2.

6 ACCOMPLISHMENTS AND RESULTS 2013

2013 performance
and 2014 outlook

2013 was a year of mixed fortunes for Novo Nordisk marked by steady progression towards
long-term financial, social and environmental targets, whereas the Complete Response Letter
for Tresiba® in the US was a disappointment.

Financial
performance

The results for 2013 are higher than expected
in the outlook for the year in the Annual
Report 2012 and in line with the latest
guidance provided in connection with the
quarterly announcement in October 2013.*

Diabetes care
sales development
Sales of diabetes care products increased
by 12% measured in local currencies and by
8% in Danish kroner to DKK 65,456 million.
Novo Nordisk is the world leader in diabetes
care and now holds a global value market
share of 27% compared with 26% at the
same time the previous year.

Sales development
Sales increased by 12% measured in local
currencies and by 7% in Danish kroner.
North America was the main contributor
with 66% share of growth measured in
local currencies, followed by International
Operations and Region China contributing
20% and 9% respectively. Sales growth
was realised within both diabetes care
and biopharmaceuticals, with the majority
of growth originating from the modern
insulins and Victoza®.

In the following sections, unless otherwise
noted, market data are based on moving
annual total (MAT) from November 2013
and November 2012 provided by the
independent data provider IMS Health.

* Please refer to the company announcement of 30 January
2014 for explanation of results compared with the latest
expectations.

Insulins and protein-
related products
Sales of insulins and protein-related products
increased by 11% in local currencies and by
6% in Danish kroner to DKK 51,577 million.
Measured in local currencies, sales growth
was driven by North America, International
Operations and Region China. Novo Nordisk
is the global leader with 48% of the total
insulin market and 46% of the market for
modern insulins and new-generation insulins,
both measured in volume.

The roll-out of Tresiba® (insulin degludec),
the once-daily new-generation insulin with
an ultra-long duration of action, continues
to progress. Launch activities are proceeding
as planned and feedback from patients and
prescribers is encouraging. Tresiba® has been
launched in eight countries with 20 more
countries expected to launch during 2014.
In the countries where Tresiba® is reimbursed
on a similar level to insulin glargine, it has
steadily grown its share of the basal insulin
market. In these countries, Tresiba® now
represents around 10% of the basal insulin

Sales growth

• In DKK as reported
• In local currencies

Sales by segment

 Biopharmaceuticals
 Diabetes care

market measured in monthly value market
share. In the markets where Tresiba® has
been launched with restricted market
access compared with insulin glargine,
market penetration remains modest.

Sales of modern insulins increased by 14%
in local currencies and by 10% in Danish kroner
to DKK 38,153 million. North America
accounted for two-thirds of the growth,
followed by International Operations and
Region China. Sales of modern insulins now
constitute 78% of Novo Nordisk’s sales of insulin.

Victoza®
(GLP-1 therapy for type 2 diabetes)
Victoza® sales increased by 27% in local
currencies and by 23% in Danish kroner to
DKK 11,633 million, reflecting robust sales
performance driven by North America, Europe
and International Operations. Victoza®
holds the global market share leadership
in the GLP-1 segment with a 71% value
market share compared with 68% in
2012. The GLP-1 segment’s value share of
the total diabetes care market has increased
to 6.9% compared with 5.9% in 2012.

NovoNorm®/Prandin®/PrandiMet®
(oral antidiabetic products)
Sales of oral antidiabetic products de-
creased by 16% in local currencies and by
19% in Danish kroner to DKK 2,246 million.
The negative sales development reflects an
impact from generic competition in the US
and Europe as well as a changed inventory
set-up in China.

Share of growth in local currencies

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

DKK billion

100

2009 2010 2011 2012 2013

* In 2012 Japan & Korea contributed –1% to the total growth.

NOVO NORDISK ANNUAL REPORT 2013

Biopharmaceuticals
sales development
Sales of biopharmaceutical products
increased by 12% measured in local
currencies and by 6% in Danish kroner
to DKK 18,116 million. Sales growth was
primarily driven by North America and
International Operations.

NovoSeven®
(bleeding disorders therapy)
Sales of NovoSeven® increased by 8%
in local currencies and by 4% in Danish
kroner to DKK 9,256 million. The market
for NovoSeven® remains volatile, and sales
growth is primarily driven by North America
and International Operations.

Norditropin®
(growth hormone therapy)
Sales of Norditropin® increased by 16%
in local currencies and by 7% in Danish
kroner to DKK 6,114 million. The sales
growth is primarily driven by contractual
wins, the support programmes that Novo
Nordisk offers healthcare professionals and
patients as well as the penetration of the
prefilled FlexPro® device in North America
and furthermore by growth in International
Operations. Novo Nordisk is the leading
company in the global growth hormone
market with a 28% market share measured
in volume.

Other biopharmaceuticals
Sales of other products within
biopharmaceuticals, which predominantly
consist of hormone replacement therapy-
related (HRT) products, increased by 15%
in local currencies and by 9% in Danish
kroner to DKK 2,746 million. Sales growth
is driven by North America and reflects a
positive impact of pricing and non-recurring
adjustments to the provisions for rebates.

Development in costs
and operating profit
The cost of goods sold grew 5% to
DKK 14,140 million, resulting in a gross
margin of 83.1% compared with 82.7% in
2012. This development primarily reflects
an underlying improvement 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 negatively impacted by
around 0.3 percentage point due to the
depreciation of key invoicing currencies
versus the Danish krone compared with
prevailing exchange rates in 2012.

Total non-production-related costs
increased by 11% in local currencies and
by 8% in Danish kroner to DKK 38,621
million.

Sales and distribution costs increased
by 13% in local currencies and by 9% in
Danish kroner to DKK 23,380 million. The
growth in costs is driven by the expansions
of the sales forces and sales and marketing
investments in the US, China and selected
countries in International Operations as
well as costs related to the launch of
Tresiba®. The growth percentage for costs
has also been impacted by changes to legal
provisions in 2012 and 2013.

Research and development costs

increased by 9% in local currencies and
by 8% in Danish kroner to DKK 11,733
million. Within diabetes care, costs are
primarily driven by development costs
related to the initiation of the Tresiba®
cardiovascular outcomes trial, and the
ongoing phase 3a trials for both faster-
acting insulin aspart and semaglutide,
the once-weekly GLP-1 analogue. Within
biopharmaceuticals, costs are primarily
related to the continued progress of the
portfolio of development projects within
haemophilia and the phase 2 trial for anti-
IL-20, a recombinant human monoclonal
antibody, in rheumatoid arthritis.

ACCOMPLISHMENTS AND RESULTS 2013

Administrative costs increased by 9%
in local currencies and by 6% in Danish
kroner to DKK 3,508 million. The increase
in costs is primarily driven by back-
office infrastructure costs to support the
expansions of the sales organisations
in North America, China and selected
countries in International Operations, non-
recurring costs related to new offices in
Denmark and the US as well as an impact
from a cost refund in 2012 of a previously
expensed fine related to an import
licence for a major market in International
Operations.

Licence income and other operating

income constituted DKK 682 million
compared with DKK 666 million in 2012.
Operating profit increased by 7% in
Danish kroner to DKK 31,493 million. In
local currencies, the growth was 15%.

Net financials and tax
Net financials showed a net income of
DKK 1,046 million compared with a net
expense of DKK 1,663 million in 2012. As
of 31 December 2013, foreign exchange
hedging gains of around DKK 1,200 million
have been deferred for recognition in the
income statement in 2014.

In line with Novo Nordisk’s treasury

policy, the most significant foreign
exchange risks for the Group have
been hedged, primarily through foreign
exchange forward contracts. The foreign
exchange result was a net income of
DKK 1,146 million compared with a net
expense of DKK 1,529 million in 2012.
This net income reflects gains on foreign
exchange hedging involving especially the
Japanese yen and the US dollar due to
their depreciation versus the Danish krone
compared with the prevailing exchange
rates in 2012, which has been partly offset
by losses on commercial balances, primarily
related to non-hedged currencies.

The effective tax rate for 2013 was 22.6%.

CONTINUED

Development in costs
Costs in % of sales

• Sales and distribution
• Cost of goods sold
• Research and development
• Administration

Operating profit

 Operating profit (left)
• Operating profit margin (right)

Net profit

 Net profit (left)
• Net profit margin (right)

DKK billion

2009 2010 2011 2012 2013

NOVO NORDISK ANNUAL REPORT 2013

8 ACCOMPLISHMENTS AND RESULTS 2013

Capital expenditure
and free cash flow
Net capital expenditure for property,
plant and equipment was DKK 3.2 billion
compared with DKK 3.3 billion in 2012. Net
capital expenditure was primarily related
to new offices in Denmark, filling capacity
in Denmark and Russia, additional GLP-1
manufacturing capacity, new diabetes
research facilities in Denmark as well as
device production facilities in the US and
Denmark.

Free cash flow was DKK 22.4 billion
compared with DKK 18.6 billion in 2012.
The increase of 20% compared with 2012
reflects the growth in net profit of 18%
and a lower impact from tax payments
in 2013 compared with 2012 related to
ongoing transfer pricing disputes, which
was partly offset by earlier payment of
rebate liabilities in the US.

Capital expenditure, net

 Capital expenditure, net (left)
• Capital expenditure, net to sales (right)

DKK billion

2009 2010 2011 2012 2013

Free cash flow
Three-year average

 Free cash flow

DKK billion

Outlook 2014

The current expectations for 2014 are summarised in the table below:

Expectations are as reported,
if not otherwise stated

Expectations
30 January 2014

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

8–11%
Around 3.5 percentage points lower

Around 10%
Around 5.5 percentage points lower

Income of around DKK 750 million

Around 22%

Around DKK 4.0 billion

Around DKK 2.9 billion

Around DKK 26 billion

Sales growth for 2014 is expected to be 8–11% measured in local currencies. This reflects
expectations of continued robust performance for the portfolio of modern insulins and
Victoza® as well as a modest sales contribution from Tresiba®. These sales drivers are
expected to be partly countered by an impact from a more challenging contract
environment in the US, generic competition for Prandin® in the US during the first half of
2014, intensifying competition within both diabetes and biopharmaceuticals as well as 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 3.5 percentage points lower than growth measured in local
currencies.

For 2014, operating profit growth is expected to be around 10% measured in local
currencies. This reflects a significant increase in costs related to the continued progress of
key development projects within diabetes and biopharmaceuticals. In addition, significant
costs are expected in relation to sales force expansions and sales and marketing investments
in the portfolio of modern insulins and Victoza® in the US, China and selected markets in
International Operations as well as the launch of Tresiba® outside the US. Given the current
level of exchange rates versus the Danish krone, the reported operating profit growth is
now expected to be around 5.5 percentage points lower than growth measured in local
currencies.

For 2014, Novo Nordisk expects a net financial income of around DKK 750 million.
The current expectation primarily reflects gains associated with foreign exchange hedging
contracts following the depreciation of the Japanese yen and the US dollar versus the
Danish krone compared with the average prevailing exchange rates in 2013.

The effective tax rate for 2014 is expected to be around 22%.
Capital expenditure is expected to be around DKK 4.0 billion in 2014, primarily
related to investments in additional GLP-1 manufacturing capacity, expansion of filling
capacity, prefilled device production facilities, construction of new laboratory facilities
as well as expansion of protein capacity within the CMC (Chemistry, Manufacturing and
Control) organisation. Depreciation, amortisation and impairment losses are
expected to be around DKK 2.9 billion. Free cash flow is expected to be around DKK
26 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 2014,
and that currency exchange rates, especially 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
CNY
JPY
GBP
CAD

DKK 1,300 million
DKK 220 million
DKK 145 million
DKK 85 million
DKK 60 million

12
*
12
14
12
10

2009 2010 2011 2012 2013

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

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

NOVO NORDISK ANNUAL REPORT 2013

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 have
subsequently been revised and updated on several occasions, most recently in connection
with the release of the financial statement for 2012. The targets have been selected to ensure
focus on growth, profitability, efficient use of capital and cash flow generation.

The targets are 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 and contracting 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.

Long-term financial target

Operating profit growth

Operating margin

Operating profit after tax to net operating assets

Cash to earnings

Cash to earnings (three-year average)

Result
2013

38%

97%

89%

94%

Target

15%

40%

125%

90%

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 2014, 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
‘2013 performance and 2014 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, governmentmandated 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 ‘Risks to be aware of’ on pp 42–43.
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.

ACCOMPLISHMENTS AND RESULTS 2013

Growth in operating profit

• Realised
Target

2009 2010 2011 2012 2013

Operating margin

• Realised
Target

2009 2010 2011 2012 2013

Operating profit after tax
to net operating assets

• Realised
Target

125

100

2009 2010 2011 2012 2013

Cash to earnings
Three-year average

• Realised
Target

120

2009 2010 2011 2012 2013

NOVO NORDISK ANNUAL REPORT 2013

10 ACCOMPLISHMENTS AND RESULTS 2013

Research and
development
Diabetes
In 2013, Novo Nordisk made important
advances in the pipeline of diabetes care
products.

Insulin
In response to the Complete Response Letter
on Tresiba® from the US Food and Drug
Administration (FDA), Novo Nordisk initiated
a cardiovascular outcomes trial (DEVOTE)
in October. It is double-blind, uses insulin
glargine as comparator and will include
7,500 type 2 diabetes patients who have
existing or high risk of cardiovascular
diseases. Novo Nordisk expects to have
sufficient data to support an interim analysis
within two to three years and to complete
the study within four to six years from
initiation. The data will also be used to
support the resubmission of Ryzodeg®, the
combination of Tresiba® and insulin aspart.
Mid-2013, Novo Nordisk filed IDegLira
for regulatory review in the EU. IDegLira is
a fixed combination of insulin degludec and
liraglutide and Novo Nordisk is the first
company to submit a product in this new
class. The filing of IDegLira in the US is
pending the outcome of the interim
analysis planned for the DEVOTE trial.

In the prandial insulin segment Novo
Nordisk began the phase 3a programme
named onset® for the faster-acting
formulation of insulin aspart. The improved
formulation is intended to enable a faster
onset of appearance of insulin in the
bloodstream, thereby mimicking the insulin
secretion of a healthy individual more
closely than NovoRapid®.

Devices
In the US, the FDA approved FlexTouch®
for delivery of NovoLog® (NovoRapid®)
and Levemir®. FlexTouch® is a prefilled pen
featuring a spring-loaded dosing action
that allows users to administer insulin at
the touch of a button – regardless of
dosage size. The pen has been launched
in the EU and Japan.

Also for administering NovoLog®, the
FDA approved NovoPen Echo®, a reusable
pen, especially designed to meet the needs
of children with diabetes. The pen has been
launched in the EU.

GLP-1 (Glucagon-Like Peptide-1)
In the GLP-1 category, Novo Nordisk
initiated phase 3a trials investigating the
efficacy and safety of liraglutide as an
adjunct therapy to insulin in people with

NOVO NORDISK ANNUAL REPORT 2013

type 1 diabetes. This programme, named
ADJUNCT™, is expected to include 3,000
people with type 1 diabetes.

Novo Nordisk’s once-weekly analogue
semaglutide has now started three of six
global phase 3a trials, one of which will
collect cardiovascular outcomes and other
long-term diabetes-related endpoints. In
total, the SUSTAIN™ programme is expected
to include more than 8,000 people with
type 2 diabetes.

Novo Nordisk also brought a tablet

formulation of semaglutide, OG217SC, into
phase 2 development. Pioneering the effort
within oral diabetes proteins, Novo Nordisk
now has seven oral formulations of insulin
and GLP-1 analogues in the early pipeline
(phase 1 and 2).

Obesity
Novo Nordisk successfully completed the
SCALE™ phase 3a programme, which
confirmed the efficacy and safety of
liraglutide 3 mg for the treatment of obesity.
Liraglutide 3 mg was filed for regulatory
review in the US and the EU in December.

Haemophilia
Novo Nordisk continued its strong progress
in the development of treatments for
people with haemophilia and other rare
bleeding disorders.

Turoctocog alfa, a recombinant coagulation

factor VIII, was approved in the US, the EU
and Japan. The product, which is now being
marketed under the trade name NovoEight®,
is indicated for use in adults and children with
haemophilia A for control and prevention of
bleeding, perioperative treatment as well as
routine prevention of bleeding episodes. In
January 2014, Germany was the first country
to launch the product.

Also for people with haemophilia A,

a long-acting coagulation factor,
glycoPEGylated rFVIII, N8-GP, is being studied
in phase 3a. In March a trial was started in
children, which is a regulatory requirement.

Strong results were reported in phase 3a
for N9-GP, a long-acting recombinant factor
IX molecule for people with haemophilia B,
with a safe and well-tolerated profile, no
inhibitor development and improved quality
of life. Also, during major surgical
procedures a single preoperative dose of
N9-GP prevented bleeding in all participants
with a 100% success rate. The compound
continues development in clinical trials in

children and during surgical procedures.

In December, the FDA approved
recombinant coagulation factor XIII as
Tretten® for use in routine prophylaxis of
bleeding in patients with congenital FXIII
A-subunit deficiency (approved as
NovoThirteen® in the EU).

Inflammation
Novo Nordisk aspires to improve the lives
of people with autoimmune and chronic
inflammatory diseases by developing
anti-inflammatory compounds with new
modes of action for rheumatoid arthritis,
systemic lupus erythematosus (SLE),
inflammatory bowel disease and psoriatic
arthritis. In March, Novo Nordisk initiated
a phase 2a trial with anti-IL-21 for severely
active Crohn’s disease.

Finally, anti-NKG2D was approved for
further phase 2 development for Crohn’s
disease.

Growth hormone
Novo Nordisk completed its phase 1 trials for
the once-weekly growth hormone NN8640
in healthy volunteers and adults with growth
hormone deficiency. In the trial, NN8640
appeared to have a safe and well-tolerated
profile and no safety concerns were
identified. The trial confirmed the data from a
similar trial in healthy adults and supports the
suitability of NN8640 for once-weekly dosing
in adults with growth hormone deficiency.

Patient years in clinical trials*

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

Thousand

2009 2010 2011 2012 2013

* A patient year is measured as the total number of months

a patient is enrolled in a clinical trial divided by 12.

ACCOMPLISHMENTS AND RESULTS 2013

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
for employees, and providing assurance
that responsible business practices are
in place, with the aim of contributing to
the communities in which the company
operates.

Patients
Novo Nordisk estimates that the
company provides medical treatments
for approximately 24.3 million people
with diabetes worldwide, showing a
7% increase compared with 2012. The
number is calculated based on the WHO’s
recommended daily doses for diabetes
medicines. This growth is driven by sales
of insulin and Victoza®.

Of the 382 million people living with

diabetes it is estimated that just over
half of them are diagnosed and many of
those diagnosed do not receive medical
treatment. Novo Nordisk’s global access
to diabetes care strategy aims to provide
better care for those who need it and
currently do not have access to proper
diabetes care. The long-term goal is to
reach 40 million people in 2020 with
diabetes care products and thereby enable
more people with diabetes to live better
lives.

In 2013, Novo Nordisk sold human insulin

according to the company’s differential
pricing policy in 35 of the 49 Least
Developed Countries (LDC), as defined by
the UN. According to this policy, the price
should not exceed 20% of the average
prices in the western world. While the
number of countries buying insulin in
accordance with this policy has been stable
for some years, the volume sold increased
by 7%. In 2013 the LDC ceiling price for
insulin treatment per patient per day was
USD 0.22, while the average price of
insulins that Novo Nordisk sold under this
programme was USD 0.17. In other low-
and middle-income countries, Novo Nordisk
sells large volumes of insulin at equally
low tender prices through government
health programmes. In 2013, an estimated
5.2 million patients worldwide have been
treated with insulin
at or for less than the LDC ceiling price.

Donations through the World Diabetes
Foundation amounted to DKK 64 million
in 2013. The World Diabetes Foundation

is an independent non-profit organisation
established in 2002 by Novo Nordisk to
help expand access to diabetes care. The
foundation invests in sustainable initiatives
to build healthcare capacity with the aim
of improving prevention and treatment
of diabetes in developing countries. Read
more on worlddiabetesfoundation.org.
Novo Nordisk also provides financial

support to improve global access to
haemophilia care. In 2013, the company
donated DKK 19 million to the Novo
Nordisk Haemophilia Foundation,
established in 2005. The foundation
supports projects and fellowships in
developing and emerging economies.
Initiatives focus on capacity-building,
awareness, diagnosis and registries. Read
more on nnhf.org.

Employees
At the end of 2013, the total number
of employees was 38,436, corresponding
to 37,978 full-time positions, which is
an 11% increase compared with 2012.
This growth is driven by expansion of the
sales and marketing organisation in the
regions North America and International
Operations as well as significant
expansion in Denmark in the research
and development organisation and in
production.

In 2013, the average frequency rate of
occupational injuries was 3.5 per million
working hours, compared with 3.6 in 2012.
Uniform occupational health and safety
management procedures are being rolled
out in the global organisation.

Assurance
Mandatory training in business ethics is a
high priority. In 2013, 97% of all relevant
employees completed and documented
their training and passed the related tests.
This is a slight decrease from 99% in 2012,
which can be explained by a higher number
of employees in scope of training and
the introduction of tests with an explicit
requirement that documentation of training
must be provided in addition to passing
the tests. Annual business ethics training
is required for all employees, including
new hires. Business ethics training is a key
element in all onboarding programmes.
Adherence to the company’s global

standards for ethical behaviour must
be observed and is monitored. Internal
business ethics audits are conducted
by means of on-site interviews and
documentation reviews to assess
compliance with legal requirements and
internal procedures. During 2013, 45
business ethics reviews were conducted,
compared with 48 in 2012.

Employee turnover decreased from 9.1%

During the year, the global facilitator

in 2012 to 8.1%, reflecting a continued
positive trend. The average number covers
some geographical variation.

The consolidated score in the annual
employee engagement survey, eVoice,
was 4.4, measured on a scale of 1 to
5, with 5 being the best score. The
survey measures the extent to which the
organisation is working in accordance with
the Novo Nordisk Way. The 2013 result
is an improvement on the score of 4.3 in
2012, and indicates that despite continued
growth, there is a strong culture and
commitment to the company’s values. Read
more about the long-term target on p 12.

In terms of diversity, by the end of
2013 a total of 70% of the 33 senior
management teams were composed of
a diverse group, with members of both
genders and different nationalities. This
represents a continued and steady positive
trend towards the ambition that by the end
of 2014 all senior management teams must
meet these diversity criteria or explain why
this has not yet been achievable.

team conducted 75 audits of units’
adherence to the Novo Nordisk Way, so-
called facilitations, covering approximately
11,500 employees, ie around one-third
of the entire workforce. A facilitation
consists of document review and interviews
with local management, employees
and stakeholders to determine the level
of adherence to corporate values and
behaviours spelled out in the Novo Nordisk
Way. A conclusive report, presented to the
Board of Directors, identifies best practices
that are shared internally, while findings
of non-compliance are reported to local
management, which must subsequently
implement corrective actions. Timely
closure, measured as an average over a
three-year period during which the entire
organisation is covered, is consistently high.
By the end of 2013, 96% of actions were
closed on time, and the conclusion is that
there is a high level of compliance with the
Novo Nordisk Way across the organisation.

CONTINUED

NOVO NORDISK ANNUAL REPORT 2013

12 ACCOMPLISHMENTS AND RESULTS 2013

A total of 221 supplier audits were

conducted to assess the level of compliance
with Novo Nordisk’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 standards.

These audits are undertaken by Novo
Nordisk’s corporate quality organisation.
The level of audit activity was on par with
2012. Of these, 25 audits in 2013 were
focused on responsible sourcing criteria,
compared with 45 in 2012. Only high-risk

suppliers, identified through a robust risk
assessment, are selected for responsible
sourcing audits. In 2013, one critical
finding was identified regarding excessive
overtime. This finding is being addressed.

Following the receipt in December 2012
of a Warning Letter from the US Food and
Drug Administration (FDA), a re-inspection
was carried out in August 2013. In January
2014 Novo Nordisk received confirmation
from the agency that the violations had
been addressed satisfactorily.

In 2013, Novo Nordisk had six instances

of product recalls from the market, which is
the same level as the previous year. Among
one of these, an internal quality control
found that a small percentage (0.14%) of
certain batches of the company’s prefilled
insulin product NovoMix® 30 did not meet
the specifications for insulin strength. As a
result 3 million products were recalled from
wholesalers, pharmacies and patients in
several European markets. The root cause
was found to be a production error and has
been resolved.

Long-term social targets

2013 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 people live
better lives, working the Novo Nordisk Way and nurturing a diverse
working environment. In 2013, progress was made against all three
targets.

Patients reached with diabetes
care products (estimate)

Working the Novo Nordisk Way
Average score in annual employee survey

• Realised
Target (2020)

Million

• Realised
Target

Scale 1–5

Diverse senior management teams

• Realised
Target (2014)*

100

2009 2010 2011 2012 2013

NOVO NORDISK ANNUAL REPORT 2013

* All senior management teams must comply with the target
to be diverse in terms of gender and nationality or explain
why this has not yet been achievable.

ACCOMPLISHMENTS AND RESULTS 2013

Environmental
performance

Novo Nordisk’s environmental performance
is measured on three strategic dimensions:
consumption of water, consumption of energy
and CO2 emissions from energy consumption.

Water and energy
In 2013, 2,572,000 GJ energy and
2,685,000 m3 water were consumed at
production sites around the world. This
equals an increase of 6% and 8%
respectively, which is linked to the
increased production volume output and
new production capacity.

Around half of the water and 30% of the

energy consumed at the company’s 13
production sites is consumed at the
production site in Kalundborg, Denmark.
Optimisations achieved at this site therefore
have a significant impact on the company’s
total resource consumption.

CO2 emissions
In 2013, CO2 emissions from production
amounted to a total of 125,000 tons. This
equals a 2% increase compared with 2012,
which is directly linked to the increased
consumption of energy. The increase in CO2
emissions is less than the increase in energy
consumption, because part of the increase
in energy consumption happened at sites
where the energy consumed is less CO2-
intensive. At the same time, consumption
decreased at sites with coal-based energy
supply.

The company’s target of a 10% absolute
reduction in 10 years is expected to be met
in 2014. Since 2005, 685 energy-saving
projects have led to a total reduction in CO2
emissions of 44,000 tons annually.
Production sites that rely on coal-based
energy supply will be in focus for further
reductions. These sites are Kalundborg in
Denmark and Tianjin in China.

Waste
In 2013, Novo Nordisk generated 91,712
tons of waste, which is an increase of 11%
compared with 2012. Of this, 81% is
non-hazardous organic production waste
in diabetes care.

The objective is to reduce environmental

impact from waste. As a consequence,
instead of setting traditional reduction
targets measured by quantity, those areas
where environmental impacts from waste
can be reduced the most have been singled
out for focused attention.

Since October 2011, the company’s

organic production waste has been used for
energy recovery in biogas plants, whereas
previously it was used for animal feed. As a
consequence, organic production waste is
now reported as waste, included in the total
waste volume. Organic waste production is
the type of waste that increases the most in
line with growing production. The total
waste volume excluding organic production
waste is stable.

Long-term environmental targets

2013 performance against
long-term environmental targets

Long-term environmental
targets update

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 for
consumption of energy and water and CO2 emissions contribute to
optimising production efficiency and reducing environmental impacts.
The consumption of energy and water for production is increasing
due to continued growth in sales and, as a consequence, emissions of
CO2 are increasing too.

Performance against the targets is as projected and the targets are

expected to be met.

The long-term environmental targets for consumption of energy and
water were revised and updated in 2013 to ensure that they were
aligned with new business priorities in response to the need for
expansions of production capacity and an increased product portfolio.
The new targets remain ambitious and reflect the aspiration of

continuous decoupling of environmental impacts from business growth,
measured as increase in sales in local currencies. The targets have been
set as a maximum 50% increase in energy and water consumption
compared with business growth, measured as a three-year average.
This will be particularly challenging in years of production expansion
and running-in of new plants or production lines.

Energy consumption

Water consumption

• Realised
Target*

1,000,000 GJ

1,000,000 m3

CO2 emissions from
energy consumption

• Realised
Target (2014)

1,000 tons

200

150

100

2009 2010 2011 2012 2013

* From 2007 to 2011 the target was set as an accumulated

reduction over four years from a 2007 baseline.

NOVO NORDISK ANNUAL REPORT 2013

14 ACCOMPLISHMENTS AND RESULTS 2013

Performance highlights

DKK million

2009

2010

2011

2012

2013

2012–2013

Financial performance
Net sales

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

Net 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

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

51,078

60,776

66,346

78,026

83,572

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%

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%

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%

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%

37.8%
31.7%
99.0%
103.7%

12%
(5%)

2,799
31,493
1,046
32,539
25,184

70,337
42,569

3,207
22,358

99.4%
28.0%
14.0%
4.2%

83.1%
30.1%
22.6%
60.5%
60.5%
88.8%
47.1%

37.7%
6.9%
97.2%
93.9%

Change
7%

4%
7%
N/A
17%
18%

7%
5%

(3%)
20%

Targets
40%
15%
125%
90%

Diabetes care sales

Biopharmaceuticals sales

Sales by geographic region

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

DKK billion

100

 Other products
 Norditropin®
 NovoSeven®

DKK billion

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

DKK billion

100

2009 2010 2011 2012 2013

NOVO NORDISK ANNUAL REPORT 2013

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ACCOMPLISHMENTS AND RESULTS 2013

2009

2010

2011

2012

2013

2012–2013

Social performance
Least developed countries where Novo Nordisk sells
insulin according to the differential pricing policy
Donations (DKK million)2
New patent families (ﬁ rst ﬁ lings)

36
83
55

33
84
62

36
81
80

35
84
65

35
83
77

Employees (total)
Employee turnover

29,329
8.3%

30,483
9.1%

32,632
9.8%

34,731
9.1%

38,436
8.1%

Relevant employees trained in business ethics
Product recalls
Warning Letters and re-inspections
Company reputation with external
key stakeholders (scale 1–7)

Long-term social targets
Patients reached with Novo Nordisk diabetes
care products in millions (estimate)
Working the Novo Nordisk Way (scale 1– 5)
Diverse senior management teams

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

N/A
2
0

N/A

N/A
N/A
50%

2,246
2,149

CO2 emissions from energy consumption (1,000 tons)
Wastewater (1,000 m3)
Waste (tons)

166
2,062
26,362

98%
5
0

N/A

N/A
N/A
54%

99%
5
0

5.6

20.9
4.3
62%

99%
6
1

5.7

22.8
4.3
66%

2,234
2,047

95
1,935
25,627

2,187
2,136

94
2,036
41,376

2,433
2,475

122
2,272
82,802

97%
6
1

5.8

24.3
4.4
70%

2,572
2,685

125
2,457
91,712

Long-term environmental targets
Energy consumption (vs prior year)
Water consumption (vs prior year)
CO2 emissions from energy consumption
(vs 2004 baseline)

Share performance
Basic earnings per share/ADR in DKK1,5
Diluted earnings per share/ADR in DKK1, 5
Total number of shares (millions) 31 December5
Net asset value per share, (Group) in DKK5
Dividend per share in DKK5
Total dividend (DKK million)

(11%)
(20%)

(1%)
(5%)

(2%)
4%

11%
16%

6%
8%

(24%)

(56%)

(57%)

(44%)

(42%)

3.59
3.56
3,100
11.53
1.50
4,400

4.96
4.92
3,000
12.32
2.00
5,700

6.05
6.00
2,900
12.91
2.80
7,742

7.82
7.77
2,800
14.51
3.60
9,715

9.40
9.35
2,750
15.48
4.50
11,8666

Change

–
(1%)
18%

11%

–
–

Targets

40 by 2020
4.0
100% by 20143

Change
6%
8%

2%
8%
11%

Targets
6%4
6%4
10% reduction
by 2014

Change
20%
20%
(2%)
7%
25%
22%

1. For deﬁ nitions, please refer to p 93. 2. Donations to the World Diabetes Foundation and the Novo Nordisk Haemophilia Foundation, which are working to increase healthcare
capacity in developing countries. 3. 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 has not yet been achievable. 4. The 6% equals 50% of the business growth measured as the increase in sales in local currencies. For detailed target deﬁ nition, please
refer to p 13. 5. As at 2 January 2014 a stock split of the company’s trading unit was conducted. Comparative ﬁ gures have been restated to reﬂ ect the change in trading unit from
DKK 1 to DKK 0.20. 6. Proposed dividend for the year (not yet declared).

Employees (total)

 Japan & Korea
 Region China
 International Operations
 Europe*
 North America

Thousand

Waste

• Waste*
• Waste excl organic production

waste for biogas

Net cash distribution
to shareholders

 Dividends
 Share repurchases

1,000 tons

100

DKK billion

2009 2010 2011 2012 2013

* Includes headquarter functions and Research and Development

* Before 2011, most of the non-hazardous organic production

in Denmark.

waste was used for animal feed and classified as a by-product.
Since October 2011, all this waste has been sent for energy
recovery in biogas plants and is therefore reported as waste.

NOVO NORDISK ANNUAL REPORT 2013

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Business strategy:
‘Our focus is our strength’

If Novo Nordisk’s business strategy were to be
described in one word, it would have to be ‘focus’.

Each year, a team of people from different parts of

Novo Nordisk’s global organisation is tasked by senior
management to explore the business environment, analyse

trends and come back and challenge Novo Nordisk’s strategy
based on the findings.

Novo Nordisk’s corporate strategy is the result of this process,

which ends when the Board of Directors approves the updated
strategy in June. In the following months, it is anchored in the
annual business and organisation plans, balanced scorecards
and performance targets.

The direction and the core elements of the strategy do not

change fundamentally from year to year, but are adjusted
whenever signals of change occur in Novo Nordisk’s business
environment. The adjustments ensure that Novo Nordisk is
capable of meeting current and emerging challenges and
opportunities.

The current business environment has plenty of both.
It is characterised by slow economic growth and austerity
measures in some parts of the world, and rapid economic
growth and urbanisation with alarming implications for
public health in others. In high-income countries with ageing
populations, governments and private payers are reluctant
to pay a premium for new, innovative therapies. Low- and
middle-income countries fight a double burden of poverty and
poor health, and access to care is inadequate and unevenly
distributed. Many countries with largely publicly funded
healthcare systems are putting in place market restrictions for
new medications and in the US, pharmaceutical companies,
including Novo Nordisk, are facing increasingly tough pricing
negotiations with managed care organisations and pharmacy
benefit managers.

Many pharmaceutical companies are seeing major products
going off patent and are unable to bring out innovative products
that can make up for the lost revenue. Some have chosen to
cut research and development budgets and lay off thousands
of employees. Some 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.
Novo Nordisk has decided to continue making large

investments in research and development, strategic products
and growth markets. The decision is based on a firm belief that
huge unmet medical needs remain to be addressed, not least
within diabetes, a disease that is growing at an alarming rate all
over the world. Read more on pp 22–23.

To meet the increasing demands for data about its products’

health-economic benefits, capabilities are being further
strengthened within the company’s market access functions.
Moreover, Novo Nordisk is expanding its field force in countries
where there are significant opportunities for market expansion.
It is also exploring new ways of reaching people with unmet
health needs. For example, pilot programmes in low-income
countries such as Kenya and Bangladesh have helped improve
access to products in rural areas.

A focused strategy
The three core elements of Novo Nordisk’s strategy have
remained unchanged for years:

First, Novo Nordisk has a sharp focus on a few diseases and
conditions where it can make a significant difference. As a
result of this focus, 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, activities are leveraging the company’s five core
capabilities:
• Engineering, formulating, developing and delivering

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. Read more on p 4. 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 24.3 million
patients rely on for their daily medication,
where more than 38,000 employees work
and in which more than 130,000 investors
have bought shares.

The five strategic
focus areas

1. Expand leadership
in diabetes

382 million people worldwide are living
with diabetes and it is predicted that
by 2035 close to 600 million people
worldwide will have diabetes. Read more
about the diabetes pandemic on pp 22–23.

The global market for diabetes care
products amounts to approximately 238
billion Danish kroner, of which Novo
Nordisk products account for about 27%.
The market has been growing by around
11% annually in the last decade and is
expected to experience continued solid
growth driven by an increased prevalence
of diabetes and the need for better
treatments. Of this global market, insulin
accounts for 52%, oral diabetes products
for 41% and GLP-1 products for 7%.

In 1923 the first patients were treated
with insulin from the company that is now
Novo Nordisk, and diabetes care remains its
largest and fastest-growing business area.

Diabetes care accounts for close to 78%
of Novo Nordisk’s total sales, most of
which comes from insulin and GLP-1
products. In both areas Novo Nordisk is the
global market leader in terms of volume.

Novo Nordisk is well positioned to address

the unmet medical needs in diabetes.

The insulin portfolio
The insulin portfolio includes:
• Tresiba® (insulin degludec), a once-daily
new-generation basal insulin analogue
with an ultra-long duration of action
and a flat and stable action profile that
reduces the rate of low blood sugar
(hypoglycaemia). Read more about
Tresiba® on pp 24–25.

• Ryzodeg® (insulin degludec/insulin

aspart), a soluble insulin combination of
Tresiba® and NovoRapid® (insulin aspart)
providing both basal and mealtime
glucose control.

• NovoRapid® (marketed as NovoLog® in
the US), the world’s most widely used
rapid-acting insulin for use at mealtimes.

• NovoMix® 70/50/30 (NovoLog® Mix

70/30 in the US), dual-release modern
insulins that cover both mealtime and
basal requirements. These insulins can
be used either to initiate or intensify
insulin therapy.

• Levemir® (insulin detemir), a soluble,

long-acting modern insulin for once-daily
use. It provides glucose control with a
favourable weight profile.

The primary goal of Novo Nordisk’s diabetes
research is to discover new therapies that
lower blood glucose while reducing the risk
of low blood sugar. A recent result of this
research is IDegLira, a fixed combination of
insulin degludec and liraglutide (the active
ingredient in Victoza®). IDegLira is under
regulatory review in the EU. Read more
about IDegLira on pp 24–25.

Novo Nordisk is also developing a new
faster-acting formulation of insulin aspart
to be taken at mealtimes and recently
initiated an extensive phase 3a programme.

In addition to new and improved
injectable insulins, Novo Nordisk is also
developing formulations of insulin that
can be taken as tablets.

GLP-1 (Glucagon-Like Peptide-1)
With the launch of Victoza® in 2009,
Novo Nordisk entered the GLP-1 therapy
segment. 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 significant advance in
the treatment of type 2 diabetes because
it lowers glucose with only a very low risk
of triggering low blood sugar.

Victoza® is approved for adults with
type 2 diabetes who are unable to achieve
blood glucose goals with lifestyle changes
and tablet-based treatment (metformin,
the most widely used tablet for type 2
diabetes). In less than two years, Victoza®
became the leading GLP-1 treatment
globally and has steadily expanded the
market for GLP-1 treatment. The market
is currently valued at around 16.4 billion
kroner, of which Victoza® accounts for
approximately 70%. Available in more
than 80 markets, Victoza® is now used by
approximately 800,000 people worldwide
according to company estimates.

Based on the expertise Novo Nordisk
has gained through the development of
Victoza®, the company is now building
a GLP-1 portfolio with the intention of
providing an even broader range

CONTINUED

Novo Nordisk’s strategy
Strategic focus areas

Core capabilities

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

of treatment options. Key projects
include a once-weekly GLP-1 analogue,
semaglutide, which in 2013 entered phase
3a development. Novo Nordisk is also
developing formulations of GLP-1 that
can be taken as tablets.

company’s ambition is to move from
this niche into the main segments of the
haemophilia A and B market and achieve a
leadership position by developing improved
treatment options for all patients. Read
more about haemophilia on p 30.

Injection devices
Novo Nordisk invented the market for
insulin injection devices with the launch
of the world’s first insulin pen in 1985.
Today, Novo Nordisk offers the world’s
most widely used durable and disposable
devices for insulin and GLP-1, NovoPen® 4
and FlexPen®, and is currently introducing
its latest innovations, NovoPen® 5
and FlexTouch®, in many markets. The
development of injection devices is based
on extensive studies of how patients
experience their daily injections and what
they want from their device. It is an area
where Novo Nordisk can make a difference
by developing devices that are simple, safe
and user-friendly. Read more about devices
on p 10.

2. Establish a
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. Of these, more than 200
million men and nearly 300 million women
are clinically obese (ie BMI ≥ 30). Obesity
is known to be a major risk factor in
developing serious diseases such as type 2
diabetes and cardiovascular diseases.
Despite the growing prevalence of
obesity globally, there are only a few
pharmaceutical treatment options currently
available and reimbursement for these
medications is limited. The market for
obesity products currently amounts to
2–3 billion kroner.

Novo Nordisk has been investigating the
use of liraglutide in a 3 mg dose as a new
once-daily treatment for some people with
obesity, namely those with obesity-related
medical conditions such as prediabetes,
sleep apnoea, high blood pressure and
lipid disorders. Liraglutide 3 mg is under
regulatory review in the EU and the US.
Read more about obesity on pp 28–29.

3. Pursue leadership
in haemophilia
Haemophilia is an inherited or acquired
bleeding disorder that prevents blood
from clotting. An estimated 420,000
people worldwide are living with severe
or moderate haemophilia. The global
haemophilia drug market is estimated
at 53 billion kroner and has grown by
more than 4% 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

4. Expand leadership
in growth disorders
Novo Nordisk has been active in the
treatment of growth hormone deficiency
for almost four decades. Growth
hormone therapy is most frequently used
in developed countries. Globally it is
estimated that more than 2 million people
are eligible for growth hormone therapy.

The market for growth disorder
treatments is estimated at 16.4 billion
kroner and has grown by more than 4%
annually since 2009. Novo Nordisk is
the leading provider of human growth
hormone with a global market share of
30% measured by value.

Novo Nordisk’s strategy in growth
hormone therapy is to expand leadership
by providing innovative and convenient
products and devices. Norditropin®
(somatropin) is the only liquid growth
hormone product with room temperature
stability after first use that is available in a
prefilled pen device. Novo Nordisk’s newest
injection device for growth hormone is
Norditropin® FlexPro®, which has an easy-
touch dosing mechanism.

Novo Nordisk is also developing a

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

5. 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 within
chronic disease management care to
develop new treatments, particularly for
patients who are unresponsive to current
treatments. Novo Nordisk has built a
portfolio of first-in-class compounds with
three projects being investigated 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. More than 7,000
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 with formulation
technology, protein engineering, expression
and delivery, enabling 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.

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. One example is DAWN2™ (Diabetes
Attitudes, Wishes and Needs), a study
conducted in 17 countries and including
more than 15,000 people with diabetes, their
family members and healthcare professionals.
DAWN2™ highlights opportunities for
improving diabetes care, education and
community support.

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. It 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
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 countries:
Denmark, France, the US, Brazil and
China, which all have the approval and
ability to export to other markets.

• In addition, Novo Nordisk has a number
of smaller manufacturing plants that
support local demand in selected
countries.

• All production facilities operate under

one global quality management system
with centrally deployed standard
operating procedures (SOPs) 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.
Read more about production on pp 36–37.

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, which is
now being utilised in connection with the
launch of, for example, Tresiba®.

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 early – as soon as there are
signs of a market developing – and to grow
organically as the market develops. This
has enabled Novo Nordisk to build long-
term relations and a sustainable market
presence, and is a key reason behind Novo
Nordisk’s success in rapidly developing
markets such as China. Read more about
Novo Nordisk’s five regions on pp 31–35.

The Triple Bottom
Line business
principle

Novo Nordisk’s strategy is underpinned by
the Triple Bottom Line business principle,
which ensures that financial, social and
environmental impacts are considered
when decisions are made. This requires
systematic and respectful engagements
with key stakeholders to stay attuned to
their interests and expectations.
The aim is to ensure long-term
profitability by mitigating risks and
minimising negative impacts from
business activities, and to enhance the
positive contributions to society from the
company’s global operations.

Financially responsible:
profitable for the long term
Doing business in a profitable and
responsible way is the basis for the long-
term viability of the company. Novo Nordisk
uses four long-term financial targets to steer
the business towards long-term sustainable
growth. These targets help Executive
Management balance growth in the short
term with investments in longer-term
growth such as new production facilities
and research and development activities.

Socially responsible: promote
healthy living – and a healthy
and engaging workplace
It is Novo Nordisk’s mission to help people
with diabetes, haemophilia and other
chronic diseases live better lives. This is
encapsulated in the company’s corporate
commitments of Changing Diabetes® and
Changing Possibilities in Haemophilia®.
As a research-based healthcare company,
Novo Nordisk’s main contribution is to
discover and develop innovative biological
medicines and make them accessible to
patients throughout the world.

With its deep disease understanding
and patient focus, Novo Nordisk plays an
active part in the fight against diabetes.
The company is engaged in the prevention
of diabetes through the promotion of
healthy living, and is working to improve
awareness, diagnosis and treatment of
diabetes. Through these efforts, Novo
Nordisk aims to reduce the human and
financial burden of diabetes. Read more
about Changing Diabetes® on pp 26–27.

Social responsibility is also about

ensuring a healthy and engaging
workplace for Novo Nordisk’s employees.
A healthy, inclusive and engaging working
environment helps attract, motivate and
retain the right people, and this is critical
to sustain global growth and make positive
contributions to society. Diversity of
backgrounds and experience enriches the
working environment. A diversity aspiration
has been set for senior management teams.
It drives strategic efforts to encourage
recruitment and promotion of women
and people from different nationalities

throughout the organisation. The people
strategy offers global standards for equal
opportunities, respect for the individual
and a safe working environment. As a
particular focus, the company promotes
healthy lifestyles at work through its
NovoHealth programme.

Environmentally responsible:
preserve nature’s resources
Producing more with less is not just sound
household management; it is a way to
help preserve scarce natural resources and
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. In addition, there is also a focus on
minimising outputs in the form of emissions
such as CO2 and waste. Read more about
production on pp 36–37.

Maximising the value
of the Triple Bottom Line
The Triple Bottom Line business principle
creates value for Novo Nordisk in three
ways as it:
1. makes the company more adaptive to
changes in its business environment.
This, in turn, mitigates risks and builds
trust. Novo Nordisk proactively engages
with stakeholders to address global and
systemic challenges that could affect
the company’s success in the long term.
One example is an active engagement in
the development of a new set of global
sustainable development goals under the
auspices of the United Nations.

2. strengthens competitiveness. Changing

Diabetes® is an example of how
demonstrating social responsibility and
systematic stakeholder engagements can
effectively complement market strategies
to drive revenue growth. Novo Nordisk
has developed a method to demonstrate
the business case, called the Blueprint for
Change programme. Through a series of
case studies, the programme documents
how the company’s approach to doing
business in ways that are responsible
and profitable creates shared value, ie
benefits for both stakeholders and the
business.

3. is an engine for innovation in

collaboration with partners. One
example is from the recent Blueprint for
Change case study in Indonesia, one of
the company’s selected growth markets.
The study showed how Novo Nordisk, by
working with partners, can develop its
business by reaching out more effectively
to people with diabetes who currently
do not have access to insulin treatment.
The study has informed the strategy in
Indonesia. Read more at novonordisk.
com/sustainability.

20 OUR BUSINESS

Pipeline overview

Diabetes care

Compound

Indication

Description

Phase 1

Phase 2

Phase 3

Filed/
regulatory
approval

Diabetes

Tresiba®
(insulin
degludec)
NN1250

Ryzodeg®
(insulin
degludec and
insulin aspart)
NN5401

IDegLira
(a fixed
combination
of insulin
degludec and
liraglutide)
NN9068

Type 1 and 2
diabetes

A new-generation basal insulin with an ultra-long duration
of action of more than 42 hours. Approved to offer patients
reduced risk of hypoglycaemia and the possibility of adjusting
the time of injection, when needed. Approved and launched in
the EU, Japan and other markets. Additional data required by
the US FDA are being generated for the planned resubmission.

A soluble co-formulation 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 to offer
patients reduced risk of hypoglycaemia. Approved in the EU,
Japan and other markets. Additional data required by the US
FDA are being generated for the planned resubmission.

Type 2
diabetes

A combination of insulin degludec and liraglutide intended
to offer the benefits of the two components in a single
preparation. Under regulatory review in the EU. Regulatory
filing in the US is awaiting the additional data required by
the FDA for Tresiba®.

Faster-acting
insulin aspart
NN1218

Type 1 and
2 diabetes
including
pump users

A new formulation of insulin aspart to accelerate onset of
action.

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.

LATIN T1D
NN9211

OG217SC
NN9924

OG987GT
NN9926

OG987SC
NN9927

OG217GT
NN9928

LAI287
NN1436

OI338GT
NN1953

OI362GT
NN1954

OI287GT
NN1956

Obesity

Liraglutide
3 mg
NN8022

Type 1
diabetes

Type 2
diabetes

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

A long-acting GLP-1 analogue intended to offer the clinical
benefits of a GLP-1 analogue in a tablet.

Type 1 and 2
diabetes

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

Type 1 and 2
diabetes

A long-acting basal insulin analogue intended to offer
the clinical benefits of a basal insulin analogue in a tablet.

Type 1 and 2
diabetes

A long-acting basal insulin analogue intended to offer
the clinical benefits of a basal insulin analogue in a tablet.

Type 1 and 2
diabetes

A long-acting basal insulin analogue intended to offer
the clinical benefits of a basal insulin analogue in a tablet.

Obesity

A once-daily human GLP-1 analogue for use as adjuvant to
lifestyle changes intended to offer weight loss for people with
severe obesity, including those at particular risk of developing
diabetes. Under regulatory review in the US and the EU.

NOVO NORDISK ANNUAL REPORT 2013

OUR BUSINESS

Biopharmaceuticals

Compound

Indication

Description

Phase 1

Phase 2

Phase 3

Filed/
regulatory
approval

Haemophilia

N8-GP
NN7088

N9-GP
NN7999

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.

Concizumab
NN7415

Haemophilia
A, B and with
inhibitors

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

Growth disorders

NN8640

Growth
disorders

A long-acting human growth hormone intended to offer
less than once-daily injections.

Inflammation

Anti-IL-20
NN8226

Rheumatoid
arthritis

Anti-IL-21
NN8828

Crohn’s
disease

Anti-NKG2D
NN8555

Crohn’s
disease

Anti-C5aR
NN8210

Rheumatoid
arthritis

Anti-NKG2A
NN8765

Rheumatoid
arthritis

Anti-IL-21
NN8828

Systemic lupus
erythematosus

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

Phase 1

Phase 2

Phase 3

Studies in a small group (usually 10–100) of
healthy volunteers, and sometimes patients, to
investigate how the body handles, distributes
and eliminates new medication and establish
maximum tolerated dose.

Studies of various dose levels in a larger group of
patients (usually 100–1,000) to learn about the
new medication’s effect on the condition and its
side effects. In phase 2, clinical trials are carried
out to evaluate efficacy (and safety) in specified
populations of patients. The outcome of phase 2
trials is clinical proof of concept and the selection
of dose for evaluation in phase 3 trials.

Studies in large groups of patients (more than
8,000) comparing a new medication with a
commonly used drug or placebo for both safety
and efficacy. Phase 3a covers trials conducted
after efficacy is demonstrated and prior to
regulatory submission. Phase 3b covers clinical
trials completed during and after regulatory
submission. In small therapeutic areas such as
haemophilia, regulatory guidelines may allow the
design of single-arm therapeutic confirmatory
trials or trials that compare against eg historical
control instead of existing treatment or placebo.

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

NOVO NORDISK ANNUAL REPORT 2013

The one rule
we have to break

382 million people in the world have diabetes today.
Yet half of these people have not been diagnosed and,
alarmingly, it’s assessed that only 6% of people with
diabetes live a life free from diabetes-related complications.

Diabetes is an insidious disease of

pandemic proportions. Ban Ki-moon,
the Secretary-General of the United

Nations, has described diabetes as a
tsunami in slow motion. According to the
latest figures from the International
Diabetes Federation (IDF), 382 million
people in the world have diabetes today
– a number predicted to grow to close to
600 million by 2035.1* 80% of the total
number affected live in low- and middle-
income countries, where the pandemic is
gathering pace at alarming rates due to the
lifestyle changes associated with economic
growth and urbanisation.

Just as worrying is the fact that only about
half of these people have been appropriately
diagnosed with diabetes. This is where the
‘Rule of Halves’2 begins. Of those who are
diagnosed, only half receive treatment from
a qualified healthcare professional and again
just half of these people achieve their
treatment targets. Unfortunately the Rule of
Halves does not end there: only half of this
already relatively small group actually achieve
the desired outcome and live a life free from
diabetes-related complications.

The Rule of Halves estimates a global
average. For some countries, eg Vietnam,
Kenya and China,1 diagnosis rates are even
lower than 50%. For some, treatment may

* All footnotes can be found on p 112.

NOVO NORDISK ANNUAL REPORT 2013

be almost non-existent, while in other
countries a key issue is that even those
people who are diagnosed and treated
do not reach their treatment targets and
therefore have a high risk of developing
complications.

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%.3
Microvascular complications include diabetic
retinopathy, which causes more than 12,000
cases of blindness annually in the US alone.4

Cannot be ignored
In human as well as financial terms, the
burden of diabetes is high, being a factor in
5.1 million deaths and accounting for some
548 billion US dollars in health spending
(11% of the total spend worldwide) in 2013
according to the IDF.1

What all countries have in common is that

the diabetes pandemic cannot be ignored.
And what’s important from both the human
and economic perspective is that countries
have a plan for how to address the Rule of
Halves with a view to minimising both the
personal strains and the financial burdens
of diabetes. Novo Nordisk is working with
governments and non-governmental
organisations in many countries to help
address these challenges. Read more about
Changing Diabetes® on pp 26–27.

The International Diabetes
Federation (IDF) estimates that
there are currently 35 million
people with diabetes living in
the Middle East and North
Africa. With a population of 9
million, Cairo is the largest city
in this region and as in all other
big cities, the number of people
with diabetes is increasing.

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.

Of the
estimated
382 million
people with
diabetes

About
50% are
diagnosed**

Of whom
about 50%
receive
care**

Of whom
about 50%
achieve
treatment
targets**

Of whom
about 50%
achieve
desired
outcomes**

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, BMJ, 300 (1990): 981–983.

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

Potential complications
of uncontrolled diabetes

Stroke
Strokes are up to
four times as likely

Heart attack
Heart attack is three
times as likely and
heart disease is up
to four times as
likely

Blindness
Diabetes is a
leading cause
of blindness

Total kidney
failure
Total kidney failure is
three times as likely

Amputation
Diabetes is a leading
cause of non-traumatic
lower-limb amputations.

What is diabetes?
Diabetes affects the way the
body uses food for growth and
energy. There are two main forms
of diabetes: type 1 and type 2.
Type 1 diabetes is a lifelong
autoimmune disease that
develops when the body
produces an immune response
against its own cells, destroying
beta cells in the pancreas. As a
result, the pancreas stops
producing insulin, often – but
not always – at a young age.

At least 90% of people with
diabetes have type 2, which is
caused by a combination of
lifestyle and genetic factors.
People with type 2 diabetes may
still produce their own insulin, but
the amount is insufficient and the
insulin is not used effectively by
the body.

Most of the long-term health

complications associated with
diabetes are due to persistently
high blood glucose levels, which
can cause damage to the kidneys,
neurological system, cardiovascular
system, retina or to the feet and
legs through effects on both
large and small blood vessels.

How is diabetes treated?
People with type 1 diabetes need to start
taking insulin as soon as they are diagnosed
and must continue to do so for the rest of
their lives.

People with type 2 diabetes need different
treatments as the disease progresses. Initially,
lifestyle changes, including diet and exercise,
and an oral medicine such as metformin may
be suffi cient. If treatment goals are not met,
GLP-1 therapy or a basal insulin (long-acting
insulin) may be added. If treatment targets
are still not achieved, intensive insulin
treatment may be necessary. This may
include adding a rapid-acting insulin at
mealtimes, in addition to a basal insulin. For
insulin initiation, premixed insulin with dual
release to cover both mealtime and basal
requirements may be used.

In total, approximately 45–50 million

people worldwide are using insulin.

A significant challenge in managing

diabetes with insulin is to maintain
appro priate blood glucose levels, adjusting
insulin dosing as necessary to balance the
impact of food and exercise to avoid either
high blood glucose levels (hyperglycaemia),
which can lead to long-term complications
such as blindness and amputations, or low
blood glucose levels (hypoglycaemia), which
can lead to seizures, unconsciousness or,
in rare cases, death.

NOVO NORDISK ANNUAL REPORT 2013

One size
doesn’t fit all

With the diabetes medications available today, one may
think it’s easy for people with diabetes to be in optimal
control of their blood sugar levels. Unfortunately it isn’t
that straightforward. What works for one person may not
work for another. And what works for one person today
may not do the job some years from now. This is why it’s
important to offer a wide variety of treatment options
that can be tailored to each person’s current needs.

Eladio Castro García has
started a ‘peer-to-peer’
diabetes information centre
in his local community
in Mexico. Eladio has
type 2 diabetes.

T he fear of low blood sugar

(hypoglycaemia) means that many
people with type 2 diabetes are
not treating their condition intensively
enough to reduce blood sugar to the
recommended level. Adding to this
problem is the inflexibility of when
injections must be taken, which can
lead many people to not take insulin as
prescribed. These factors can result in people
with diabetes being at risk of developing
severe long-term complications.

When long is not long enough
A long-acting insulin is often the first step
into insulin treatment for a person with type
2 diabetes – the idea is that such a ‘basal
insulin’ should only need to be taken once
a day, so it’s a ‘manageable’ introduction to
insulin injections. One challenge, however,
is that the speed at which the insulin is
absorbed in the body can vary significantly
from day to day in the same person. This
increases the risk of hypoglycaemia,
particularly at night. Another challenge is
that most basal insulins do not provide an
adequate level of insulin in the blood for full
24-hour coverage.1

“From speaking with many doctors and
people with diabetes, we knew there was a
need for a basal insulin with an ultra-long
duration of action,” says Jakob Riis,
executive vice president of Marketing &
Medical Affairs. Tresiba® (insulin degludec)

has been
designed with
this need in mind.

Establishing a routine for when to take
insulin is important, but with a duration of
action that lasts beyond 42 hours, once-daily
Tresiba® provides flexibility when needed.
“To be able to change the time you inject
from day to day, if the situation requires,
gives a remarkable sense of freedom for
patients,” points out Dr Alan Moses, global
chief medical officer. “And with the
significantly lower risk of hypoglycaemia
during the night, Tresiba® is a good example
of how, even after 90 years, we can still
engineer better insulin treatments.”

Greater than the sum of its parts
Not all people can control their diabetes
with a basal insulin alone. As type 2
diabetes progresses, it may become
necessary to add treatment(s) to tackle the
spike in the blood sugar level that occurs

Making Tresiba® available for patients

Tresiba® was approved in the EU in January 2013 and by the end of the year it had
been launched in eight countries. In countries with broad market access, Tresiba®
has quickly gained a significant share of the market for long-acting insulins.

In February 2013, Novo Nordisk received a Complete Response Letter from the
US Food and Drug Administration (FDA) in which the agency requested additional
cardiovascular safety data from a dedicated cardiovascular outcomes trial before the
review of the New Drug Application can be completed. While Novo Nordisk remains
confident about the cardiovascular safety of Tresiba® based on both its own
interpretation of the data derived from the clinical development programme and
reviews by the European and Japanese regulatory authorities, the company also
recognises the importance of reassuring the FDA about the cardiovascular safety.
Hence, in October 2013, a dedicated clinical trial, named DEVOTE, was initiated to
rule out any excess cardiovascular risk.

DEVOTE is a double-blind trial, using insulin glargine as comparator, and is

expected to include around 7,500 type 2 diabetes patients who have existing or high
risk of cardiovascular disease. Novo Nordisk expects to have sufficient data to support
a prespecified interim analysis within two to three years and to complete the study
within four to six years from initiation. Thereby Novo Nordisk passed a significant
milestone in the process of making Tresiba® available for people with diabetes in the US.

OUR BUSINESS

Image of the insulin degludec molecule
based on X-ray crystallography data. Insulin
degludec is the active compound in Tresiba®.

after meals too. For these people, Novo
Nordisk has developed IDegLira, a
combination of Tresiba® and Victoza®
(liraglutide), delivered in a single daily
dose. Victoza®, a human GLP-1 analogue,
stimulates insulin secretion and inhibits
glucagon secretion in a blood glucose-
dependent manner and has also been
shown to reduce body weight.

In clinical trials, when IDegLira was
administered once daily independently of
meals, it provided improved overall
glycaemic control compared with Tresiba®
or Victoza® alone, with no weight change
and a low rate of hypoglycaemia compared
with Tresiba®. “If people aren’t getting
good control on a basal insulin, IDegLira
may provide the opportunity of continuing
on a single daily injection of a long-acting
insulin, but with the addition of Victoza®.
During clinical trials, this co-formulation has
been shown to work better than Tresiba® or
Victoza® separately,” says Alan Moses.

Jakob Riis agrees: “IDegLira may provide
a new opportunity for people with type 2
diabetes who are not adequately controlling
their blood sugar levels. We believe this
product will improve convenience for
patients, but the development programme
has also supported that the two active
ingredients actually complement each
other.”

In May 2013, Novo Nordisk submitted
the regulatory filing for IDegLira in the EU.

Tresiba® study results

Translating the results from clinical trial
programmes into real advances in
clinical practice can be challenging,
especially since new medicines are
often utilised in patients who are not
responding well to available therapies.
However, recent findings from Marc
Evans, a clinician investigator in the UK,
provide some important insights into
how much value Tresiba® can bring to
patients who are experiencing
challenges with other insulins. Dr Evans
studied 25 consecutive patients who
were experiencing poor glucose
control and frequent low blood sugar
with either insulin glargine or Levemir®
(insulin detemir). He found that when
switched to Tresiba®, these patients
improved their glucose control (in both
type 1 and type 2 diabetes) and
substantially reduced the frequency
of low blood sugar episodes.2

NOVO NORDISK ANNUAL REPORT 2013

26 OUR BUSINESS

Changing
diabetes

where it matters most

It has been almost a decade since Novo Nordisk launched
Changing Diabetes®, its promise to people with
diabetes to help them live a better life. Much has been
achieved in this time, but a lot still needs to be done.

Novo Nordisk’s core responsibility to people with diabetes

and to society is to deliver innovative, high-quality products.
“We have a very diverse insulin portfolio, from human

insulins to modern insulin analogues,” says Jakob Riis, executive
vice president of Marketing & Medical Affairs. “Our core focus
is to drive innovation and develop even better products to help
people achieve the best possible outcome of their treatment.”
As a world leader in diabetes care, Novo Nordisk not only
produces insulin, but also works to ensure that it reaches the hands
of those who need treatment and care worldwide. “We strive to
make insulin accessible for more people living at the base of the
economic pyramid, and we’ll continue to offer human insulin at
very low prices in developing countries,” explains Jakob Riis.

While delivering products will always remain Novo Nordisk’s
number one priority, the efforts to change diabetes go beyond
medicine. “Our goal is to make a difference to patients, and we
know that we can only get part of the way with our products.
This is why our Changing Diabetes® activities are important,”
points out Jakob Riis.

“Access to health is a human right, and Changing Diabetes® is
Novo Nordisk’s response to the global diabetes challenge. A key
element is our strategy for global access to diabetes care, which
we renewed in 2013. It is global in scope and part of our business
model. Basically, we will stop diabetes ruining people’s lives,”
explains Charlotte Ersbøll, corporate vice president of Corporate
Stakeholder Engagement. “We would like to see a world where
everyone with diabetes is diagnosed, everyone who is diagnosed gets
treated and everyone treated can live their life to the full,” she adds.

That is why Novo Nordisk is working around the world together
with its partners to break the diabetes ’Rule of Halves’. Read more
on pp 22–23.

and local stakeholders to identify the most pressing health needs
and ways in which we can achieve the biggest impact,” explains
Charlotte Ersbøll.

For countries where improving understanding of diabetes and
its prevention is of the utmost importance, Novo Nordisk works to
raise awareness, for example through activities on World Diabetes
Day and by organising high-level national and international diabetes
leadership forums with policymakers.

More urgent in some countries is the need to increase diagnosis
of diabetes and improve access to healthcare. In these areas Novo
Nordisk is working with local partners to develop screening
programmes, build capacity by training healthcare professionals,
and establish clinics and networks to strengthen the existing
healthcare infrastructure.

Ambitious long-term target
“Ten years ago diabetes was not recognised as having a direct
impact on development,” says Charlotte Ersbøll. “The world knew
diabetes was increasing in high-income countries such as the US,
but didn’t understand the implications of the rising prevalence of
diabetes in developing countries. Today non-communicable
diseases, including diabetes, are recognised as the biggest killer
globally and therefore increasingly important on the global health
agenda.”

Novo Nordisk has set a long-term global target of providing
quality diabetes care products to 40 million people by 2020. It
builds on the belief that the way in which the company addresses
a global health issue must be linked to its commercial offering;
otherwise it is not sustainable in the long term. Today, Novo
Nordisk provides diabetes care products to more than 24 million
people.

“With our ‘40by20’ long-term target we hope to make a

The challenge is global, the solutions local
“The challenges of living with diabetes are different from country
to country and person to person, so we partner with governments

significant contribution to the World Health Organization’s target
of decreasing mortality from non-communicable diseases such as
diabetes by 25% by 2025,” adds Charlotte Ersbøll.

NOVO NORDISK ANNUAL REPORT 2013

Team Novo Nordisk has raced more than
9,500 km in 55 races since its launch
in December 2012.

Inspire people with diabetes
through Team Novo Nordisk
“Ultimately, diabetes shouldn’t restrict the lives of children or
adults no matter where they live,” says Jakob Riis. “This is why
we support Team Novo Nordisk, the world’s first all-diabetes
pro-cycling team. The team’s mission is to educate, empower
and inspire those affected by diabetes. We want people to say ‘I
manage my diabetes, it doesn’t manage me’.” In total, Team
Novo Nordisk consists of more than 80 cyclists, triathletes and
runners who all have diabetes.

Eliodoro Gonzales lives in Bolivia.
He has type 1 diabetes and lost his
legs due to diabetes complication.

The World Diabetes
Foundation
The World Diabetes
Foundation was established by
Novo Nordisk in 2002 as an
independent trust with the
vision of being a catalyst for
change in developing
countries. Since 2002, Novo
Nordisk has donated around
1.1 billion Danish kroner to the
Foundation. The largest share
(37%) is spent on
strengthening healthcare
systems and building
healthcare capacity. As of
October 2013, 7,138 clinics
had been established or
strengthened, 4.6 million
patients had been treated and
221,935 healthcare
professionals trained.

Building healthcare
capacity
Healthcare professionals who are
capable of detecting and treating
diabetes are needed to catch up
with the accelerating growth in the
prevalence of diabetes. In China,
Novo Nordisk, the government and
local partners collaborate to increase
quality diabetes care. As of October
2013, 2,076 apprentices have been
trained and people across 830
counties have benefited from
improved diagnosis and treatment.
Another example is the new REACH
programme in which Novo
Nordisk-owned Steno Diabetes
Center is scaling up its efforts by
establishing an education centre in
various countries in Asia. Once fully
rolled out, the programme, which
is funded by the Novo Nordisk
Foundation, is expected to train
more than 9,200 healthcare
professionals globally each year.

Patsy Left Hand
Bull is a tribal
elder of the
Lakota Sioux
tribe in the
Rosebud
Reservation.

Training
apprentices
in China.

Supporting vulnerable populations
People living in vulnerable communities are often overlooked
if they live in high-income countries, but they experience
disproportionately high levels of diabetes compared with
the rest of the population. Novo Nordisk recently helped
the Rosebud Sioux tribe of South Dakota in the US improve
diabetes care. The project includes a mobile health unit for
travelling to remote areas of the reservation, a wellness
centre and a programme to certify diabetes educators.

Reaching the base of the pyramid
People who earn 1,500–3,000 US dollars per year
constitute more than 1 billion people. With some
disposable income, but difficulties in accessing
healthcare services, they belong to the base of the
global economic pyramid. Novo Nordisk has launched
projects in Kenya, India and Nigeria to bring diabetes
care to these people. Through public–private partnerships,
integrated solutions are pursued to supply insulin and
diagnosis as well as quality treatment and care. One
example is the establishment of ‘One-Stop-Shops’
in Nigeria, where people with diabetes are offered
guidance on how to manage their diabetes, blood
glucose testing and easy and fast access to insulin.

Ranjith is enrolled in the
Changing Diabetes® in
Children programme
in India.

In most of Africa
there is a lack
of knowledge
about diabetes.

Changing Diabetes®
in Children
In some developing countries, the
life expectancy for children with
type 1 diabetes is less than one
year. In 2010, Novo Nordisk
committed 75 million Danish
kroner over five years to provide
free insulin and care to children as
part of its Changing Diabetes® in
Children programme. The
programme is a collaboration with
local partners including ministries
of health and the World Diabetes
Foundation. Since 2010, 93 clinics
have been established and over
4,150 local healthcare
professionals have received the
proper training and education to
treat children. More than 11,700
children in nine countries across
Africa and Southeast Asia have
been enrolled in the programme.

28 OUR BUSINESS

obesitya disease?

The increasing prevalence of obesity is no longer just an issue for high-income countries; the
number of people who are overweight or obese is rising to record-breaking levels in low- and
middle-income countries too. Without doubt, obesity is a growing threat to global health as it has
many potentially life-threatening complications, not least type 2 diabetes. With liraglutide 3 mg,
Novo Nordisk hopes to be able to offer a new treatment option for some people with obesity.

According to the World Health

Organization, being overweight or
obese is the fifth leading risk for
deaths worldwide, and is linked to more
deaths globally than being underweight.
In the US, where more than 35% of adults,
or some 100 million people, are obese,1
the American Medical Association recently
recognised obesity as a disease. In 2011, a
US congress committee urged the US Food
and Drug Administration (FDA) to take
steps to support the development of new
treatments for obesity. The US isn’t the
only country sounding the alarm over the
obesity epidemic. Worldwide there appears
to be a new willingness to address obesity.
The problem isn’t necessarily obesity

itself, it’s that obesity can have many
serious – even life-threatening – health
consequences. Known co-morbidities
including heart disease, hypertension, type
2 diabetes, sleep apnoea and some types
of cancer2–5 reduce life expectancy for
people with obesity by 5–10 years. With
increased BMI6,7 (see box on p 29) the risk
of these complications increases and, as a
consequence, obesity has a huge cost
implication for healthcare systems.8

Yet, many people with obesity are unaware

how it might affect their health. “Some
people who are overweight or obese may
never experience any health issues,” explains
Mads Krogsgaard Thomsen, executive vice
president and chief science officer. “For these
people, obesity may be less of a health
concern. What we’re concerned about are
the people who have a BMI of 35 or more
and a significantly elevated risk of compli-
cations such as diabetes, prediabetes or sleep
apnoea, or indeed may already have these
co-morbidities. It’s our vision to offer a medical
treatment to help these people specifically.”

Moderate weight loss has
significant health benefits
Lifestyle interventions, including a healthy
diet and increased physical activity, should
always be part of the treatment for people
with obesity. It’s recognised that a
moderate weight loss of 5–10% has

NOVO NORDISK ANNUAL REPORT 2013

significant health benefits.9–15 However,
with most people not managing to achieve
and maintain this level of weight loss with
diet and exercise alone, other treatment
options are necessary. “In the past, when
medicines with an acceptable efficacy and
safety profile were lacking and after diet
and exercise had failed, doctors may have
been reluctant to engage in dialogue with
patients about obesity,” says Heather
Millage, corporate vice president and
responsible for bringing liraglutide 3 mg
to the market. “We hope obesity care will
improve when more tools – in particular
liraglutide 3 mg – are available for the
treatment of this disease.”

Liraglutide 3 mg, Novo Nordisk’s
once-daily GLP-1 therapy, has recently
completed the fourth phase 3a trial as
part of SCALE™, the clinical development
programme for obesity treatment.
“Liraglutide is a fascinating molecule,”
points out Mads Krogsgaard Thomsen.
“Back in 1997, our research scientists
suggested it could be efficacious for the
treatment of type 2 diabetes, as well as
obesity. We’ve therefore been investigating
this molecule for the last 15 years. If
approved, it’ll be the first and only product
to treat obesity based on physiological
regulation of appetite.”

A natural hormone
Liraglutide 3 mg is 97% similar to human
GLP-1, a gut hormone that produces the
sensation of fullness and decreases hunger
signals when eating. Thereby it reduces
appetite and food intake. In addition,
liraglutide 3 mg stimulates the release of
insulin in response to glucose to maintain
the right levels of glucose in the blood.

“GLP-1 is a natural hormone in the body,
so with liraglutide 3 mg we’re using one of
the body’s own mechanisms to tackle
obesity,” says Mads Krogsgaard Thomsen.
“In clinical trials, four out of 10 patients
who took liraglutide 3 mg during one year
lost 10% of their body weight. And the
majority of patients who had prediabetes
at the beginning of the trial and who took

liraglutide 3 mg reverted to a normal
glucose level.” In fact, the majority of
people with obesity treated with liraglutide
3 mg in the largest trial in the development
programme achieved a clinically relevant
weight loss of 5%. In one of the trials that
extended for 104 weeks, weight loss
achieved after one year was maintained
for two years.

Safety has been a key issue for obesity

treatments, with several drugs being
withdrawn due to safety concerns. However,
a lot is already known about the safety
profile of liraglutide. Under the brand name
Victoza®, liraglutide has been on the market
since 2009 in 1.2 mg and 1.8 mg doses for
the treatment of type 2 diabetes.

Stigmatisation of people with obesity
While liraglutide 3 mg looks promising for
the treatment of obesity, and with early
research ongoing into other approaches to
treating obesity, there are still challenges
ahead. One is that many doctors, based on
past experience, are reluctant to prescribe
antiobesity medications due to concerns
that the benefits don’t outweigh the risks
of treatment. Another is that obesity
medications aren’t widely reimbursed.
The latter is to a large extent the result
of a false assumption that all people with
obesity can effectively lose weight just by
changing their lifestyle – exercise more
and eat less. For most this has proven
exceedingly difficult, if not impossible,
despite many attempts. It is this group –
often stigmatised due to their weight and
suffering from the complications of obesity
– that may benefit from treatment with
an obesity medication in combination
with lifestyle changes and diet.

“There are many myths and a lot of
stigmas when it comes to the science of
obesity and its treatment. We need to
remove the stigma and raise awareness
that safe and effective treatment options
can improve lives. This is what Novo
Nordisk has been doing successfully with
type 2 diabetes and we think we can do
it with obesity too,” says Heather Millage.

The number of adults
with obesity has
doubled since 1980

500 million

1980

2008

Worldwide rates of obesity have doubled since 1980,
with more than 500 million adults classified as obese
in 2008 – more than 10% of the world’s adult population
(World Health Organization’s global estimates from 2008).

Definition of obesity
Obesity is defined as abnormal or
excessive fat accumulation that may
impair health for people with a BMI
over 30. BMI provides the most
convenient population-level measure
of overweight and obesity currently
available.16 BMI itself, however, does
not define health risk.

The role of hormones
in obesity
The understanding of the biological
factors contributing to weight gain
and obesity is rapidly evolving. There
is increased focus on the role of
hormones and new research clearly
indicates that much more is involved
in the progression from normal body
weight to obesity than just a person’s
lifestyle and eating habits.17

The regulation of appetite and food

intake is a complex process involving
multiple hormones that transmit
signals between the organs that
receive the food (the intestines or gut)
and the brain. After a meal, the gut
responds to food by producing several
hormones that tell the brain to increase
the feeling of fullness while reducing
feelings of hunger. One of these
hormones is GLP-1, which has been
found to play an important role in
regulating appetite.18

As a GLP-1 analogue, liraglutide

directly addresses some of the
underlying biological mechanisms of
obesity. Novo Nordisk is committed to
research into and further exploration
of the role of hormones in obesity
and weight management, and the
development of liraglutide is a first
step in this process.

Maria Lopez is one of the
100 million obese people
in the US. Her BMI is 33.

30 OUR BUSINESS

An important
factor of life

For people living with haemophilia A
or B, there hasn’t always been a great
deal of choice when it comes to
treatment. With NovoSeven®, Novo
Nordisk helps about 5% of these
people – but with the launch of
NovoEight®, the company will be able
to help many more.

Novo Nordisk addressed a huge unmet
medical need in 1996 when it launched the
first ever recombinant treatment for people
with haemophilia with inhibitors. Today
NovoSeven® is still an important treatment
option for the small part of the haemophilia
community who have inhibitors.

Now, Novo Nordisk is offering another

product for people in the haemophilia
community by launching a recombinant
factor VIII product (turoctocog alfa) for
people with haemophilia A. “While there
are already similar products available for this
group of people, NovoEight® should not be
underestimated,” says Stephanie Seremetis,
chief medical officer, Haemophilia.

“We’ve tried to improve on what is
available and I think we’ve achieved this.
NovoEight® is technically a different
product from our competitors’. We’ve
established a production process focusing
on providing a new, highly purified and
well-defined molecule and I believe this is
important for both safety and efficacy. Of
all licensed factor VIII products, NovoEight®
has undergone the largest pre-approval
programme ever carried out, which also
includes a paediatric study. We therefore
have a lot of data to document the safety
and efficacy of our product.”

Building on confidence
In the phase 3 trial,
NovoEight® demonstrated
good efficacy in preventing
and treating bleeds and had no
confirmed inhibitor
development. NovoEight® has
now been approved in the US,
the EU and Japan for the
treatment and prophylaxis of
bleeding in patients with
haemophilia A. In January 2014
Germany was the first country to
launch NovoEight®, and Novo
Nordisk expects to launch the
product in more European
countries and in Japan during the
year. Launch in the US is expected after April
2015, awaiting the expiration of existing
patents.

“NovoEight® is very important for us as a
company as we want to be a true partner for
people with haemophilia and take a
leadership role in this market – and we can’t
do that without a treatment option for
people with haemophilia A,” explains Paul
Huggins, corporate vice president and
responsible for bringing NovoEight® to the
market. “Patients and doctors have grown
to know and have confidence in NovoSeven®.
We want to build on that confidence by
providing another option for physicians that’s
based on advanced purification technology.”

A paradigm shift in treatment
Novo Nordisk is also developing a
long-acting recombinant factor VIII
(N8-GP) and factor IX (N9-GP). The latter
holds the promise of changing treatment

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 (prophylactic treatment).

People with haemophilia A may have either a decreased ability or total inability

to produce clotting factor VIII. Approximately 350,000 people have haemophilia A
globally. However, the disease is severely under-diagnosed in developing countries.

People with haemophilia B have deficiencies in producing clotting factor IX.
Haemophilia B is inherited in the same way as haemophilia A, but is five times less
common (70,000 people worldwide).

Around 3,500–4,500 people with haemophilia worldwide have high-titre inhibitors.

NOVO NORDISK ANNUAL REPORT 2013

Image of the turoctocog
alfa molecule based on
X-ray crystallography
data. Turoctocog alfa
is the active compound
in NovoEight®.

options for people with haemophilia B.
“Our strong clinical trial results have
shown that prophylactic treatment with
N9-GP reduces the number of bleeding
episodes per year to a very large extent,”
says Stephanie Seremetis.

Unfortunately, the expansion of

manufacturing capacity for N9-GP didn’t
progress as fast as planned, and Novo
Nordisk therefore had to shorten the
duration of one of the clinical trials. This,
understandably, caused much frustration
among both patients in the trial and their
doctors.

In addition to developing products for
the wider haemophilia community, Novo
Nordisk remains committed to smaller
patient groups – as illustrated by the
development and approval in major markets
of NovoThirteen® for the treatment of a rare
bleeding disorder caused by congenital
factor XIII deficiency, which around 1,000
people suffer from worldwide.

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. Read more about the study,
which is supported by Novo Nordisk’s
programme Changing Possibilities
in Haemophilia®, at novonordisk.com/
hero.

Novo Nordisk’s
FIVE REGIONS

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

Novo Nordisk markets its products in more than 180 countries. Despite the differences in
terms of economic development, political systems and healthcare infrastructure between
these countries, Novo Nordisk’s business model is fundamentally the same all over the world.

Novo Nordisk has employees in 75 countries. They share the

common ambition to be the country’s leading pharmaceutical
company within the selected disease areas, both in commercial

terms and when it comes to making a positive change for patients.
Key to achieving this ambition are biological pharmaceuticals with
new, distinct properties that Novo Nordisk’s researchers have
invented and developed. These products, for example NovoRapid®/
NovoLog®, Levemir® and Victoza®, are what make up the bulk of
Novo Nordisk’s revenues in all of its five business regions.

In addition, Novo Nordisk offers – and is committed to continue
offering – lower-priced products in the form of traditional human
insulin in countries where there’s still a significant demand for such
products.

Creating value for customers
Novo Nordisk markets its products the same way globally by sharing
clinical knowledge about the products with doctors, so that they can
make an informed choice about whether these products are right for
their patients. At the same time, payers and administrators – typically
public health systems and private health plans – are presented with
evidence about the cost efficiency of the products, in order to make
informed decisions about pricing and reimbursement.

Moreover, Novo Nordisk organises and supports education of
healthcare professionals in managing diabetes, and engages in
activities aimed at improving awareness, prevention and diagnosis
of the disease.

Organisation
Novo Nordisk is a firm believer in having wholly owned affiliates
and expanding them organically as the market develops. While

other pharmaceutical companies may build a presence through the
acquisition of local companies, joint ventures or rented sales forces,
Novo Nordisk prefers to hire its own people and train them to
become the best. This is also seen as the best way to convey and
preserve a strong company culture.

Competitors
In its all-important 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. However, they are not innovation-based and primarily offer
human insulin. So far, these companies haven’t been able to gain
significant market shares. In the biopharmaceuticals business,
Novo Nordisk faces competition from a broader number of
pharmaceutical companies, in some markets including producers of
biosimilar medicines (products that are similar but not identical to
an original medicine). So far, biosimilar competition hasn’t had a
dramatic impact on the business, which has continued to grow at
a global level.

Regional differences
What almost all countries have in common is that the incidence of
diabetes is increasing and that they’re battling with how to tackle the
situation most effectively. The countries differ, however, when it comes
to the level of spending on diabetes care and in their ability and
willingness to fund further investments in improving care, including the
use of the latest advances in medical treatment. The following pages
provide a review of Novo Nordisk’s business in the five regions.

CONTINUED

NOVO NORDISK ANNUAL REPORT 2013

North America

The North American region consists
of the US and Canada and is Novo
Nordisk’s largest in terms of sales, which
isn’t surprising given that the US is the
world’s largest pharmaceutical market.
In 2012, total pharmaceutical sales in the
US amounted to 327 billion US dollars,
of which 6% was spent on products for
treating diabetes.

Novo Nordisk has experienced

tremendous growth in the US in recent
years. Since 2008, sales have more than
doubled from 14 billion Danish kroner (3
billion dollars) to 37 billion kroner (7 billion
dollars) in 2013. In the same period Novo
Nordisk’s organisation in the US, including
research and development and production,
has grown from around 3,700 employees
to more than 6,100. The main drivers of
sales have been – and continue to be – the
portfolio of modern insulins and Victoza®.

In 2013, sales of diabetes care products

increased by 18% in local
currencies in North
America. This reflects
continued market

penetration by the
modern insulins,
especially

Levemir®, modest growth of human insulin
and a 31% growth in sales of Victoza®,
measured in local currencies.

Sales of biopharmaceuticals –

NovoSeven® and Norditropin® being the
main products – grew by 16% in 2013,
measured in local currencies. Norditropin®
in particular did very well in 2013, which
is due to both the very positive reception
of the FlexPro® injection device and the
very comprehensive support programmes
that Novo Nordisk offers both healthcare
professionals and patients.

A complex healthcare system
The US healthcare system is complex as it
involves multiple payers and intermediaries
with complex interactions. Roughly half
of all Americans are insured by their
employers and one-third by the
government through programmes
such as Medicare and Medicaid,
while around 15% are uninsured.
The government figure is expected
to increase significantly while the
number of uninsured is expected
to drop significantly in the coming
years as a result of the Affordable
Care Act, which is currently being
implemented.

To manage the purchase and
delivery of healthcare, employers
and the government contract
with intermediaries such as
health plans and pharmacy
benefit managers (PBMs).
These are often referred
to as ‘payers’, but are in
most cases managers
of healthcare costs on
behalf of payers.
Health plans

contract with

providers such as physician, hospital
and pharmacy networks to provide the
required service. They provide different
levels of coverage based on the payers’
willingness to pay for selected services for
their employees. A PBM is an intermediary
that contracts with payers and health plans
to manage the pharmacy benefit for a
specific population. Typical services include
claims processing, managing enrolee
eligibility, contracting pharmacy networks
and managing rebate contracts with
pharmaceutical companies.

The health plans use various methods

for managing the use and cost of
pharmaceuticals. Among the most widely
used interventions are generic substitution,
quantity limits, prior authorisation (which
means that a medication will only be
covered under certain conditions and
subject to individual approval by the
health plan) and tightly controlled
Preferred Drug Lists.

Growing pressures
Competitive pressures are growing
in the managed healthcare industry,
driving both consolidation through
mergers and acquisitions and
increasingly tough rebate negotiations
with pharmaceutical companies.
Novo Nordisk experienced the
effects of the latter in the second

half of 2013 when it lost coverage
for NovoLog® and Victoza®

for 2014 with Express Scripts
National Preferred Formulary
covering 45 million people
in the US. Despite such

pressures and increasing
competition from

other pharmaceutical
companies, Novo

In Philadelphia, 65% of the adult inhabitants
are estimated to be overweight, making it
one of the most obese cities in the US. More
than 10% of the inhabitants have diabetes.

initiated a cardiovascular outcomes trial
involving 7,500 patients. Read more on pp
24–25.

Another event that may have an impact

on the insulin market is Sanofi’s basal
insulin product, insulin glargine, which will
lose US patent protection in 2015. Eli Lilly
has submitted a biosimilar version of insulin
glargine for regulatory approval, and Sanofi
itself is developing a stronger formulation
of insulin glargine. How, and to what
extent, such events will change the market
dynamics is not possible to predict at this
point in time.

In the GLP-1 area, several new products
are likely to enter the market in the coming
years.

CONTINUED

Sales in North America

(+14%)

DKK billion

2009 2010 2011 2012 2013

Nordisk maintains a competitive presence
on the US market. The company’s key
diabetes care products have broad market
access and are capturing market shares. In
fact, in 2013 Novo Nordisk’s three modern
insulins were the only products with a
growing volume market share in the US
in the modern insulin category.

To further strengthen the presence in

the US, Novo Nordisk’s US affiliate has
expanded its field force several times in
recent years. The latest expansion was
announced in 2013 with the addition of
more than 350 new representatives, who
after an intensive period of training will be
in the field by April 2014.

Preparing for a new market
The US affiliate is preparing to enter a new
market for the medical treatment of obesity
with liraglutide 3 mg, which was filed for
regulatory review with the US Food and
Drug Administration (FDA) in December
2013. Read more about obesity on pp
28–29.

Developments to look out for
In February 2013, the FDA requested more
data on the cardiovascular safety profile of
Tresiba® (insulin degludec) before it could
complete its review of Novo Nordisk’s
application. In response, Novo Nordisk

Growing market for diabetes products
Novo Nordisk holds around 29% of
the total US market for diabetes care
medications and 37% of the insulin market,
measured in value. The insulin market is
expected to continue growing in volume
in the coming years due to the increasing
number of people with diabetes, many
of whom will require insulin treatment.
Moreover, in the US, only around 41% of
insulin volume is delivered in a pen system
such as Novo Nordisk’s FlexPen®, while it
is more than 95% in Europe. This means
there is still significant potential to upgrade
treatment in the US. In 2014, Novo Nordisk
expects to introduce its newest pen system,
FlexTouch®, with certain insulin products.

Novo Nordisk is the market leader
within GLP-1-based therapies in the US,
where Victoza® has a value market share of
around 67%. The market itself experienced
decelerating growth in 2013 due to questions
being raised about potential pancreatic side
effects. Read more on pp 38–41. Victoza®,
however, continues to expand its share of the
GLP-1 market and has further consolidated
this position with the support of a new
nationwide TV campaign.

It’s Novo Nordisk’s ambition to

sustain the strong performance, despite
the dynamic business environment,
by consolidating the diabetes market
leadership position through the modern
insulins and Victoza®.

Europe

Europe is Novo Nordisk’s second largest
region in terms of sales. Sales growth has
been modest in recent years – in the low
single-digit range. To a large extent, this is
a result of the depressed economy in many
European countries in the wake of the
financial crisis. This has led governments
to implement cost-cutting measures, both
through price cuts on medicines and by
limiting access to new medicines. Tresiba®
has been affected by such measures in
countries such as the UK and Denmark.

In 2013, Novo Nordisk’s sales of diabetes
care products in Europe increased by 3% in
local currencies. Sales of insulin and protein-
related products were unchanged, reflecting
the fact that declining human insulin sales
were offset by the continued progress of
Levemir® and NovoRapid®. Furthermore,
sales were impacted by low volume growth
of the insulin market, around 3%. However,
the use of devices for insulin injections is
very high, with 96% of Novo Nordisk’s
insulin volume being used in devices,
primarily NovoPen® and FlexPen®.

Sales of Victoza® increased by 20% in
local currencies. Sales growth was primarily
driven by France, the UK, Spain and Italy. In
Europe, the GLP-1 class’s share of the total
diabetes care market in value increased to
8% compared with 7% in 2012. Victoza®
is the GLP-1 market leader with a value
market share of 78%.

Tresiba® is important for future growth
There are no signs of a return to significantly
higher sales rates in the coming years, with
government cost-cutting measures expected
to continue. Moreover, the diabetes market
is well developed, diagnosis rates are high,
birth rates low and Novo Nordisk already has
an insulin market share of 49% measured
by volume. This means there are limits as
to how much Novo Nordisk can grow in
Europe.

The key growth driver in the coming years is
expected to be Tresiba® as it becomes available
to patients in more European countries.
Moreover, Novo Nordisk will be launching
NovoEight® for treating haemophilia A in
the first European countries in 2014.

International Operations

With sales of 12 billion Danish kroner in
2013 and average annual sales growth
of around 15% since 2009, International
Operations is Novo Nordisk’s main
contributor to growth after North America.
Thinking of International Operations as one
business region requires a stretch of the
imagination, though. It encompasses 149
countries all over the world with more than
4.4 billion people – Latin America, Africa,
the Middle East, the Gulf, most of Asia,
and Australia. A region of extraordinary
diversity, it covers some of the world’s
poorest countries and some of the richest.
This means that Novo Nordisk must be
able to meet demand for both standard
therapy in the form of human insulin in
vials at very low prices and advanced
modern insulin products in sophisticated
pen systems, which are sold at prices
similar to those seen in Europe and the
US. Within many of the countries in
International Operations, there is both a
public and a private market. In most cases
the public market only reimburses use
of human insulin vials, while the private
market is primarily modern insulin paid
for by people who either have private
insurance or can pay out of their own
pockets.

What these countries have in common is
that the incidence of diabetes is increasing,
and many of them are enjoying economic
growth above what is being seen in the
Western world. This means they can afford
to extend the reach and quality of their
healthcare systems.

In 2013, Novo Nordisk’s sales of diabetes

care products in International Operations
increased by 16% in local currencies, driven
by all three modern insulins. Currently, 59%
of Novo Nordisk’s insulin volume in the
major private markets is used in devices.
Novo Nordisk’s insulin volume market share
is around 56%.

Victoza® is becoming an increasingly

important product in International
Operations. Sales grew by 31% measured
in local currencies in 2013 and the product
was marketed in 43 countries by the end
of 2013.

Future growth
Growth in International Operations will
continue to be driven by the increasing
number of people with diabetes in the region
and the fact that more of them will have
access to medical treatment as economies
develop. Novo Nordisk’s key priorities are
to increase the modern insulin penetration,
launch Tresiba® in more countries (Mexico
and India already launched this product in
2013), continue the roll-out of Victoza® and
ensure that more people are treated with
insulin sooner than is the case today.

To support growth, Novo Nordisk is
expanding its organisation in many of the
key growth markets and making significant
investments in building healthcare capacity
within diabetes.

Region China

With sales of 7.2 billion Danish kroner in
2013 and average annual sales growth of
around 19% since 2009, China has been a
major contributor to Novo Nordisk’s growth
in recent years. This is predicted to be the
case in the coming years too, partly due
to the rapidly increasing number of people
with diabetes in China. According to the
latest estimates from the International
Diabetes Federation, more than 99 million
people in China have diabetes today.

With China’s economic growth comes

urbanisation, with urbanisation come
sedentary lifestyles – and diabetes follows.
This is the same pattern seen in other rapidly
developing countries, but on a much larger
scale in a country with an ageing population
of 1.35 billion. On top of this, there is
another challenge. Twenty 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 in
proper diabetes care, including how to use
insulin effectively and safely. While these
initiatives primarily took place in the biggest
cities at first, today they’re being rolled out
to smaller cities and rural areas.

In 2013, Novo Nordisk’s sales of diabetes
care products in Region China increased by

Sales in Europe

Sales in International Operations

Sales in Region China

DKK billion

(+2%)

DKK billion

(+8%)

(+12%)

DKK billion

2009 2010 2011 2012 2013

In 2013, Novo Nordisk’s sales of diabetes

care products in Japan & Korea decreased
by 4% in local currencies. This sales
development reflects a stagnant Japanese
insulin volume market and the negative
impact from a challenging competitive
environment. A shift in recent years from
the use of premixed insulin products,
where Novo Nordisk is the clear leader with
NovoMix®, to basal insulin products, where
Novo Nordisk is in fierce competition with
Sanofi, has led to a loss of market share.
In 2013, there have been signs that this
development is changing with the launch of
Tresiba®. Japan was the first country to launch
Tresiba® in 2013 with broad market access.
Since its launch in March, Tresiba® has steadily
expanded its share of the basal insulin market
and now represents 8.6% of this market
measured in monthly value market share.
In 2014, the focus in Japan & Korea

will be on the further penetration of
Tresiba®, the launch of Ryzodeg® (insulin
degludec/insulin aspart) and the launch of
NovoEight® (turoctocog alfa) for treating
haemophilia A. However, growth rates are
expected to remain modest due to price
reductions and the overall low growth of
the total insulin market.

Sales in Japan & Korea

DKK billion

(–20%)

2009 2010 2011 2012 2013

Diabetes care
Value market share by geographic region

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

2009 2010 2011 2012 2013

Modern insulins
Global value market share by brand in its
respective insulin segment*

• NovoMix®
• NovoRapid®
• Levemir®

2009 2010 2011 2012 2013

* Levemir® in the long-acting segment, NovoRapid® in the

rapid-acting segment and NovoMix® in the dual-release segment.

North
America

Europe

International
Operations

Region China4

Japan &
Korea

13% 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®. GLP-1 products
are currently not reimbursed in China and this
class of products is therefore relatively small.
However, its share of the total diabetes care
market in value expanded to 0.6% compared
with 0.5% in 2012. Victoza® holds a GLP-1
value market share of 74%.

Reforms to widen healthcare coverage
The Chinese government is implementing
widespread reforms of the healthcare
system with a view to extending both its
reach and quality and, as in many other
countries, several measures are being taken
to limit spending on pharmaceuticals. One
way to do this is by creating lists of essential
pharmaceuticals that are purchased from
potential companies in large quantities at
low prices. Pharmaceuticals on this list are
primarily older products that have gone off
patent, such as human insulin.

However, there’s also a growing market
for newer and higher priced pharmaceuticals
in China as both the health awareness and
the purchasing power of many Chinese
families are growing. They’re willing to
pay for – or have private health insurance
that covers – newer and more innovative
treatments.

Novo Nordisk’s growth in the coming
years is expected to primarily come from the
portfolio of modern insulins, in part driven by
the continuing expansion of the company’s
reach into an increasing number of county
hospitals, and from Victoza®.

Japan & Korea

With a 52% market share measured in volume,
Novo Nordisk is the clear insulin market leader
in Japan. The use of devices remains high in
Japan, with 98% of Novo Nordisk’s insulin
volume being used in devices, primarily FlexPen®.

Key regional facts

Population (million)1

GDP per capita (USD)1

349

538

51,796

33,242

Healthcare spend per capita (USD)1

8,310

3,575

Physicians per 1,000 people1

Number of people with diabetes (million)2

Diagnosis rate2

Diabetes national prevalence2

Novo Nordisk total sales (DKK billion)

Insulin value market share3

Insulin volume market share3

2.4

78%

11%

39.0

38%

41%

3.3

64%

20.1

47%

49%

4.408

4,499

292

1.1

203

55%

12.0

49%

56%

1.351

6,091

278

1.8

46%

10%

7.2

57%

59%

178

39,925

3,566

2.1

51%

5.3

52%

49%

1. The World Bank. 2. The 2013 data are based on the IDF Diabetes Atlas, 6th edition, 2013. Prevalence rates have been estimated lower in a number of countries compared with the 5th edition used in the Novo Nordisk Annual Report 2012.
This reduction is due to changes in methodology and sources used by IDF for a given country and not to an improvement in diabetes prevalence. All studies from the same country show an increase in diabetes prevalence over a longer time
period. 3. IMS Health, IMS MIDAS Customized Insights, November 2013. 4. Data from IMS Health, IDF and The World Bank include China only.

The complexity
of insulin
production

More than 24 million people globally rely on Novo Nordisk’s products to treat their diabetes.
Around 10,000 employees are responsible for manufacturing high-quality products – with
low environmental impact.

Insulin production at Novo Nordisk

starts in Kalundborg, a town of about
16,000 inhabitants 100 kilometres west

of Copenhagen, Denmark. It is here that
the company makes insulin crystals, the
active ingredient in its insulin products,
through the processes of fermentation,
recovery and purification. Site Kalundborg
is Novo Nordisk’s largest production site at
1,350,000 m2 – equivalent to 270 football
pitches. In fact, it’s the largest production
site for insulin in the world, making around
half of the world’s insulin crystals.

A complex production process
Insulin is a protein and thus a large and
complex molecule. Manufacturing insulin is
very different from manufacturing most other
pharmaceuticals, which are based on small
molecules. It requires large investments in
biotechnology, sterile production facilities and
an understanding of working with living cells
– in this case yeast – to produce a uniform
and pure product.

“In Kalundborg we’ve developed large-
scale production expertise over many years,”
says Henrik Wulff, senior vice president and
head of Product Supply. “Centralised insulin
crystal production is an important part of

NOVO NORDISK ANNUAL REPORT 2013

our manufacturing strategy, and our unique
capabilities enable us to produce large
volumes of insulin at a competitive cost.”

While most other large-molecule

pharmaceuticals are produced in relatively
small quantities, production of insulin is a
high-volume undertaking. It is estimated
that an entire Olympic-sized swimming
pool could be filled with Novo Nordisk’s
insulin every year. Every second, every
day, 21 Penfill® insulin cartridges are filled.
And enough FlexPen® injection devices are
produced each year to stretch more than
once around the globe.

Final production close to patients
While the production of insulin crystals is
centralised in Denmark, the next steps in
the manufacturing process are closer to the
patients and major markets that need the
company’s products.

The largest production sites outside
Denmark are in the US, Brazil, France,
China and Japan. Working according to
the same, global quality management
system, these plants turn the insulin crystals
into finished products. In the formulation
process, freeze-dried insulin crystals are
blended with other ingredients and water

to create the different types of Novo
Nordisk insulin, for example Levemir®
(insulin detemir) or Tresiba® (insulin
degludec). In the filling process, glass
Penfill® cartridges and vials are filled on
high-speed lines. Once filled and inspected,
some cartridges are mounted into injection
devices, such as FlexPen® and FlexTouch®.
Finally, the products are packed to fulfil
customer orders and shipped to their
destination after final quality control.

“We place the production of finished
products close to where the patients are,”
explains Henrik Wulff. “This allows us to
react fast to local changes and lowers any
supply risk; our obligation to patients is
to supply safe, high-quality products in
compliance with regulatory requirements,
in volumes that meet demand. To live up
to this obligation, we have one quality
management system that defines the
global standards for compliance and
product quality.”

Continuous improvement
Novo Nordisk’s highly efficient production
system is based on years of experience
and learning from better practices. The
company has continuously developed its

One global quality system
Novo Nordisk uses one global
approach to ensure the quality of its
products no matter where in the world
they are produced. The company’s
quality management system has been
designed to ensure that all
manufacturing processes follow its
standard operating procedures (SOPs)
and are in compliance with
international standards such as Good
Manufacturing Practice and ISO 9001.
In total, Product Supply, the company’s
production division, has more than
15,000 SOPs.

All employees working in Product

Supply receive training to ensure
compliance with the quality
management system, including how
to document that all production lines
consistently meet the predetermined
criteria, how to identify and address
systemic quality problems, and how to
handle deviations from the standards.
Furthermore, Novo Nordisk has two

functions charged with ensuring
manufacturing quality. Quality Control
independently validates that products
are manufactured in compliance with
all procedures, while Quality Assurance
monitors that processes are conducted
in accordance with the company’s
SOPs. This is the final control before
batches of medicine are released to
the markets.

Ephrem Rudahunga works
at site Kalundborg, the
largest insulin production
site in the world.

production through technology upgrades,
skill-building and process optimisation.
“The introduction and in-house
development of cLEAN®, our version of
the lean manufacturing principles, has had
a very positive impact on the quality and
performance of our processes and hence
the production cost,” Henrik Wulff says.
In fact, the company’s ambition to improve
production performance has produced
remarkable results, with cost of goods sold
as a percentage of sales falling from 28%
to 17% from 2003 to 2013.

Energy savings
Optimising process performance has
also helped reduce Novo Nordisk’s
environmental impact significantly. The

long-term aspiration is to continuously
decouple environmental impacts from
business growth. Since 2004, Novo
Nordisk has reduced the emissions of
CO2 by 42%. In response to the need for
expansions of production capacity and an
increased product portfolio, the long-term
environmental targets for consumption
of energy and water were revised and
updated in 2013.

Energy-saving projects have resulted

in savings of up to 144 million kWh,
equivalent to the annual energy usage of
more than 7,000 Danish households, and
reductions in CO2 emissions of 44,000
tons annually. “In the beginning, we
could realise large improvements in our
environmental impact, but now it has

become more difficult to optimise our
absolute footprint as we’ve become so
efficient. However, we remain committed
to ensuring that our environmental impact
grows more slowly than the company
grows its sales,” explains Henrik Wulff.
“Looking ahead, I’m confident that

we’re well prepared to continue our strong
performance within production. We’ll
expand our production facilities to increase
output in line with market demands and
continue supplying high-quality products
that meet regulatory requirements. At
the same time, we’ll keep our focus on
improving our existing processes so that
we continue to live up to our financial,
environmental and social commitments,”
he concludes.

A Warning Letter with important learnings

An error that shouldn’t have happened

In December 2012, Novo Nordisk received a Warning Letter
from the US Food and Drug Administration (FDA) following
an inspection of a production plant in Denmark. In the
Warning Letter, the FDA cited two specific violations of its
compliance standards. Novo Nordisk immediately took action
to address the issues. A re-inspection was carried out in
August 2013 and in January 2014, Novo Nordisk received
confirmation from the agency that the violations had been
addressed satisfactorily. The learnings from this case are
being applied throughout the global Product Supply
organisation and serve as a reminder of the importance of
keeping up with ever-evolving compliance standards.

In October 2013, Novo Nordisk recalled certain batches of its
prefilled insulin product NovoMix® 30 in several European
countries. A quality control conducted by Novo Nordisk had
shown that a small percentage (0.14%) of the 3 million
products in these batches did not meet the specifications for
insulin strength. This could lead to the patient’s blood sugar
level becoming higher or lower than expected. To protect
patient safety Novo Nordisk recalled all products in the
affected batches from wholesalers, pharmacies and patients.
The root cause, a production error at one of Novo Nordisk’s
production facilities, has been identified and resolved.

NOVO NORDISK ANNUAL REPORT 2013

38 OUR BUSINESS

A question of trust

and redacted to protect patient and site
confidentiality – as they are the complete
descriptions of the trials presented in
a standardised format and the actual
material used for submission to regulatory
authorities. “In this way, we hope to
further reassure healthcare professionals
and patients that what we communicate
is an accurate reflection of what we have
observed and thereby strengthen public
confidence in the approved medical
treatments,” adds Peter Kristensen.

He stresses that Novo Nordisk will

publish the CSRs after regulatory approval
in the EU and in the US, so that the

As a business with shareholders to satisfy, the pharmaceutical
industry must have a strong focus on financial performance.
But the industry’s greater purpose is to improve human health.
At first glance these ambitions may appear conflicting – is it
therefore any wonder that the issue of trust is so often raised?

The pharmaceutical industry is no

stranger to critical media attention.
Headlines often call into question
the ethics and transparency of business
practices that must balance financial and
social responsibilities. It is easy to find
people who don’t trust pharmaceutical
companies to put the interests of patients
above profits.

Calling into question the transparency

of clinical trial results, some critics are
suggesting that negative data, or data
that don’t support the hypothesis being
tested, have been buried. They have
called for the disclosure of further data.
Authorities have also recently reviewed
guidelines on the interaction between the
pharmaceutical industry and healthcare
professionals in order to address concerns
about this relationship. The dilemma is
obvious: On the one hand, doctors have
expert knowledge based on their clinical
experience, without which pharmaceutical
companies can’t develop new medical
treatments. On the other hand, some
may see payments made to healthcare
professionals for this knowledge as an
illegitimate means of encouraging them to
prescribe certain medicines. So can patients
be sure that doctors are making treatment
decisions in the patients’ best interests?

Data transparency
Novo Nordisk has a strong track record on
clinical trial data transparency. For almost
a decade, the company has systematically
shared and published results and related
data – irrespective of trial outcome. “For
the success of future clinical trials, and for
our long-term business, it is imperative that
we build good and trustful relationships
with doctors and patients. We rely on our
collaboration with them, and take the
concerns they may have very seriously.
This is why today, we already go beyond
regulatory requirements by making our

NOVO NORDISK ANNUAL REPORT 2013

clinical trial results of approved products
public,” explains Peter Kristensen, senior
vice president of Global Development.
It is Novo Nordisk’s policy that the

results of all clinical studies are published,
preferably in scientific journals and at
scientific meetings. Tabulated data from
Novo Nordisk’s clinical trials
of products approved in the
US are available today on
the website clinicaltrials.gov.
This is a registry and
results database of
publicly and privately
supported clinical
trials conducted
around the world
and is run by
the U.S. National
Institutes of Health.
Since 2005, Novo Nordisk
has published a synopsis
of results from the
company’s clinical trials
of approved marketed
products, whether
positive or negative.
Today this information
is publicly available at
novonordisk-trials.com
including information
from discontinued trial
programmes.

From 1 March 2014,

novonordisk-trials.com will also
provide access to Clinical Study
Reports (CSRs) for all Novo
Nordisk trials after 2006
– regardless of study
outcome – involving
product indications
that are approved in
the EU and the US.
The company has
chosen to publish CSRs
– without appendices

decision-making process of the regulatory
authorities is not made even more complex
by a parallel public debate. In addition,
prior to approval, Novo Nordisk regards
the design of its trials, as well as the results
obtained, as confidential information. “We
have to protect competitive information.
Otherwise investments in future treatments
will be lost, which would be bad for
patients and the industry alike,” points out
Peter Kristensen.

Access to patient-level data
Taking transparency to a new level,
public access to individual patient

OUR BUSINESS

research data from clinical trials has
recently been proposed by the European
Medicines Agency (EMA). Novo Nordisk
agrees that there is value in making these
data available: “We have a responsibility
to patients to ensure that the data they
contribute to clinical trials are leveraged
as much as possible to advance scientific
understanding. We believe that by
sharing detailed clinical trial data with
the research community, new knowledge
may be created that could contribute to
the development of new and improved
treatments,” Peter Kristensen highlights.
“However, we have to be careful that
patient confidentiality is not compromised
and that competitive business information
is not divulged.”

Therefore, Novo Nordisk will make
patient-level data for approved products
from trials completed after 2001 available
to researchers upon request. To ensure that
the data are handled in a responsible way,
the company will establish an independent
governing body. This will include experts
skilled in evaluating clinical data and will
assess researchers’ requests for data and
make decisions based on an accountable
and transparent process.

Integrity and transparency are
the foundation for building trust
A company such as Novo Nordisk can’t
develop new medicines without the
guidance, knowledge and expertise of
doctors, who understand the medical needs
of the patients they see in their clinics. It
is therefore reasonable that they are fairly
compensated for the services they provide
in this respect. However, relationships
with doctors can create the potential for
conflicts of interest as the doctors have a
direct impact on a company’s sales via their
prescribing decisions. The issue of trust
raises its head again.

“Our business ethics strategy is there to
safeguard the integrity of our relationships
with all our stakeholders and we want to
make sure our actions are transparent,”
comments Lise Kingo, executive vice
president and chief of staffs. She is also
the chair of the Business Ethics Board,
which is responsible for implementing the
company’s business ethics strategy. “We
have focused on business ethics for a long
time and we’re always looking for ways we
can make improvements in this area.” By
way of example, Lise Kingo mentions that
all relevant employees are trained in – and
then tested on – the company’s standard
operating procedures for interactions with
and payments to healthcare professionals.

Global reporting, global transparency
This past year national regulations for
disclosure of payments and other transfers of
value to healthcare professionals have come
into force in the US and France. There is now,
for example, a requirement to report any
individual payments exceeding 10 US dollars
or 10 euros in the US and France respectively.
Furthermore, the European pharmaceutical
industry trade organisation EFPIA has recently
revised its codes of conduct for interactions
between the pharmaceutical industry
and healthcare professionals and patient
organisations. The revised codes ban all gifts
to healthcare professionals, enable each
country to set a threshold for any hospitality
provided to doctors and, as in the US and
France, call for individual disclosure of any
transfers of value.

Novo Nordisk fully supports the new
regulations and codes of conduct, and has
developed a system for reporting payments
to individual healthcare professionals.
“Ultimately, we want to have one system
for all our affiliates to ensure the same
reporting standard, not only in the US and

CONTINUED

A selection of books
published in recent years
with a critical perspective on
the pharmaceutical industry.

NOVO NORDISK ANNUAL REPORT 2013

Europe, but throughout the world. We
are therefore ready to roll out this system
in each country once specific national
requirements have been announced and
taken into account,” explains Lise Kingo.
“We hope that these new regulations
and revised codes of conduct will enhance
transparency and reassure external
stakeholders of our commitment to
ethical behaviour.”

Reaffirming results to build confidence
For good reason, product safety is one of the
greatest concerns for patients and healthcare
professionals and is an issue that Novo
Nordisk takes very seriously, particularly
as the company makes potentially life-

saving treatments for people who are,
by nature of their medical condition,
vulnerable. The company therefore
continuously and actively monitors the
safety profile of its products. Stringent
protocols and systems are in place to
ensure product safety, both during the
development phases and after a product has
been launched. Read more in the box on p 41.
However, new pharmaceuticals often

come under the spotlight, particularly
if they represent a new class of drug. A
recent example is GLP-1-based diabetes
therapies, a drug class to which Novo
Nordisk’s Victoza® belongs. The safety
of this drug class was challenged early in
2013, when a study (which did not include

Victoza®) suggested an increased risk of
side effects on the pancreas. The FDA and
EMA reacted by reviewing data on GLP-
1-based therapies to see if a link between
them and an increase in pancreatic side
effects could be determined.

In July, the EMA concluded that currently
available data did not confirm the concerns
over an increased risk of pancreatic adverse
events with these medicines. The FDA has
not officially announced the conclusion
of its review. However, in response to
questions from the media, a spokesperson
said that the FDA was in agreement with
the EMA’s conclusions.

Mads Krogsgaard Thomsen, executive

vice president and chief science officer,

Continuous safety
surveillance process
All Novo Nordisk products – whether
in development or on the market –
have a dedicated cross-organisational
safety committee, with experts
anchored in Global Safety, which
oversees the safety of the product.
Preclinical data, clinical studies,
post-marketing reports, publications,
competitor information and databases
are continuously reviewed to detect
any safety concerns.

The benefit–risk profiles of Novo

Nordisk-marketed products are
described in the product label, as
agreed with health authorities. New
data are shared with authorities,
either as an ongoing process via
individual case safety reports or at
regular intervals via periodic safety
update reports. If necessary, product
labels are updated based on new
data. Furthermore, when possible,
analysis of safety data is published
in peer-reviewed journals in
collaboration with experts.

Senior Clinical Research Associate
Sowmya Muralidhar from India
discusses a clinical trial with a
doctor involved in the trial.

welcomed the EMA’s conclusion: “Novo
Nordisk is committed to patient safety and
continuously monitors for adverse events
related to all of its medicines. Victoza® has
more than 1.9 million patient years of use
and a strong body of evidence to support
its safety and efficacy based on both
clinical trial and real-world practice data.”
Karsten Lollike, corporate vice president

and head of Global Product Safety, adds
that Novo Nordisk continues to conduct
studies to assess the effects of long-term
use of Victoza® on the pancreas. This
includes a review of databases and the
cardiovascular outcomes trial LEADER®,
to be completed in 2016, and other post-
marketing studies.

“Ensuring the safety of our products

remains our top priority. I believe our
history – and how we have handled safety
issues and concerns in the past – proves
our commitment is more than just words,”
explains Karsten Lollike. “I’m really pleased
that in a recent survey1 Novo Nordisk
was ranked number one in the industry
by patients for having a good record in
ensuring patient safety. I believe this shows
that patients trust us.”

An ongoing issue requires
a long-term perspective
While it can be expected that the issue
of trust and the pharmaceutical industry
will continue to be discussed for many

years to come, Lise Kingo hopes that Novo
Nordisk’s approach to business ethics will
demonstrate the company’s commitment
to building trust with all its stakeholders:
“We have clear priorities and the needs
of patients come first – this has been the
case ever since the company was founded.
We have a Triple Bottom Line approach
that ensures all business decisions live up
to our financial, social and environmental
responsibilities. This long-term perspective
is absolutely fundamental to the way
we work and how we run our business,
and I believe this is our firm foundation
for being a credible and trustworthy
company,” she concludes.

RISKS

to be aware of

Several developments in 2013 were reminders that there are, and always will be, risks
associated with Novo Nordisk’s business – risks that all investors should be aware of.

8 February 2013: The US Food and
Drug Administration (FDA) informs Novo
Nordisk that it cannot approve the New
Drug Applications for Tresiba® (insulin
degludec) and Ryzodeg® (insulin degludec/
insulin aspart) in their current form. This
unexpected development meant that these
two insulin products could not be launched
in the US in 2013 as originally planned.
Read more on pp 24–25.

22 March 2013: A study is published
suggesting that GLP-1-based drugs for
treating type 2 diabetes have an increased
risk of pancreatic side effects. Although the
authorities later concluded that currently
available data did not confirm the concerns,
the growth of this market segment was
affected in some countries. Read more
on pp 38–41.

23 October 2013: Novo Nordisk
announces a recall of 3 million NovoMix®
insulin products in several European
countries due to a production error.
Situations leading to product recalls
may pose a risk to patient safety, lead
to disruption of supplies in the affected
countries and tarnish Novo Nordisk’s
reputation. Read more on pp 36–37.

Three examples of three different types of
risk that come with being a pharmaceutical
company and investor in one. And there
are more. This article covers the main types
of risk that Novo Nordisk faces. For some
specific risks, reference is made to articles
elsewhere in the Annual Report and notes
to the consolidated statements.

Market risks
The principal market risks Novo Nordisk
experiences are:
• price pressure and reimbursement

restrictions by payers

• the launch of new products by

established competitors

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

Europe, China and the US are all main
markets for Novo Nordisk where payers –
both governments and private payers – take
measures to limit spending on medicines,
typically by driving down prices, demanding
higher rebates and/or restricting access
to and reimbursement of products. This
is unlikely to change in the foreseeable
future. For Novo Nordisk, reimbursement
restrictions pose a significant risk when
launching a new product such as Tresiba®,
the new-generation basal insulin with ultra-
long duration of action. Despite the patient
benefits and data supporting the health-
economic benefits of the product, it is not
always possible to obtain market access on
what Novo Nordisk considers reasonable
conditions. In some countries, the company
may therefore not launch Tresiba® under the
current conditions.

The launch of new products by
established competitors is an inherent
market risk. As mentioned on p 33 in the
article about Novo Nordisk’s five regions,
new products are under way in both the
insulin and GLP-1 segments, including a
biosimilar version of the best-selling modern
insulin product. How and to what extent
such events will change the market dynamics
is not possible to predict at present.

In addition to these global risks, in some

countries in the International Operations
region 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 the
production facilities. During the process,
various hurdles may delay the development
of a potential product candidate and
add substantial expense. In some cases,
significant obstacles could lead to the
company eventually deciding to abandon
the development of the potential
product candidate.

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. However, there is
significant uncertainty regarding
the timing and success of the

regulatory approval process, as illustrated
by the aforementioned decision by the FDA
regarding Tresiba® and Ryzodeg®.

Supply disruptions
Failure or breakdown in one of Novo
Nordisk’s or the company’s key suppliers’
vital production facilities could adversely
affect operations and 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 sites in several
countries. Read more on pp 36–37.

Quality and product safety issues
Quality and product safety issues may arise
if, for example, a production facility is not
continuously in compliance, a product is not
within specifications or if side effects that
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 quality
management system, a key priority of
which is to safeguard product quality and
minimise risks to patient safety and secure
product quality. The quality management
system aims to ensure that the company is in
compliance with all regulatory requirements
and it includes standard operating
procedures, quality controls and release,
quality audits, quality improvement plans
and systematic senior management reviews.
For information on Novo Nordisk’s product
safety monitoring, authority inspection
status and product recalls, read more on pp
36–37 and 38–41 and in note 4.2 on p 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. Read more about
how Novo Nordisk manages this risk in
notes 4.2 and 4.3 on pp 79–83.

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. As a general rule, Novo
Nordisk’s affiliates pay corporate taxes in
the countries in which they operate.

To manage uncertainties regarding
tax, Novo Nordisk has negotiated multi-
year transfer pricing agreements with tax
authorities in key markets. Read more
about taxes paid by Novo Nordisk in 2013,
in note 2.4 on pp 68–70.

Information technology risks
Well-functioning IT systems are critical for
Novo Nordisk’s ability to operate effectively.
Furthermore, they hold confidential
information that if disclosed could have
a severe impact on Novo Nordisk’s
competitive situation. An information
security strategy is in place to mitigate the
risk of intruders causing damage to systems
and gaining access to critical data. Specific
measures include awareness campaigns,
access controls, and intrusion detection and
prevention systems.

Business ethics and legal risks
Business ethics violations and patent and con-
tract disputes are the main risks in this area.
The pharmaceutical industry is tightly
regulated in many respects, including which
promotional claims it can make about its
products and how it can interact with
doctors and other healthcare professionals.

In June 2013, news broke in China
of a government investigation into the
business practices of an international
pharmaceutical company. At the same
time the Chinese government announced
industry-wide measures to crack down on
illegal business activities. Subsequently,
several companies, including Novo Nordisk,
were visited by the authorities. In August,
Novo Nordisk’s facilities in Tianjin were
visited by the local Administration for
Industry and Commerce (AIC) and asked
to provide information regarding the
company’s operations in Tianjin City.
The investigation has been closed by the

AIC with a few observations, which have
no material impact on Novo Nordisk’s
business in China.

This example underlines the potential
business ethics risks associated with being
a pharmaceutical company. To minimise the
risk of violating national and international
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’s 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, the US
affiliate has added additional reporting
and other procedures to its already robust
compliance programme.

Also in the US, Novo Nordisk is a
defendant in product liability lawsuits
related to hormone therapy products and
Victoza®. Read more about these and other
pending litigations against Novo Nordisk
and investigations involving the company,
in note 3.6 on pp 74–76.

Protection of intellectual property
through patents is very important 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.

Novo Nordisk’s risk
management policy
“In Novo Nordisk we will proactively
manage risk to ensure continued
growth of our business and to
protect our people, assets and
reputation. This means that we will:
• utilise an effective and integrated
risk management system while
maintaining business flexibility
• identify and assess material risks

associated with our business
• monitor, manage and mitigate

risks.”

For more information on Novo
Nordisk’s risk management process,
please visit novonordisk.com/about_us.

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 its B shares.

Share capital and ownership
Novo Nordisk’s total share capital of DKK
550,000,000 is divided into an A share
capital of nominally DKK 107,487,200
and a B share capital of nominally DKK
442,512,800, of which Novo Nordisk
A/S and its wholly owned affiliates held
nominal DKK 20,570,405 as treasury shares
as of 31 December 2013.

To secure liquidity for both the Novo
Nordisk B shares and American Depositary
Receipts (ADRs) and bring price levels in
line with market practice, especially for the
ADRs, a stock split of the Novo Nordisk
B shares and ADRs was implemented in
January 2014. Following the five for one
stock split, Novo Nordisk’s A and B shares
are calculated in units of DKK 0.20. The
ratio of Novo Nordisk’s B shares to ADRs
remains one-to-one.

The company’s A shares are not listed
and are held by Novo A/S, a Danish public
limited liability company wholly owned 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. According to the Articles of
Association of the Foundation, the A shares
cannot be divested. As of 31 December

Breakdown of shareholders
% of capital (% of votes)

 Novo A/S, Bagsværd, Denmark
 Novo Nordisk A/S
 Other

25.5
(74.0)

3.7
(0.0)

2013, Novo A/S also held nominal value
DKK 32,762,800 of B share capital. Each
A share carries 200 votes and each B share
carries 20 votes. With 25.5% of the total
share capital, Novo A/S controls 74% of
the total number of votes, excluding Novo
Nordisk’s holding of treasury shares.

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 complete record of
all shareholders exists. Based on available
sources of information about the company’s
shareholders as of 31 December 2013, it
is estimated that shares were distributed
as shown in the charts on this page. As of
31 December 2013, the free float of listed
B shares was 87.9%, excluding the Novo
A/S holding and Novo Nordisk’s holding of
treasury shares. For details on share capital,
see note 4.1 on pp 78–79.

The capital structure
Novo Nordisk’s Board of Directors and
Executive Management consider 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

Geographic distribution
of shareholders*
% of share capital (2012 % of share capital)

 Denmark
 North America
 UK and Ireland
 Other

14.2
(12.7)

12.8
(12.9)

41.1
(40.4)

70.8
(26.0)

NOVO NORDISK ANNUAL REPORT 2013

31.9
(34.0)

* Calculated using shareholders’ registered home country.

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 2013 Annual General Meeting, a
reduction of the company’s B share capital,
corresponding to approximately 1.8% of
the total share capital, was implemented
in April 2013 by cancellation of treasury
shares. This enabled 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
2012, Novo Nordisk repurchased shares
worth DKK 14 billion. 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.

Share repurchase programme for
1 February 2014 to 31 January 2015
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 15
billion. Novo Nordisk expects to implement
the majority of the new share repurchase
programme according to the Safe Harbour
Regulation. At the 2014 Annual General
Meeting, the Board of Directors will propose
a further reduction of the company’s B share
capital, corresponding to approximately
3.6% of the total share capital, by
cancellation of 20 million treasury shares.
After implementation of the share capital
reduction, Novo Nordisk’s share capital will
amount to DKK 530,000,000 divided into
an A share capital of DKK 107,487,200
and a B share capital of DKK 422,512,800,
corresponding to 537,436,000 A shares
and 2,112,564,000 B shares of DKK 0.20.

Share price performance
Novo Nordisk’s share price increased by
8.5% from its 2012 close of DKK 916.50
to its 31 December 2013 close of DKK
994.00 for B shares with a nominal value
of DKK 1. Following the stock split, the
comparable share prices for B shares with
a nominal value of DKK 0.20 were DKK
183.30 and DKK 198.80 at the end of 2012
and 2013 respectively. In comparison, the
MSCI Europe Health Care and MSCI US
Health Care indexes increased by 20% and
36% respectively during 2013. The smaller
increase in Novo Nordisk’s share price
compared with the two indexes is assumed
to reflect a negative impact from the delay in
the US regulatory process for Tresiba® (insulin
degludec), which has only partly been offset
by an expanded leadership position in the
growing diabetes care market, coupled
with a continued improvement in operating
margin and encouraging outlook for the
rest of the research and development
product portfolio. Read more about
financial performance on p 6 and about
developments in the pipeline on pp 20–21.
The total market value of Novo Nordisk’s B
shares, excluding treasury shares, was DKK
419 billion at the end of 2013.

Payment of dividends
As illustrated below Novo Nordisk has
continuously increased both the payout
ratio and the dividend paid over the last
five years. The dividend for 2012 recorded
in March 2013 was equal to DKK 3.60 per
share of DKK 0.20. At the 2014 Annual
General Meeting, the Board of Directors
will propose a dividend for 2013 of DKK
4.50 per A and B share of DKK 0.20, as
well as for ADRs. The dividend for 2013
represents an increase in the dividend per
share of 25% (adjusted for stock split).
Novo Nordisk does not pay a dividend on
its holding of treasury shares. The proposed
dividend corresponds to a payout ratio
of 47.1%. For 2012, the payout ratio was
45.3%, whereas Novo Nordisk’s peer
group of comparable pharmaceuticals
companies operated with a payout ratio of
47%. Shareholders’ enquiries concerning
dividend payments and shareholder
accounts should be addressed to Investor
Service. Read more on the back cover.

Communication with shareholders
To keep investors updated on
performance and the progress of clinical
development programmes, Novo Nordisk

GOVERNANCE, LEADERSHIP AND SHARES

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 34
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, where company announcements
from 1995 onwards, financial, social
and environmental results, a calendar
of investor-relevant events, investor
presentations, background information
etc are also available.

Novo Nordisk’s share performance compared with benchmark indexes
Total price development in the period up to 31 December 2013

3 years

1 year

Novo Nordisk’s B shares on NASDAQ OMX, DKK

Novo Nordisk’s ADRs on the New York Stock Exchange, USD

13%

24%

20%

36%

58%

64%

35%

39%

92%

5 years

267%

260%

148%

48%

108%

NASDAQ OMX Copenhagen 20 Index

MSCI Europe Health Care Index

MSCI US Health Care Index

Dividend payments
and payout ratio

 Dividend per share for the year1 (left)
• Payout ratio2 (right)

Price development and monthly
turnover of Novo Nordisk’s
B shares on NASDAQ
OMX Copenhagen 2013

 Turnover of B shares (left)
Novo Nordisk’s B share
closing prices (right)

Total shareholder return

 Per cent

DKK

DKK billion

2009 2010 2011 2012 2013

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

DKK

1,250

1,000

750

500

250

100

1. Adjusted for the five for one stock split implemented

as of 2 January 2014.

2. Dividend for the year as a percentage of net profit.
3. Proposed dividend for the financial year 2013.

2009 2010 2011 2012 2013

NOVO NORDISK ANNUAL REPORT 2013

Corporate
governance

In 2013, the Board of Directors established a Nomination Committee to enhance
the process for nominating members to the Board of Directors. The Board
of Directors also increased its diversity ambition and set new targets for 2017.

Governance structure

Shareholders
Shareholders have ultimate authority over the
company and exercise their rights 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
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. Read more about
shares and capital structure on pp 44–45.

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 and follows
up on its implementation, supervises
the performance, ensures adequate
management and organisation, and as
such 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 annual general
meeting and recorded in the meeting
minutes. For minutes from annual general
meetings, see novonordisk.com/about_us.
The Board of Directors has 11 members,
seven of whom are elected by shareholders
and four by employees in Denmark.
Shareholder-elected board members serve
a one-year term and may be re-elected.
Members must retire at the first annual
general meeting after reaching the age of
70. Four of the seven shareholder-elected
board members are independent as defined
by the Danish Corporate Governance
Recommendations. Read more on pp 52–53.
A proposal for nomination of board

members is presented by the newly
established Nomination Committee
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.

To ensure that discussions include multiple
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 seven shareholder-elected board
members are non-Danes. In 2013, the
Board of Directors increased its ambition
and set out new targets with the aim
that by 2017 it will consist of at least
two shareholder-elected board members
with Danish nationality and at least two
shareholder-elected board members with a
nationality other than Danish – and at least
two shareholder-elected board members of
each gender. In accordance with section 99b
of the Danish Financial Statements Act, Novo
Nordisk discloses its mandatory diversity
report at novonordisk.com/annualreport.
The self-assessment conducted in
2013 resulted in a continued focus on
discussion of the current critical issues
and on management development and
succession planning. 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 of 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 annual
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 four-year term and have
the same rights, duties and responsibilities
as shareholder-elected board members.
Novo Nordisk’s Board of Directors met

seven times during 2013.

Chairmanship
The annual general meeting directly elects
the chairman and vice chairman of the
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 and
recommending the remuneration of board
members and Executive Management.

GOVERNANCE, LEADERSHIP AND SHARES

In practice, the Chairmanship has the
role and responsibility of a remuneration
committee, as the Board of Directors
considers that each board member must
have the opportunity to contribute actively
to discussions and have access to all
relevant information on remuneration.
In March 2013, the Annual General
Meeting elected a new chairman, Göran
Ando, and a new vice chairman, Jeppe
Christiansen. See novonordisk.com/about_us
for a report on the Chairmanship’s activities.

Audit Committee
The three members of the Audit
Committee are elected by the Board
of Directors among its members. Two
members qualify as independent and have
been designated as financial experts as
defined by the US Securities and Exchange
Commission (SEC). Under Danish law, two
members qualify as financial experts and
as independent. In 2013, an employee
representative was elected as a member.

The Audit Committee assists the Board
of Directors with oversight of the external
auditors, the internal audit function,
the procedure for handling complaints
regarding accounting, internal accounting
controls, auditing or financial reporting
matters and business ethics matters
(whistleblowing), financial, social and
environmental reporting, business ethics
compliance, post-completion reviews and
post-investment reviews of investments,
long-term incentive programmes, and
in 2013 it was agreed that the Audit
Committee also assists with oversight
of IT security. In 2013, the Board of
Directors re-elected Hannu Ryöppönen as
chairman and Liz Hewitt as a member of
the Audit Committee and, further, elected
Stig Strøbæk as a new member. See
novonordisk.com/about_us for a report
on the Audit Committee’s activities.

Nomination Committee
In 2013, the Board established a Nomination
Committee consisting of four members
to enhance the process for nominating
members to the Board of Directors. Two
members qualify as independent, while
one member is an employee representative.
The Nomination Committee assists the
Board with oversight of the competence
profile and composition of the Board,
nomination of members and committees,
and other tasks on an ad hoc basis as
specifically decided by the Board. In 2013,
the Board of Directors elected Göran Ando
as chairman and Bruno Angelici, Liz Hewitt
and Anne Marie Kverneland as members
of the Nomination Committee. See
novonordisk.com\about_us for a report
on the Nomination Committee’s activities.

Executive Management
The Board of Directors has delegated
responsibility for day-to-day management
of Novo Nordisk to its Executive

CONTINUED

NOVO NORDISK ANNUAL REPORT 2013

48 GOVERNANCE, LEADERSHIP AND SHARES

Management. In 2013, two new executives
were appointed and Executive Management
now consists of the president and chief
executive officer plus six executives. They
are responsible for overall conduct of the
business and all operational matters, 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
audit firm 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
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 reviews
the result of the audits and must approve
the appointment, remuneration and
dismissal of the head of the internal audit
function.

Three other types of assurance activity
– 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.

Compliance
Novo Nordisk’s B shares are listed on
NASDAQ OMX Copenhagen and on
the New York Stock Exchange (NYSE) 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.

In 2013, new Danish corporate
governance recommendations were
introduced, and Novo Nordisk adheres
to all but the following:
• The Board of Directors has not

established a remuneration committee
(but in practice the Chairmanship has
such role).

• Current employment contracts for Executive
Management allow in some instances for
severance payments of more than 24 months’
fixed base salary plus pension contribution.

• The majority of the Nomination
Committee’s members are not
independent. It consists of two
members who are not independent,
including the Chairman, and two
members who are independent.

The reasons for deviating from the first
two recommendations are given on pp 47
and 50. The reason for deviating from the
third recommendation is that the Board of
Directors finds that this composition of the
Nomination Committee allows for both a
representative of the majority shareholder
as well as an employee representative to
be on the Nomination Committee, while
keeping it small.

Novo Nordisk complies with the

corporate governance standards of NYSE
applicable to foreign listed private issuers.
As a controlled company, Novo Nordisk
is not obliged to comply with all standards
established by NYSE. Furthermore,
Novo Nordisk as a foreign private issuer
is permitted to follow home country
practice, which is the case in relation
to independence requirements, audit
committee, equity compensation plans,
code of business conduct and ethics, and
CEO certification.

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. Read
more about the Novo Nordisk Way on p 4.

Novo Nordisk is part of the Novo Group
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. Read
more about the Novo Group on p 44.

Corporate governance codes and practices

Compliance

Governance structure

Assurance

Danish and foreign
laws and regulations

Shareholders

Board of Directors

Corporate
governance
standards

Chairmanship*

Audit
Committee

Nomination
Committee

Executive Management

Organisation

Novo Nordisk Way

* The Chairmanship is directly elected by the annual general meeting.

NOVO NORDISK ANNUAL REPORT 2013

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

Facilitation and
organisational audit
(internal)

Quality audit
and inspections
(internal and external)

Remuneration

At the Annual General Meeting in 2013,
Novo Nordisk’s shareholders approved
that the maximum allocation for both
the short- and long term incentive
programmes for Executive Management
was increased to 12 months’ base salary
plus pension contribution. This was
done to ensure flexibility for the Board
of Directors in executive remuneration,
as the benchmark had shown that
elements of the executive remuneration
were below market levels.

Nomination 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 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, complexity and
market capitalisation. The results are
presented to the 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 and

Travel and other expenses
All board members who reside outside
Denmark are paid a fixed travel allowance:
3,000 euros for Europe-based board
members and 6,000 euros for board
members based outside Europe. Otherwise,
no travel allowance is paid to board
members when attending board meetings
outside Denmark. 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

GOVERNANCE, LEADERSHIP AND SHARES

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 performance, while promoting sound,
long-term business decisions to achieve
the company’s objectives. 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
achievement of a number of predefined
short-term functional and individual business
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 2013, the base fee for members of the Board of Directors was DKK 500,000 (DKK 500,000 in 2012)

DKK million

2013

Fixed
base fee

Fee for
ad hoc tasks and
committee work

Travel
allowance

Total

Fixed
base fee

2012

Fee for
ad hoc tasks and
committee work

Travel
allowance

Total

1.4
0.8
0.5

Göran Ando3, 4 (chairman of the Board and
of the Nomination Committee)
Jeppe Christiansen1 (vice chairman of the Board)
Hannu Ryöppönen (chairman of the Audit Committee)
Liz Hewitt1 (member of the Audit Committee and
0.5
the Nomination Committee)
0.5
Stig Strøbæk (member of the Audit Committee)
0.5
Bruno Angelici (member of the Nomination Committee)
0.5
Henrik Gürtler
0.5
Ulrik Hjulmand-Lassen
Thomas Paul Koestler
0.5
Anne Marie Kverneland (member of the Nomination Committee) 0.5
0.5
Søren Thuesen Pedersen
Steen Scheibye2
0.4
Kurt Anker Nielsen2
0.1
Jørgen Wedel2
–

Total

7.2

–
–
0.5

0.3
0.2
0.1
–
–
–
0.1
–
–
0.1
–

1.3

0.1
–
0.1

0.1
–
0.1
–
–
0.3
–
–
–
–
–

0.7

1.5
0.8
1.1

0.9
0.7
0.7
0.5
0.5
0.8
0.6
0.5
0.4
0.2
–

9.25

1.0
–
0.5

0.4
0.5
0.5
0.5
0.5
0.5
0.5
0.5
1.5
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

0.8

1.1
–
1.0

0.7
0.5
0.6
0.5
0.5
0.8
0.5
0.5
1.5
0.8
0.3

9.35

1. Liz Hewitt was ﬁ rst elected at the Annual General Meeting in March 2012, and Jeppe Christiansen was ﬁ rst elected at the Annual General Meeting in March 2013.
2. Jørgen Wedel resigned as of March 2012. Steen Scheibye and Kurt Anker Nielsen resigned as of March 2013.
3. Novo Nordisk provides secretarial assistance to the chairman in Denmark and the UK.
4. As Göran Ando also holds the position of chairman of the Board, he has not received a fee as chairman of the Nomination Committee.
5. In addition, social security taxes have been paid by Novo Nordisk amounting to less than DKK 1 million (less than DKK 1 million in 2012).

NOVO NORDISK ANNUAL REPORT 2013

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50 GOVERNANCE, LEADERSHIP AND SHARES

In 2013, the Annual General Meeting
approved that the maximum allocation per
year cannot exceed 12 months’ base salary
plus pension contribution, and in March
the Board of Directors determined that the
2013 maximum would be up to 10 months.

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.
These are typically related to reaching
specific milestones within research and
development, such as execution of trials,
product approvals and product launches,
or milestones within sustainability
related to patients, environment,
company reputation and development of
employees. The total number of non-
financial targets varies, but is typically
made up of 10–15 targets within five to
six categories.

In 2013, the Annual General Meeting
approved that the maximum allocation per
year cannot exceed 12 months’ base salary
plus pension contribution and in March
the Board of Directors determined that the
2013 maximum for Executive Management
would be nine months. If the financial
target is met for economic profit, and
at least 85% performance is reached on
non-financial targets, the allocation to the
joint pool would correspond to 4½ months’
base salary plus pension contribution for
Executive Management.

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. The
shares in the joint pool are allocated to the
participants prorated according to their
base salary as per 1 April in any given year.
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.

NOVO NORDISK ANNUAL REPORT 2013

Pension
Pension contributions are paid to enable
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.
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 contribution
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.

The existing employment contracts will

not be changed. For the two executives
who joined Executive Management in 2013
and for all 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.

Composition of executive remuneration
Midpoint 2013

 Fixed base salary  Cash bonus  Share-based incentive  Pensions  Benefits

Maximum performance

On-target performance

14%

15%

33%

22%

46%

30%

22%

15%

Remuneration package components

Remuneration

Board of
Directors

Executive
Management

Comments relating
to Executive Management

Fixed fee/base salary

Fee for committee work

Fee for ad hoc tasks

Cash bonus

Share-based incentive

Pensions

Travel and
other expenses

Benefits

Severance payment

Accounts for 30–55% of the total value of the
remuneration package*

Up to 6–10 months’ fixed base
salary + pension contribution per year

Up to 9 months’ fixed base salary + pension
contribution per year

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

Non-monetary benefits such as company car and
phone

Up to 24 months’ fixed base salary + pension. The
employment contracts entered into before 2008
exceed the 24-month limit, though will not exceed 36
months’ fixed base salary plus pension contribution

* The interval 30–55% states the span between ‘maximum performance’ and ‘on-target performance’.

GOVERNANCE, LEADERSHIP AND SHARES

Delayed approval of Tresiba® in the US reduces share allocation in the 2013 incentive programme

While Novo Nordisk exceeded the planned financial performance
in 2013, the company did not meet its target of having Tresiba®
approved in the US due to the Complete Response Letter from
the US Food and Drug Administration (FDA) in February. This
event also entailed that the target for the submission of IDegLira
for regulatory approval to the FDA could not be met. As a

consequence of these shortcomings, the allocation of shares
under the long-term incentive programme was reduced. For
2013, Executive Management was allocated an amount equal
to 4.75 months’ fixed base salary plus pension contribution per
member compared with a potential maximum allocation of nine
months.

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

DKK million

Executive Management
Lars Rebien Sørensen
Jesper Brandgaard
Lars Fruergaard Jørgensen1
Lise Kingo
Jakob Riis1
Kåre Schultz
Mads Krogsgaard Thomsen

2013

2012

Fixed
base
salary

Cash
bonus

Pension

Beneﬁ ts

Share-
based
incentive

Total

Fixed
base
salary

Cash
bonus

Pension

Beneﬁ ts

Share-
based
incentive

10.1
5.7
4.1
5.1
4.1
6.3
5.7

5.1
2.4
1.4
1.9
1.4
2.7
2.4

3.8
2.0
1.4
1.8
1.4
2.4
2.0

0.3
0.3
0.3
0.3
0.3
0.3
0.3

2.1

–
–
–
–
–
–
–

–

19.3
10.4
7.2
9.1
7.2
11.7
10.4

8.4
4.8
–
4.3
–
5.2
4.8

75.3

27.5

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

–
–
–
–
–
–
–

–

Total

14.4
8.3
–
7.1
–
8.6
8.3

46.7

Executive Management in total

41.1

17.3

14.8

Other members of the Senior
Management Board in total2

Share allocation3

82.74

32.3

25.5

14.4

–

154.9

72.14

25.0

22.3

8.4

–

127.8

51.5

73.1

1. Effective 31 January 2013, Novo Nordisk’s Executive Management was expanded to include two new members, Jakob Riis and Lars Fruergaard Jørgensen.
2. The total remuneration for 2013 includes remuneration to 33 senior vice presidents (26 in 2012), ﬁ ve of whom have retired or left the company (none in 2012). The 2013

remuneration for the retired senior vice presidents is included in the table above, whereas severance payments of DKK 57.2 million are not included.

3. The joint pool of shares is locked up for three years before it is transferred to the participants employed at the end of the three-year period. The value is the cash amount of
the share bonus granted in the year using the grant-date market value of Novo Nordisk B shares. Based on the split of participants at the establishment of the joint pool,
approximately 40% of the pool will be allocated to the members of Executive Management and 60% to other members of the Senior Management Board (2012: 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.

4. Including social security taxes paid amounting to DKK 2.0 million (DKK 1.5 million in 2012).

Management’s long-term incentive programme

The shares allocated to the joint pool for 2010 (842,880 shares) were released to the individual participants subsequent to the
approval of the Annual Report 2013 by the Board of Directors and the announcement on 30 January 2014 of the full-year ﬁ nancial
results for 2013. Based on the share price at the end of 2013, the value of the released shares is as follows:

Value as at 31 December 2013 of shares released on 30 January 2014

Executive Management
Lars Rebien Sørensen
Jesper Brandgaard
Lars Fruergaard Jørgensen
Lise Kingo
Jakob Riis
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 2014 is based on the Novo Nordisk B share price of DKK 198.80 at the end of 2013.
2. In addition, 124,975 shares (market value: DKK 24.8 million) were released to retired members of the Senior Management Board.

Number
of shares

Market value1
(DKK million)

74,985
49,990
24,995
49,990
24,995
49,990
49,990

324,935

392,970

14.9
9.9
5.0
9.9
5.0
9.9
9.9

64.5

78.1

Lars Rebien Sørensen serves as a board member of Danmarks Nationalbank, from which he received remuneration of DKK 22,232 in 2013 (DKK 22,012 in 2012), as a member of
the Supervisory Board of Bertelsmann AG, from which he received remuneration of EUR 122,000 in 2013 (EUR 129,000 in 2012) and as a board member of Thermo Fisher Scientiﬁ c
Inc, from which he received remuneration of USD 314,786 in 2013 (USD 219,840 in 2012). Jesper Brandgaard serves as chairman of the Board of Directors of SimCorp A/S, from
which he received remuneration of DKK 871,068 in 2013 (DKK 801,846 in 2012). Kåre Schultz serves as a board member of LEGO A/S, from which he received remuneration of
DKK 350,000 in 2013 (DKK 300,000 in 2012). 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 2013 (DKK 625,000 in 2012). Mads Krogsgaard Thomsen serves as a board member of the University of Copenhagen, from which he received remuneration of
DKK 40,500 in 2013 (DKK 79,800 in 2012). Lise Kingo serves as a board member of Grieg Star Group AS from April 2013, from which she received remuneration of NOK 225,000.
Jakob Riis serves as a board member of ALK-Abelló A/S, from which he received remuneration of DKK 375,000 in 2013.

NOVO NORDISK ANNUAL REPORT 2013

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52 GOVERNANCE, LEADERSHIP AND SHARES

Board of Directors

Göran Ando (chair)

Jeppe Christiansen (vice chair)

Bruno Angelici

Formerly CEO of Celltech Group plc, UK (retired).
Member of the Board of Novo Nordisk A/S in
2005, vice chair since 2006, chair since 2013 and
chair of the Nomination Committee since 2013.
Management duties: Symphogen A/S,
Denmark (chair), member of the boards of Novo
A/S, Denmark, Molecular Partners AG,
Switzerland, Archimedes Pharma Ltd., UK, and
RAND Health, US. 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.

Chief executive officer of Fondsmæglerselskabet
Maj Invest A/S, Denmark. Vice chair of the Board
of Novo Nordisk A/S since 2013.
Management duties: Member of the boards
of Novo A/S, Haldor Topsøe A/S, KIRKBI A/S
and Symphogen A/S, all in Denmark.
Special competences: Extensive background
and experience within the financial sector, in
particular in relation to financial and capital
market issues, as well as insight into the investor
perspective.
Education: MSc in Economics (1985) from the
University of Copenhagen, Denmark.

Formerly executive vice president of AstraZeneca
(retired). Member of the Board of Novo Nordisk
A/S since 2011 and member of the Nomination
Committee since 2013.
Management duties: Member of the boards
of Smiths Group plc and Vectura Group plc, both
in the 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

Liz Hewitt

Ulrik Hjulmand-Lassen

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)
and Copenhagen Airports A/S (chair), both 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.

Formerly Group Director Corporate Affairs
of Smith & Nephew plc, UK (retired). Member
of the Board of Novo Nordisk A/S since 2012,
and member of the Audit Committee since 2012
and the Nomination Committee since 2013.
Management duties: Member of the board,
audit committee (chair), remuneration committee
and nomination committee of Synergy Health plc
and member of the board of Melrose Industries
plc, both in the UK. External member of the
audit committee of the House of Lords, UK.
Special competences: Extensive experience
within the field of medical devices, significant
financial knowledge and knowledge of how
large international companies operate.
Education: BSc (Econ) (Hons) (1977) from
University College London, UK, and FCA (UK
Institute of Chartered Accountants) (1982).

Advanced IT quality advisor in the IT QA Office.
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.

Name (male/female)

First elected

Göran Ando (m)
Jeppe Christiansen (m)
Bruno Angelici (m)
Henrik Gürtler (m)
Liz Hewitt (f)
Ulrik Hjulmand-Lassen3 (m)

2005
2013
2011
2005
2012
2010

Term

2014
2014
2014
2014
2014
2014

Nationality

Born

Swedish
Danish
French
Danish
British
Danish

March 1949
November 1959
April 1947
August 1953
November 1956
April 1962

Independence1

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

1. As designated by NASDAQ OMX Copenhagen in accordance with section 3.2.1 of Recommendations on Corporate Governance (2013). 2. Member of Management or the Board of Novo A/S.
3. Elected by employees of Novo Nordisk.

NOVO NORDISK ANNUAL REPORT 2013

GOVERNANCE, LEADERSHIP AND SHARES

Thomas Paul Koestler

Anne Marie Kverneland

Søren Thuesen Pedersen

Laboratory technician and full-time shop
steward. Member of the Board of Novo Nordisk
A/S since 2000 and member of the Nomination
Committee since 2013.
Education: Degree in Medical Laboratory
Technology (1980) from Copenhagen University
Hospital, Denmark.

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.

Executive with Vatera Holdings LLC, US. Member
of the Board of Novo Nordisk A/S since 2011.
Management duties: Melinta Therapeutics Inc.
(chair), US. Member of the boards of Momenta
Pharmaceuticals Inc., ImmusanT Inc. and Arisaph
Pharmaceuticals Inc., all in the US.
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.

Hannu Ryöppönen

Stig Strøbæk

Electrician and full-time shop steward. Member
of the Board of Novo Nordisk A/S since 1998
and member of the Audit Committee since 2013.
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).

Formerly CFO and deputy CEO of Stora Enso Oyj,
Finland (retired). Member of the Board of Novo
Nordisk A/S since 2009 and chair of the Audit
Committee 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. BillerudKorsnäs AB
(chair), Sweden. Member of the boards of Amer
Sports Oyj, Finland, and the private equity fund
Value Creation Investments Limited, Jersey,
Channel Islands. Chair 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 market 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.

Name (male/female)

First elected

Thomas Paul Koestler (m)
Anne Marie Kverneland3 (f)
Søren Thuesen Pedersen3 (m)
Hannu Ryöppönen (m)
Stig Strøbæk3 (m)

2011
2000
2006
2009
1998

Term

2014
2014
2014
2014
2014

Nationality

Born

American
Danish
Danish
Finnish
Danish

June 1951
July 1956
December 1964
March 1952
January 1964

Independence1

Independent
Not independent
Not independent
Independent4,5
Not independent

4. Mr Ryöppönen 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 2013

54 GOVERNANCE, LEADERSHIP AND SHARES

Executive Management

Lars Rebien Sørensen
President and chief executive officer*

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. He was appointed a
member of Corporate Management in May 1994,
and in December 1994 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.
Born: October 1954.

Kåre Schultz
Chief operating officer*

Jesper Brandgaard
Chief financial officer

Lars Fruergaard Jørgensen
Chief information officer

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: Chair of the board
of Royal Unibrew A/S and member of the board
of LEGO A/S, both in Denmark.
Born: May 1961.

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: Chair of the
boards of SimCorp A/S and NNIT A/S, both
in Denmark.
Born: October 1963.

Lars Fruergaard Jørgensen joined Novo Nordisk
in 1991 as an economist in Health Care,
Economy & Planning and has over the years
completed overseas postings in the US and
Japan. In 2004, he was appointed senior vice
president for IT & Corporate Development. In
January 2013, he was appointed executive vice
president and chief information officer, assuming
responsibility for IT, Quality & Corporate
Development.
Other management duties: Vice chair of the
board of NNE Pharmaplan A/S and member of
the board of NNIT A/S, both in Denmark.
Born: November 1966.

Lise Kingo
Chief of staffs

Jakob Riis
Executive vice president of Marketing
& Medical Affairs

Mads Krogsgaard Thomsen
Chief science officer

Lise Kingo joined Novo Industry A/S in 1988 and
worked over the years to build up the company’s
Triple Bottom Line business principle. In 1999,
she was appointed senior vice president,
Stakeholder Relations. In 2002, she was
appointed executive vice president and chief
of staffs, assuming global responsibility for
Corporate Relations. She is adjunct professor
at the Medical Faculty, Vrije Universiteit,
Amsterdam, the Netherlands.
Other management duties: Chair of the board
of Steno Diabetes Center A/S, Denmark, and
member of the board of Grieg Star Group AS,
Norway. Chair of the Danish Council for
Corporate Responsibility.
Born: August 1961.

Jakob Riis joined Novo Nordisk in 1996 as
a health economist. From 2001 to 2005, he
worked first in the US sales force and then as
head of marketing in Japan. In 2005, he was
appointed senior vice president for International
Marketing. In January 2013, he was appointed
executive vice president, assuming responsibility
for Marketing & Medical Affairs.
Other management duties: Chair of the board
of Copenhagen Institute of Interaction Design
and member of the board and audit committee
of ALK-Abelló A/S, both in Denmark.
Born: April 1966.

Mads Krogsgaard Thomsen joined Novo Nordisk
in 1991 as head of Growth Hormone Research.
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 has served as president of the
National Academy of Technical Sciences (ATV),
Denmark. He is 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.
Born: December 1960.

* Effective 30 January 2014, Kåre Schultz is appointed president and chief operating officer. Lars Rebien Sørensen continues as chief executive officer.

NOVO NORDISK ANNUAL REPORT 2013

Consolidated financial,
social and environmental
statements 2013

Consolidated financial statements

57
58
59
60

Income statement and Statement
of comprehensive income
Balance sheet
Statement of cash flows
Statement of changes in equity
Notes to the Consolidated financial statements

Consolidated social statement
(supplementary information)

95
96

Statement of social performance
Notes to the Consolidated social statement

Consolidated environmental statement
(supplementary information)

101
102

Statement of environmental performance
Notes to the Consolidated environmental
statement

As Novo Nordisk’s business continues to develop,
the company remains committed to documenting
its performance via its integrated reporting. The
Consolidated financial, social and environmental
statements are structured to increase focus on what
drives the company’s performance in accordance
with the Triple Bottom Line business principle.

Within each of the financial, social and environmental
statements, the notes are 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 reflected in
Novo Nordisk’s financial, 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.

Juan Jenny Li works as a
chemistry professional in Novo
Nordisk’s Research and
Development Centre in Beijing.

56 CONSOLIDATED FINANCIAL STATEMENTS

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

DKK million

Income statement

Net sales
Cost of goods sold

Gross proﬁ t

Sales and distribution costs
Research and development costs
Administrative costs
Licence income 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)1
Diluted earnings per share (DKK)1

Note

2013

2012

2011

2.1, 2.2
2.2, 2.3

83,572
14,140

78,026
13,465

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

69,432

64,561

23,380
11,733
3,508
682

21,544
10,897
3,312
666

31,493

29,474

4.7
4.7

1,702
656

125
1,788

66,346
12,589

53,757

19,004
9,628
3,245
494

22,374

514
963

32,539

27,811

21,925

2.4

7,355

6,379

4,828

25,184

21,432

17,097

4.1
4.1

9.40
9.35

7.82
7.77

6.05
6.00

DKK million

Note

2013

2012

2011

Statement of comprehensive income

Net proﬁ t for the year

25,184

21,432

17,097

Other comprehensive income:
Items that will not be reclassiﬁ ed subsequently to the Income statement:
Remeasurements of 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

3.7

(281)

–

(435)
(809)
1,195
75
(211)

(131)

(172)
1,182
849
35
(587)

1,026

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

(515)

2.4

Total comprehensive income for the year

25,053

22,458

16,582

1. Comparative ﬁ gures have been restated to reﬂ ect the change in trading unit from DKK 1 to DKK 0.20.

NOVO NORDISK ANNUAL REPORT 2013

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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

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

Note

2013

2012

3.1
3.2
2.4
4.6

3.3
3.4

3.5
4.2, 4.6
4.3
4.2, 4.4

4.1
4.1

2.4
3.7
3.6

4.6
4.6

3.8
4.3
3.6

1,615
21,882
4,231
551

28,279

9,552
10,907
3,155
2,454
3,741
1,521
10,728

42,058

1,495
21,539
2,244
228

25,506

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

40,163

70,337

65,669

550
(21)
41,137
903

560
(17)
39,001
1,088

42,569

40,632

672
688
2,183

3,543

215
4,092
2,222
9,386
–
8,310

732
760
1,907

3,399

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

24,225

27,768

21,638

25,037

70,337

65,669

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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 sale of other ﬁ nancial assets
Purchase of intangible assets and other ﬁ nancial assets
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Net sale/(purchase) of marketable securities

Net cash used in investing activities

Repayment of loans
Purchase of treasury shares, net
Dividends paid

Note

2013

2012

2011

5.3
4.5

2.4

3.1, 4.6

3.2

25,184

21,432

17,097

10,738
(265)
131
(39)
(9,807)

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

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

25,942

22,214

21,374

29
(406)
31
(3,238)
811

–
(250)
53
(3,372)
(501)

(2,773)

(4,070)

–
(259)
70
(3,073)
(197)

(3,459)

4.1
4.1

–
(13,924)
(9,715)

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

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

Net cash used in ﬁ nancing activities

(23,639)

(20,140)

(16,802)

Net cash generated from activities

(470)

(1,996)

1,113

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

11,053
(70)

13,057
(8)

11,960
(16)

Cash and cash equivalents at the end of the year

4.4

10,513

11,053

13,057

NOVO NORDISK ANNUAL REPORT 2013

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Statement of changes in equity
at 31 December

CONSOLIDATED FINANCIAL STATEMENTS

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

2013
Balance at the beginning of the year

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

Total comprehensive income for the year

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

2012
Balance at the beginning of the year

560

(17)

39,001

226

847

1,088

40,632

25,184
54

25,238

(9,715)
409
114
(13,974)
64

(15)
1
10

(435)

386

(136)

(185)

25,184
(131)

(136)

(185)

25,053

(9,715)
409
114
(13,989)
65
–

(21)

41,137

(209)

1,233

(121)

903

42,569

(10)

550

580

(24)

37,111

398

(1,184)

567

(219)

37,448

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

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

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

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 year

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

(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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60 CONSOLIDATED FINANCIAL STATEMENTS

Notes
Sections in the Consolidated ﬁ nancial statements
Section 1 Basis of preparation
Read this section to get an overview of the ﬁ nancial accounting policies in
general and an overview of Management’s key accounting estimates.

Section 4 Capital structure and ﬁ nancing items
Read this section to gain an insight into the capital structure, cash ﬂ ow and
ﬁ nancing items.

1.1 Summary of signiﬁ cant accounting policies, p 61
1.2 Summary of key accounting estimates, p 62
1.3 Changes in accounting policies and disclosures, p 62
1.4 General accounting policies, p 62

Section 2 Results for the year
Read this section to get more details on the results for the year, including
operating segments, taxes and employee costs.

2.1 Net sales and sales deductions, p 63
2.2 Segment information, p 65
2.3 Employee costs, p 68
2.4 Income and deferred income taxes, p 68

Section 3 Operating assets and liabilities
Read this section to get more details on the assets that form the basis for
the activities of Novo Nordisk, and the related liabilities.

3.1 Intangible assets, p 71
3.2 Property, plant and equipment, p 72
3.3 Inventories, p 73
3.4 Trade receivables, p 73
3.5 Other receivables and prepayments, p 74
3.6 Provisions and contingent liabilities, p 74
3.7 Retirement beneﬁ t obligations, p 76
3.8 Other liabilities, p 77

4.1 Share capital, distribution to shareholders and earnings per share, p 78
4.2 Financial risks, p 79
4.3 Derivative ﬁ nancial instruments, p 81
4.4 Cash and cash equivalents, ﬁ nancial resources and free cash ﬂ ow, p 83
4.5 Change in working capital, p 83
4.6 Financial assets and liabilities, p 84
4.7 Financial income and expenses, p 85

Section 5 Other disclosures
Read this section for more details on the statutory notes that have
secondary importance from the perspective of Novo Nordisk.

5.1 Share-based payment schemes, p 86
5.2 Management’s holdings of Novo Nordisk shares, p 88
5.3 Adjustments for non-cash items, p 89
5.4 Commitments, p 90
5.5 Related party transactions, p 91
5.6 Licence income and other operating income, net, 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 2013

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CONSOLIDATED FINANCIAL STATEMENTS

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 strives for early adoption of EU-endorsed IFRS accounting standards.

All entities in the Novo Nordisk Group follow the same Group accounting policies. This section gives a summary of the
signiﬁ cant accounting policies, Management’s key accounting estimates, new IFRS requirements and other accounting
policies in general. 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), in accordance with IFRS as endorsed by the European Union and also
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 derivative ﬁ nancial instruments, equity investments
and marketable securities measured at fair value.

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 each of the individual
notes to the Consolidated ﬁ nancial statements. Considering all the
accounting policies applied, Management regards the following as the most
signiﬁ cant accounting policies for the recognition and measurement of
reported amounts:

(cid:129) Net sales and sales deductions (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. To arrive at net sales, rebates and discounts
to retail customers, government agencies, wholesalers, health insurance
companies and managed healthcare organisations are deducted from
gross sales. These deductions include estimates of unsettled obligations,
requiring the use of judgement when estimating the effect of these sales
deductions on gross sales for a reporting period.

(cid:129) Research and development (note 3.1 and 3.2)

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 in a relevant major
market is obtained or highly probable. The same principles are applied
to plant and equipment with no alternative use developed as part of
a research and development project. However, plant and equipment with
alternative use or used for general research and development purposes is
capitalised and depreciated over its estimated useful life as research and
development costs.

For acquired in-process research and development projects, the

probability effect is reﬂ ected in the cost of the asset, and the probability
recognition criteria are therefore always considered satisﬁ ed. As the
cost of acquired in-process research and development projects can often
be measured reliably, these projects fulﬁ l the capitalisation criteria as
intangible assets upon acquisition. However, further internal development
costs subsequent to acquisition are treated in the same way as other
internal development costs.

(cid:129) Derivative ﬁ nancial instruments (note 4.3)

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 net proﬁ t 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 classify 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, GBP and CAD, net sales will be impacted by exchange rate
ﬂ uctuations whereas the impact of exchange rate ﬂ uctuations on Proﬁ t
before income taxes depends on the results of the hedging activities and
the development in non-hedged currencies.

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

(cid:129) Income taxes (note 2.4)
(cid:129) Property, plant and equipment including impairment (note 3.2)
(cid:129) Inventories (note 3.3)
(cid:129) Trade receivables and allowance for doubtful trade receivables (note 3.4)
(cid:129) Provisions for legal disputes (note 3.6).

Deﬁ ning materiality

The 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 Consolidated ﬁ nancial statements
or in the notes.

There are substantial disclosure requirements throughout IFRS.
Management 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.

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62 CONSOLIDATED FINANCIAL STATEMENTS

1.2 Summary of key accounting

estimates

The use of reasonable estimates is an essential part of the preparation
of the Consolidated ﬁ nancial statements. Given the uncertainties inherent
in Novo Nordisk’s 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 ows 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:

(cid:129) Sales deductions and provisions for sales rebates (notes 2.1 and 3.6)
(cid:129) Indirect production costs (note 3.3)
(cid:129) Allowance for doubtful trade receivables (note 3.4)
(cid:129) Income taxes (note 2.4)
(cid:129) 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.

1.3 Changes in accounting policies

and disclosures

Early adoption of new or amended IFRSs

With effect from 1 January 2013, Novo Nordisk has implemented the
new standards IFRS 10 ‘Consolidated Financial Statements’, IFRS 11 ‘Joint
Arrangements’ and IFRS 12 ‘Disclosure of Interests in Other Entities’.
These new standards have no material impact on the Consolidated ﬁ nancial
statements in 2013, nor is a signiﬁ cant impact expected on future periods.

Adoption of new or amended IFRSs

IAS 19R ‘Employee beneﬁ ts’ effective for annual periods beginning on or
after 1 July 2012 was early adopted in 2012. As retrospective application
of these changes only had an immaterial impact on each previous ﬁ nancial
year, Management fully adopted the revised standard in 2012 without
restating previous years’ comparative amounts and disclosures. Please refer
to note 3.7 for a detailed description of the accounting policy for retirement
beneﬁ t obligations.

Furthermore, amendment to IAS 1 ‘Presentation of ﬁ nancial statements’,
effective for annual periods beginning on or after 1 July 2012, was early
adopted in 2012 with no material impact on the Consolidated ﬁ nancial
statements. For a further description please refer to the Annual Report
2012.

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 or after 1 January 2013, it has been
assessed that the application of these new IFRSs has not had a material
impact on the Consolidated ﬁ nancial statements in 2013 and Management
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 standards are in general expected to
change current accounting regulation most signiﬁ cantly:

NOVO NORDISK ANNUAL REPORT 2013

(cid:129) IASB has issued IFRS 9 ‘Financial Instruments’, which awaits ﬁ nal effective
date and EU endorsement. IFRS 9 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.
Novo Nordisk has assessed the impact of the standard and determined
that it will not have any signiﬁ cant impact on the Consolidated ﬁ nancial
statements in its current wording.

(cid:129) IASB has issued re-exposure drafts on IAS 17 ‘Leasing’ and IAS 18

‘Revenue’. The revised IAS 18 is expected to have only immaterial impact
on the Consolidated ﬁ nancial statements. Depending on the wording of
the ﬁ nal standard, the change in lease accounting is expected to require
capitalisation of the majority of the Group’s operational lease contracts,
representing less than 10% of total assets, with a minor impact on the
Group’s assets, liabilities and ﬁ nancial ratios, and no signiﬁ cant impact on
net proﬁ t.

Changes in classiﬁ cation

With effect from 1 January 2013, Novo Nordisk has changed the
classiﬁ cation of uncertain tax positions. Previously these were presented
net as part of deferred tax liabilities. As of 2013 these are presented gross
as part of deferred tax assets, tax receivables and tax payables. Refer to
note 2.4 for further description.

1.4 General accounting

policies

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. Control
exists when Novo Nordisk own more than 50% of the voting rights or has
the power to govern the entity in some other way.

Where necessary, adjustments are made to the ﬁ nancial statements
of subsidiaries to bring their accounting policies into line with Novo Nordisk
group 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 balance sheet items, 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:

(cid:129) the translation of foreign subsidiaries’ net assets at the beginning of the

year at the exchange rates at the end of the reporting period

(cid:129) the translation of foreign subsidiaries’ statement of comprehensive

income from average exchange rates to exchange rates at the end of the
reporting period

(cid:129) the translation of non-current intra-Group receivables that are considered

to be an addition to net investments in subsidiaries.

These speciﬁ c exchange rate adjustments are recognised in Other
comprehensive income.

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Section 2
Results for the year

This section comprises notes related to the results for the year, including sales and sales deductions, segment

information, employee costs as well as details on income and deferred income taxes. Consequently the section provides
additional information related to performance against 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, a global commercial presence and innovative products drive Novo
Nordisk’s growth in sales. Over the last ﬁ ve years, growth in operating proﬁ t has been higher than sales growth, resulting
in an increasing operating margin. The gross margin expansion has primarily been driven by a positive product mix and
a favourable pricing development. The operating margin expansion has also been supported by a modest development
in administrative costs and economy of scale advantages within sales and marketing, whereas research and development
costs have been growing 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 ‘2013 performance and
2014 outlook’ on p 6 gives a detailed description of the results for the year.

2.1 Net sales and

sales deductions

Accounting policies

Revenue from goods sold is recognised when Novo Nordisk has transferred
the signiﬁ cant risks and rewards to the buyer, and the amount of revenue
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 recognised as a
reduction of gross sales to arrive at net sales. 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.

Overall sales performance

The sales performance for a ﬁ ve-year period is presented below in respect of business performance and geographical areas:

Financial performance

DKK million

Net sales
Modern insulins (insulin analogues)
Human insulins
Victoza®
Protein-related products
Oral antidiabetic products (OAD)

Diabetes care total

NovoSeven®
Norditropin®
Other biopharmaceuticals

Biopharmaceuticals total

2013

2012

2011

2010

2009

38,153
10,869
11,633
2,555
2,246

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

28,765
10,785
5,991
2,309
2,575

26,601
11,827
2,317
2,214
2,751

21,471
11,315
87
1,977
2,652

65,456

60,887

50,425

45,710

37,502

9,256
6,114
2,746

8,933
5,698
2,508

8,347
5,047
2,527

8,030
4,803
2,233

7,072
4,401
2,103

18,116

17,139

15,921

15,066

13,576

Net sales by business segment

83,572

78,026

66,346

60,776

51,078

North America
Europe
International Operations
Japan & Korea
Region China

39,024
20,063
12,007
5,317
7,161

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

26,586
19,168
9,367
6,223
5,002

23,609
18,664
8,335
5,660
4,508

18,279
17,540
6,835
4,888
3,536

Net sales by geographical segment

83,572

78,026

66,346

60,776

51,078

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64 CONSOLIDATED FINANCIAL STATEMENTS

2.1 Net sales and sales deductions

(continued)

Key accounting estimates – Sales deductions

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. As such, 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.

US Medicaid and Medicare rebates
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 also involves
interpretation of relevant regulations that are subject to changes in
interpretative guidance from 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.

US managed healthcare rebates
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. 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 adjusts the provision periodically to reﬂ ect actual
sales performance.

US wholesaler charge-backs
Wholesaler charge-backs relate to contractual arrangements between
Novo Nordisk and indirect customers 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 10 to 30 days of the liability being
incurred.

Discounts, sales returns and other rebates
Other discounts are provided to wholesalers, hospitals, pharmacies etc,
and are usually linked to sales volume or provided as cash discounts. Sales
returns are related to damaged or expired products. Accruals are calculated
based on historical data, and recorded as a reduction in gross sales at the
time the related sales are recorded.

Arrangements with certain healthcare providers may require Novo Nordisk
to make refunds to the healthcare providers if anticipated treatment
outcomes do not meet predeﬁ ned targets.

Gross-to-net sales reconciliation

DKK million

Gross sales

2013

2012

2011

115,906

103,948

84,386

US Medicaid and Medicare rebates
US managed healthcare rebates
US wholesaler charge-backs
US discounts and sales returns
Non-US rebates, discounts and
sales returns

(9,959)
(5,481)
(10,126)
(2,978)

(7,519)
(4,390)
(8,196)
(2,620)

(5,075)
(2,551)
(5,894)
(1,886)

(3,790)

(3,197)

(2,634)

Total gross-to-net sales adjustments

(32,334)

(25,922)

(18,040)

Net sales

83,572

78,026

66,346

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

NOVO NORDISK ANNUAL REPORT 2013

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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.

CONSOLIDATED FINANCIAL STATEMENTS

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 at Group level 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 income and other
operating income has been allocated to the two segments based on the
same principle. Segment assets comprise the assets that are applied directly
to the activities of the segment, including intangible assets, property, plant
and equipment, other 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)

2013

2012

2011

2013

2012

2011

2013

2012

2011

Diabetes care

Biopharmaceuticals

Total

16,848
9,759
11,546
38,153
10,869
11,633
2,555
2,246

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

Diabetes care total sales

65,456

60,887

50,425

NovoSeven®
Norditropin®
Other products

Biopharmaceuticals total sales

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

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

Depreciation, amortisation and
impairment losses expensed
Additions to Intangible assets
and Property, plant and equipment

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

9,256
6,114
2,746

8,933
5,698
2,508

8,347
5,047
2,527

18,116

17,139

15,921

65,456
7.5%
12.0%

11,909
20,584
7,786
2,767

510
22,920
35.0%

60,887
20.7%
14.5%

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

464
21,096
34.6%

50,425
10.3%
12.6%

10,762
16,476
6,402
2,485

285
14,585
28.9%

18,116
5.7%
11.5%

2,231
2,796
3,947
741

172
8,573
47.3%

17,139
7.7%
2.4%

2,030
2,650
3,575
708

202
8,378
48.9%

15,921
5.7%
7.6%

1,827
2,528
3,226
760

209
7,789
48.9%

83,572
7.1%
11.9%

14,140
23,380
11,733
3,508

682
31,493
37.7%

78,026
17.6%
11.6%

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

666
29,474
37.8%

66,346
9.2%
11.4%

12,589
19,004
9,628
3,245

494
22,374
33.7%

2,209

2,167

2,051

2,651

2,800

2,654

590

990

526

770

686

678

2,799

2,693

2,737

3,641

3,570

3,332

36,436

36,030

34,853

10,525

9,119

8,998

46,961

45,149

43,851

23,376
70,337

20,520
65,669

20,847
64,698

1. The part of total assets that remains unallocated to either of the two business segments includes Cash at bank and on hand, Marketable securities, Derivative ﬁ nancial instruments

deferred tax assets and tax receivables.

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NOVO NORDISK ANNUAL REPORT 2013

66 CONSOLIDATED FINANCIAL STATEMENTS

2.2 Segment information

(continued)

Information about geographical areas

Novo Nordisk operates in ﬁ ve geographical regions:

(cid:129) North America: the US and Canada
(cid:129) Europe: the EU, EFTA, Albania, Bosnia-Hercegovina, Macedonia, Serbia,

Montenegro and Kosovo

(cid:129) Japan & Korea: Japan and Korea
(cid:129) Region China: China, Hong Kong and Taiwan
(cid:129) International Operations: all other countries.

Geographical areas

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

Sales are attributed to geographical regions according to the location of the
customer. Allocation of property, plant and equipment, trade receivables,
allowance 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 to Novo Nordisk’s activities in terms of geographical
size and the operational business segments. More than 99.4% of total
sales are realised outside Denmark. Sales to external customers attributed
to the US are collectively the most material to the Group. 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.

For patent expiry in key markets, please refer to note 2.5 in the social
statements, where the various marketed products are listed.

2013

2012

2011

2013

2012

2011

North America

Europe

9,953
2,694
6,823
19,470
1,976
7,537
1,590

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

3,819
2,450
2,909
9,178
2,427
2,896
885

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

30,573

26,698

19,916

15,386

15,118

14,526

4,459
2,273
1,719

4,397
1,721
1,404

3,951
1,394
1,325

2,294
1,729
654

2,206
1,741
642

2,310
1,705
627

8,451

7,522

6,670

4,677

4,589

4,642

Total sales by business and geographical segment

39,024

34,220

26,586

20,063

19,707

19,168

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

17.8%
(3.8%)

19.2%
9.5%

17.9%
(5.3%)

2.5%
(0.7%)

2.0%
0.8%

2.4%
0.3%

Total sales growth as reported

14.0%

28.7%

12.6%

1.8%

2.8%

2.7%

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 nition.

1,571
3,076
(20)
7,057

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

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

16,801
3,779
(245)
51,205

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

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

NOVO NORDISK ANNUAL REPORT 2013

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2.2 Segment information

(continued)

Geographical areas

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

CONSOLIDATED FINANCIAL STATEMENTS

2013

2012

2011

2013

2012

2011

International Operations

Japan & Korea

1,639
1,875
1,290
4,804
2,954
741
692

9,191

1,716
853
247

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

951
789
288
2,028
490
331
471

3,320

629
1,246
122

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

2,816

2,540

2,357

1,997

2,312

2,116

Total sales by business and geographical segment

12,007

11,080

9,367

5,317

6,617

6,223

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

17.0%
(8.6%)

16.2%
2.1%

17.1%
(4.7%)

(0.1%)
(19.5%)

(1.5%)
7.8%

Total sales growth as reported

8.4%

18.3%

12.4%

(19.6%)

6.3%

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

1,292
2,196
(716)
5,945

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

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

140
269
(8)
1,022

174
335
(3)
989

5.1%
4.8%

9.9%

207
377
(2)
1,388

DKK million

2013

2012

2011

2013

2012

2011

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 sum of the ﬁ ve regions

486
1,951
236
2,673
3,022
128
1,163

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

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

16,848
9,759
11,546
38,153
10,869
11,633
4,801

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

6,986

6,226

4,866

65,456

60,887

50,425

158
13
4

175

158
14
4

176

119
12
5

9,256
6,114
2,746

8,933
5,698
2,508

8,347
5,047
2,527

136

18,116

17,139

15,921

Total sales by business and geographical segment

7,161

6,402

5,002

83,572

78,026

66,346

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

12.7%
(0.8%)

16.3%
11.7%

11.7%
(0.7%)

11.9%
(4.8%)

11.6%
6.0%

11.4%
(2.2%)

Total sales growth as reported

11.9%

28.0%

11.0%

7.1%

17.6%

9.2%

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 nition.

2,078
1,587
0
5,108

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

2,042
1,187
0
4,224

21,882
10,907
(989)
70,337

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

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

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NOVO NORDISK ANNUAL REPORT 2013

68 CONSOLIDATED FINANCIAL STATEMENTS

2.3 Employee

costs

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.

Employee costs

DKK million

2013

2012

2011

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

19,077
409
1,428

17,301
308
1,302

16,127
319
1,155

113
1,489
1,891

150
1,358
1,779

(2)
1,189
1,491

Total employee costs for the year

24,407

22,198

20,279

Employee costs included
in property, plant and equipment1
Change in employee costs included
in inventories

(772)

(533)

(496)

2.4 Income and deferred

income taxes

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 and changes in provision for uncertain tax
positions. Tax is recognised in the Income statement, except to the extent
that it relates to items recognised in Other comprehensive income.

Following developments in ongoing tax disputes primarily related to
transfer pricing cases, uncertain tax positions previously presented net as
part of deferred tax liabilities are as of 2013 presented individually as part
of deferred tax assets, tax receivables and tax payables. As retrospective
application of this change in classiﬁ cation would have only an immaterial
impact on comparative amounts, Novo Nordisk has applied the
reclassiﬁ cation in 2013 without restating previous years’ comparative
amounts and disclosures. Had comparative amounts been restated for
2012, deferred tax liabilities would decrease by DKK 716 million,
deferred tax assets increase by DKK 614 million, tax receivables increase
by DKK 425 million and tax payables increase by DKK 1,755 million.
In 2013 uncertain tax positions of DKK 1,705 million is presented as
DKK 760 million in deferred tax assets, DKK 2,317 million in tax receivables
and DKK 1,372 million in tax payables.

(29)

(70)

(37)

Key accounting estimate – Income taxes

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. In the course of
conducting business globally, transfer pricing disputes with tax authorities
may occur, and Management judgement is applied to assess the possible
outcome of such disputes. Novo Nordisk believes that the provision made
for uncertain tax positions not yet settled with local tax authorities is
adequate. However, the actual obligation may deviate and is dependent on
the result of litigations and settlements with the relevant tax authorities.

Total employee costs

23,606

21,595

19,746

Included in the Income statement:
Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative costs
Licence income and other operating
income, net

5,160
9,831
4,680
2,250

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

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

1,685

1,681

1,510

Total employee costs

23,606

21,595

19,746

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

which subsequently will be included in depreciation and impairment losses.

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

36,144
37,978

33,061
34,286

31,499
32,136

Remuneration to Executive Management and
Board of Directors

DKK million

2013

2012

2011

Salary and cash-based incentive
Pension
Other beneﬁ ts

Executive Management in total1

Fee to Board of Directors2

58
15
2

37
9
1

35
9
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.
2. Excluding social security taxes paid amounting to less than DKK 1 million (less than

DKK 1 million in 2012).

NOVO NORDISK ANNUAL REPORT 2013

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2.4 Income and deferred income taxes

(continued)

Deferred income taxes

Accounting policies

CONSOLIDATED FINANCIAL STATEMENTS

Income taxes expensed

DKK million

2013

2012

2011

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

8,540
(682)

6,001
645

4,534
257

Tax on proﬁ t for the year
Adjustments recognised for
current tax of prior periods
Adjustments recognised for
deferred tax of prior periods

Income taxes in the
Income statement

7,858

6,646

4,791

(74)

4,042

277

(429)

(4,309)

(240)

Adjustments recognised for prior periods include adjustments caused by
events that occurred in the current year related to current and deferred tax
of prior periods. Such adjustments predominantly arise from tax payments
on tax disputes related to transfer pricing and reversal of associated tax
liability recognised in prior periods.

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. No provision is made for income
taxes that would be payable upon the distribution of unremitted earnings
unless a concrete distribution of earnings is planned.

Development in deferred income tax assets
and liabilities

At the beginning of the year
Reclassiﬁ cation to Tax receivables/Tax payables
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

1,512
1,330
–
682
429

(259)
(135)

(792)
–
(739)
(645)
4,309

(575)
(46)

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)
Effect on deferred tax related to
change in the Danish corporate tax rate
Other

25.0%

Total deferred tax assets/(liabilities), net

3,559

1,512

(2.0%)

(2.1%)

(3.0%)

–

0.1%

(0.2%)

(0.3%)
(0.1%)

–
(0.1%)

–
0.2%

7,355

6,379

4,828

DKK million

2013

2012

Effective tax rate

22.6%

22.9%

22.0%

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

211

587

(190)

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 inventories. This is
offset by DKK 48 million (DKK 12 million in 2012) recognised as current tax
in Other comprehensive income in 2013.

Income taxes paid

DKK million

2013

2012

2011

Income taxes paid in Denmark
Income taxes paid outside Denmark

7,363
2,444

7,895
2,996

2,825
2,566

Total income taxes paid

9,807

10,891

5,391

The income taxes of DKK 7,363 million paid in Denmark in 2013
(DKK 7,895 million in 2012) include adjustments arising from ongoing tax
disputes primarily related to transfer pricing from prior periods.

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70 CONSOLIDATED FINANCIAL STATEMENTS

2.4 Income and deferred income taxes

(continued)

Development in deferred income tax assets and liabilities

DKK million

2013
Net deferred tax asset/(liability) at 1 January
Reclassiﬁ cation to Tax receivables/Tax payables
Income/(charge) to the Income statement1
Income/(charge) to Other comprehensive income
Exchange rate adjustment

Property,
plant and
equipment

Intangible
assets

Inventories

Tax-loss
carry-
forward

(997)

133

1,336

141

(44)

(25)

593
(168)
–

1,761

Net deferred tax asset/(liability) at 31 December

(853)

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

109
(962)

378
(314)

2,637
(876)

1. Including effect related to change in the Danish corporate tax rate.

(1,060)

244

1,599

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

176
(1,173)

(106)

(5)

133

436
(303)

(185)
(78)
–

1,336

2,560
(1,224)

Offset
within
countries

–

Other

974
1,330
428
(91)
(108)

2,533

3,567
(1,034)

(2,514)
2,514

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

974

–

1,421
(447)

(2,415)
2,415

Total

1,512
1,330
1,111
(259)
(135)

3,559

4,231
(672)

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

1,512

2,244
(732)

(7)

(5)

54
–

(17)

(4)

66
–

Further to the above, the tax value of the tax-loss carry-forward of DKK 182 million (DKK 208 million in 2012) has not been recognised in the Balance
sheet due to the likelihood that the tax losses will not be realised in the future. None of the unrecognised tax-loss carry-forward expires within one year.
DKK 8 million expires within two to ﬁ ve years and DKK 174 million after more than ﬁ ve years.

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Section 3
Operating assets and liabilities

CONSOLIDATED FINANCIAL STATEMENTS

This section presents details on 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 generates 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 based
on the straight-line method over the estimated useful life, which is the
shorter of the legal duration and the economic useful life not exceeding
10 years. 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, ie a signiﬁ cant business system where the
expenditure leads to the creation of a durable asset. Amortisation is based
on the straight-line method over the estimated useful life of 3 –10 years.
The amortisation begins when the asset 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 but 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:

(cid:129) Development of a competing drug
(cid:129) Changes in the legal framework covering patents, rights and licences
(cid:129) Advances in medicine and/or technology that affect the medical

treatments

(cid:129) Lower-than-predicted sales
(cid:129) Adverse impact on reputation and/or brand names
(cid:129) Changes in the economic lives of similar assets
(cid:129) Relationship with other intangible assets or property, plant and

equipment

(cid:129) 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

2013

2012

2,712
403
–
(16)

2,538
198
(18)
(6)

3,099

2,712

1,217
166
113

1,049
160
32

–
(12)

(18)
(6)

1,484

1,217

Carrying amount at the end of the year

1,615

1,495

Speciﬁ ed as:
Patents and licences
Internally developed software and software
under development

Total

810

805

762

733

1,615

1,495

Intangible assets not yet in use amount to DKK 831 million (DKK 669 million
in 2012), primarily patents and licences in relation to development projects.

In 2013, an impairment loss of DKK 113 million (DKK 32 million in 2012)
related to patents has been recognised due to discontinuation of
development projects. Impairment tests in 2013 and 2012 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

2013

2012

2011

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

97
41
126

81
50
47

47
35
139

Total amortisation and
impairment losses

279

192

232

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72 CONSOLIDATED FINANCIAL STATEMENTS

3.2 Property, plant

and equipment

Accounting policies

Property, plant and equipment is measured at historical cost less accumulated depreciation and any impairment loss. The cost of self-constructed assets
includes costs directly and indirectly attributable to the construction of the assets. Subsequent cost is included in the asset’s carrying amount or recognised
as a separate asset 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 interest on loans is capitalised as part of the cost.
Depreciation is based on the straight-line method over the estimated useful lives of the assets:

(cid:129) Buildings: 12 – 50 years
(cid:129) Plant and machinery: 5 –16 years
(cid:129) Other equipment: 3 –10 years
(cid:129) 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

2013
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

15,345
521
(195)
804
(291)

18,022
581
(655)
1,283
(267)

3,359
230
(259)
186
(59)

5,878
1,906
–
(2,273)
(79)

Total

42,604
3,238
(1,109)
0
(696)

16,184

18,964

3,457

5,432

44,037

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

5,881
688
4
(192)
(114)

12,975
1,464
22
(643)
(204)

2,209
337
5
(243)
(34)

Depreciation and impairment losses at the end of the year

6,267

13,614

2,274

–
–
–
–
–

–

21,065
2,489
31
(1,078)
(352)

22,155

Carrying amount at the end of the year

9,917

5,350

1,183

5,432

21,882

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

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)

40,340
3,372
(748)
–
(360)

15,345

18,022

3,359

5,878

42,604

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

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3.2 Property, plant and equipment

(continued)

Depreciation and impairment losses

DKK million

2013

2012

2011

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

1,984
37
340
59

1,909
46
416
53

1,833
60
494
58

100

Total depreciation and
impairment losses

2,520

2,501

2,505

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. Production costs for work in progress and
ﬁ nished goods include indirect production costs such as employee costs,
depreciation, maintenance etc.

If the expected sales price less completion costs to execute sales (net
realisable value) is lower than the carrying amount, a write-down is
recognised for the amount by which the carrying amount exceeds its net
realisable value.

Inventory manufactured prior to regulatory approval (pre-launch inventory)
is capitalised but immediately 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 research and development 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

Indirect production costs account for more than 50% of the net inventory
value reﬂ ecting a lengthy production process compared with low direct
raw material cost. The production of both diabetes care and biopharma
products is highly complex from fermentation to puriﬁ cation and
formulation, including quality control of all production processes. Further-
more, the process is very sensitive to manufacturing conditions. These
factors all inﬂ uence the parameters for capitalisation of indirect production
costs in Novo Nordisk and full cost of the products. Indirect production
costs is measured using a standard cost method, which is reviewed regularly
to ensure relevant measures of capacity utilisation, production lead time,
cost base and other relevant factors. When calculating total inventory,
Management must make certain judgements about cost of production and
idle capacity when estimating indirect production costs for capitalisation.
Changes in the parameters for calculation of indirect production costs could
have an impact on the gross margin and the overall valuation of inventories.

CONSOLIDATED FINANCIAL STATEMENTS

Inventories

DKK million

Raw materials
Work in progress
Finished goods

Total inventories (gross)

Inventory write-downs at year-end

Total inventories (net)

Carrying amount of inventory carried
at net realisable value

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

2013

2012

1,660
6,227
2,625

1,512
4,910
3,985

10,512

10,407

960

864

9,552

9,543

4,834
51%

4,894
51%

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

864
465
(156)
(213)

815
845
(532)
(264)

Inventory write-downs at the end of the year

960

864

3.4 Trade

receivables

Accounting policies

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

The allowance 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. Subsequent recoveries of amounts previously
written off are credited against Sales and distribution costs.

Key accounting estimate –

Allowance for doubtful trade receivables

The customer base of Novo Nordisk comprises government agencies,
wholesalers, retail pharmacies, managed care and other customers.
Management makes allowance 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, an additional allowance 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
and payment history, current economic trends and changes in customer
payment terms. Please refer to note 4.2 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
allowance for doubtful trade receivables.

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74 CONSOLIDATED FINANCIAL STATEMENTS

3.4 Trade receivables

(continued)

Trade receivables

DKK million

Trade receivables (gross)
Allowance for doubtful trade receivables

Trade receivables (net)

Trade receivables (net) are equal to an average
credit period of 48 days (45 days in 2012).

Age analysis of trade receivables
Non-impaired trade receivables
– Not yet due
– Overdue by between 1 and 179 days
– Overdue by between 180 and 360 days
– Overdue by more than 360 days

2013

2012

11,896
989

10,663
1,024

10,907

9,639

9,985
844
78
0

8,950
629
60
0

Trade receivables with credit risk exposure

10,907

9,639

Allowance for doubtful trade receivables

989

1,024

Trade receivables (gross)

11,896

10,663

Movement in allowance for
doubtful trade receivables
Carrying amount at the beginning of the year
Conﬁ rmed losses
Reversal of allowance for conﬁ rmed losses
Allowance for possible losses during the year
Effect of exchange rate adjustment

1,024
(8)
(10)
51
(68)

892
(35)
(13)
189
(9)

Allowance at the end of the year

989

1,024

3.5 Other receivables and

prepayments

Accounting policies

Other receivables and prepayments is 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 relate to ongoing research and
development activities such as clinical trials and costs concerning
subsequent ﬁ nancial years.

Other receivables and prepayments

DKK million

Prepayments
Interest receivable
Amounts owed by related parties
Deposit
VAT receivable
Other receivables

2013

2012

1,110
75
141
232
197
699

1,033
87
184
524
185
692

Total other receivables and prepayments

2,454

2,705

3.6 Provisions and contingent

liabilities

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. Provisions are calculated based on the 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.

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.

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 ﬁ nancial expense.

Key accounting estimate – Provisions for sales rebates

Novo Nordisk records provisions for expected sales rebates, wholesaler
charge-backs and other rebates, including Medicaid and Medicare in
the US.

Such estimates are based on analyses of existing contractual or legal
obligations, historical trends and the Group’s experience. Provisions are
calculated on the basis of a percentage of sales for each product as deﬁ ned
by the contracts with the various customer groups.

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 provisions.

Novo Nordisk considers the provisions 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 provision 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

3.6 Provisions and contingent liabilities

(continued)

Provisions

DKK million

Provisions
for sales
rebates

Provisions
for legal
disputes

Provisions
for product
returns

Other
provisions1

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

7,352
16,277
(15,069)
(289)
(321)

1,057
206
(3)
(54)
(55)

At the end of the year

Non-current liabilities
Current liabilities

7,950

1,151

–
7,950

1,151
–

582
298
(335)
138
(2)

681

409
272

572
297
(86)
(62)
(10)

711

623
88

2013
Total

9,563
17,078
(15,493)
(267)
(388)

2012
Total

8,264
13,419
(11,255)
(768)
(97)

10,493

9,563

2,183
8,310

1,907
7,656

1. Other provisions consist of various types of provisions, including employee beneﬁ ts such as jubilee beneﬁ ts, company-owned life insurance etc. Assets related to company-owned

life insurance are presented as part of other ﬁ nancial assets.

Contingent liabilities

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 and 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 as provision for legal disputes.

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 2 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,
one individual (compared with 45 individuals in 2012) 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. On 8 October 2013
a hearing was conducted for ﬁ nal conclusions. On 8 January 2014 the trial
court dismissed the case against Novo Nordisk. Menarini has the right to appeal
the decision of the trial court. 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.

In August 2013, a number of claims alleging pancreatic cancer and
pancreatitis have been ﬁ led against various incretin-class manufactures in
U.S. courts, including Novo Nordisk. Novo Nordisk is currently named in
34 product liability cases related to Victoza®, predominantly related to
pancreatic cancer. On 26 August 2013, the request for centralisation of all
federal pancreatic cancer cases has been granted, and a single multidistrict
litigation (MDL) court is now presiding over all federal cases. 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.

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 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 civil and criminal offences
relating to the company’s marketing and promotional 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. Following brieﬁ ng and oral argument,
the US Court of Appeals for the Federal Circuit reversed the District Court
ﬁ nding of patent unenforceability and afﬁ rmed the patent invalidity
decision. Novo Nordisk’s request for rehearing en banc of the invalidity
afﬁ rmance was denied on 18 September 2013.

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NOVO NORDISK ANNUAL REPORT 2013

76 CONSOLIDATED FINANCIAL STATEMENTS

3.6 Provisions and contingent liabilities

(continued)

3.7 Retirement beneﬁ t

obligations

Novo Nordisk has been involved in patent infringement litigation with
three additional ANDA applicants for generic versions of Prandin®: Paddock
Laboratories, Aurobindo Pharma Ltd. and Sandoz Inc., and ANDA applicant
Lupin Ltd. for PrandiMet®. Following the 18 September US Court of
Appeals for the Federal Circuit denial of Novo Nordisk’s en banc request,
the cases are concluding.

Also 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®.

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.

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. 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 comprehensive
income in the period in which they arise. 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.

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.

The net obligation recognised in the Balance sheet is reported as
non-current liabilities.

Retirement beneﬁ t obligations

DKK million

Germany

Switzerland

Japan

At the beginning of the year
Current service costs
Settlements
Interest costs
Remeasurement (gains)/losses1
Plan participant contributions etc
Beneﬁ ts paid
Exchange rate adjustment

At the end of the year

Fair value of plan assets

At the beginning of the year
Interest income
Settlements
Remeasurement gains/(losses)
Employer contributions
Plan participant contributions etc
Beneﬁ ts paid to employees
Exchange rate adjustment

At the end of the year

476
20
–
18
9
–
(4)
–

519

388
15
–
(8)
21
2
(4)
–

414

319
35
(120)
5
(17)
11
(15)
(5)

213

219
4
(90)
–
28
11
(15)
(3)

154

336
29
–
5
5
–
(14)
(73)

288

229
2
–
30
24
–
(14)
(50)

221

294
23
–
10
(23)
–
(6)
(13)

285

–
–
–
–
6
–
(6)
–

–

Other

239
22
(7)
6
(7)
5
(13)
(6)

239

68
2
(2)
(1)
10
5
(13)
(2)

2013
Total

1,664
129
(127)
44
(33)
16
(52)
(97)

2012
Total

1,363
132
–
47
223
19
(80)
(40)

1,5442

1,6642

904
23
(92)
21
89
18
(52)
(55)

856

859
31
–
7
93
17
(80)
(23)

904

Net retirement beneﬁ t obligations
at the end of the year

105

285

172

688

760

1. Remeasurement relates primarily to change in ﬁ nancial assumptions.
2. Present value of partly funded retirement beneﬁ t obligations amounts to DKK 1,115 million (DKK 1,229 million in 2012). Present value of unfunded retirement beneﬁ t obligations

amounts to DKK 429 million (DKK 435 million in 2012).

NOVO NORDISK ANNUAL REPORT 2013

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3.7 Retirement beneﬁ t obligations

(continued)

Net retirement beneﬁ t obligations

DKK million

2013

2012

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

At the end of the year

760
113

(54)

(42)
(89)

688

439
150

281

(17)
(93)

760

1. Service costs, net interest, settlements and other.
2. 2012 includes effect of change in accounting policy amounting to DKK 65 million

related to prior periods.

3. 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

DKK
million

584
78
167
17
10

2013

68%
9%
20%
2%
1%

DKK
million

607
67
214
9
7

2012

67%
7%
24%
1%
1%

Coverage insurance1
Equities
Bonds
Cash at bank
Property

Total

856

100%

904

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.

CONSOLIDATED FINANCIAL STATEMENTS

Assumptions used for valuation

Discount rate
Projected future remuneration increases
Medical cost trend rate
Inﬂ ation rate

2013

2012

Weighted Weighted
average

average

3%
2%
4%
2%

3%
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

(216)
62

274
(54)

The sensitivities above consider the single change shown with the other
assumptions assumed to be unchanged. In practice, changes in one
assumption may be accompanied by offsetting changes in another
assumption (although this is not always the case).

3.8 Other

liabilities

Other liabilities

DKK million

Employee costs payable
Accruals
VAT and duties payable
R&D clinical trials
Other payables1

Total other liabilities

1. Primarily relates to royalty payments and deferred income.

2013

2012

3,962
3,685
761
410
568

3,748
3,697
703
229
605

9,386

8,982

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NOVO NORDISK ANNUAL REPORT 2013

78 CONSOLIDATED FINANCIAL STATEMENTS

Section 4
Capital structure and ﬁ nancing items

The notes in this section provide an insight into the capital structure, free cash ﬂ ow and ﬁ nancing items. The free
cash ﬂ ow impacts Novo Nordisk’s long-term target for ‘Cash to earnings’. Further information on the company’s capital
structure can be found in ‘Shares and capital structure’ on pp 44 – 45.

Novo Nordisk’s capital structure is characterised by a substantial equity ratio. This reﬂ ects the long-term investment
horizon that is generally applied in the pharmaceutical industry, where a development time of more than ten years is
usual. The main ﬁ nancial risk is foreign exchange exposure, where Novo Nordisk aims to reduce the short-term impact
from the movement in key currencies by hedging future cash ﬂ ows.

4.1 Share capital, distribution to shareholders

and earnings per share

Share capital

DKK million

Development in share capital:
2009
2010
2011
2012

At the beginning of the year

2013

At the end of the year

A share
capital

B share
capital

Total share
capital

107
–
–
–

107

–

107

513
(20)
(20)
(20)

453

(10)

443

620
(20)
(20)
(20)

560

(10)

550

With effect 2 January 2014 a stock split of the company’s B shares was conducted changing the trading unit from DKK 1 to DKK 0.20. At the end of 2013,
the share capital amounted to DKK 107 million in A share capital and DKK 443 million in B share capital (equal to 2,213 million B shares of DKK 0.20).

Treasury shares

Accounting policies

Treasury shares are deducted from the share capital at their nominal value of DKK 0.20 per share. Differences between this amount and the amount paid to
acquire or received for disposing of treasury shares are deducted directly in equity.

Holding at the beginning of the year
Cancellation of treasury shares

Holding of treasury shares, adjusted for cancellation
Transfer regarding options and restricted stock units
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

3.1%
(1.8%)

1.3%

15,962
(9,165)

6,797
(618)
13,989
(65)
343

20,446

1.3%
(0.1%)
2.7%
(0.2%)

3.7%

2013

Number of
B shares
of DKK 0.20
(million)

2012

Number of
B shares
of DKK 0.20
(million)

871
(50)

37
(3)
73
(4)
–

103

1221
(100)

22
(4)
73
(4)
–

1. Comparative ﬁ gures have been restated to reﬂ ect the change in trading unit from DKK 1 to DKK 0.20.

The purchase of treasury shares during the year relates to the remaining part of the 2012 share repurchase programme totalling DKK 1.0 billion and the
DKK 14 billion share repurchase programme of Novo Nordisk B shares for 2013 of which DKK 1 billion remains at year-end. The programme ends on
28 January 2014. The purpose of the programmes is to reduce the company’s share capital. Transfer of treasury shares relates to exercised share options,
long-term share-based incentive programme and employee share-savings programmes.

At year-end the holding of treasury shares amounts to 102,852,025 shares corresponding to DKK 21 million of the share capital (87,083,380 shares in
2012 or DKK 17 million of the share capital). At year-end 13.3 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.

NOVO NORDISK ANNUAL REPORT 2013

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4.1 Share capital, distribution to shareholders

and earnings per share (continued)

Net cash distribution to shareholders

DKK million

Dividends
Share repurchases

Total

CONSOLIDATED FINANCIAL STATEMENTS

2013

2012

2011

9,715
13,924

7,742
11,896

5,700
10,595

23,639

19,638

16,295

At the end of 2013, proposed dividends (not yet declared) of DKK 11,866 million (DKK 4.50 per share) are included in Retained earnings.
The declared dividend included in Retained earnings was DKK 9,715 million (DKK 3.60 per share) in 2012 and DKK 7,742 million (DKK 2.80 per share)
in 2011. No dividend is declared on treasury shares.

Earnings per share

Accounting policies

Earnings per share is presented as both basic 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 outstanding share bonus pool and 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 would have been transferred assuming the exercise of the share options and share bonus pool.
2) the number of shares that could have been acquired at fair value with proceeds from 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

2013

2012

2011

25,184

21,432

17,097

Average number of shares outstanding1
Dilutive effect of outstanding share bonus pool and options ‘in the money’1, 2

in 1,000 shares
in 1,000 shares

2,679,362
14,263

2,741,690
16,650

2,827,165
23,495

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

in 1,000 shares

2,693,625

2,758,340

2,850,660

Basic earnings per share1
Diluted earnings per share1

DKK
DKK

9.40
9.35

7.82
7.77

6.05
6.00

1. Comparative ﬁ gures have been restated to reﬂ ect the change in trading unit from DKK 1 to DKK 0.20.
2. For further information on outstanding share bonus pool and options, refer to note 5.1.

4.2 Financial

risks

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 overall objective of foreign exchange risk management is to reduce 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.

The majority of Novo Nordisk’s sales are in EUR, USD, JPY, CNY, GBP and
CAD. Consequently, Novo Nordisk’s foreign exchange risk is most
signiﬁ cant in USD, JPY, CNY, GBP and CAD, while the EUR exchange rate
risk is regarded as low due to Denmark’s ﬁ xed-rate policy towards EUR.

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 2013, the hedging horizon varied between 8 and 14 months for
USD, JPY, CNY, GBP and CAD. 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.

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NOVO NORDISK ANNUAL REPORT 2013

80 CONSOLIDATED FINANCIAL STATEMENTS

4.2 Financial risk

(continued)

USD

JPY

CNY

GBP

CAD

562
541
(4.4%)

5.77
5.14
(21.8%)

91
89
(2.2%)

878
892
(2.3%)

545
505
(11.2%)

Key currencies

Exchange rate
DKK per 100

2013
Average
Year-end
Year-end change

2012
Average
Year-end
Year-end change

Interest rate risk

Changes in interest rates affect Novo Nordisk’s ﬁ nancial instruments. At the
end of 2013, 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 20 million in 2012).

The ﬁ nancial instruments included in the sensitivity analysis consist of
marketable securities, current and non-current loans. 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

579
566
(1.6%)

7.27
6.57
(11.5%)

92
91
0.0%

918
913
2.6%

580
569
1.1%

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.

Credit risk

Credit risk arises from the possibility that transactional counterparties may
default on their obligations, causing ﬁ nancial losses for the Group. Novo
Nordisk considers its maximum credit risk on ﬁ nancial counterparties to be
DKK 15,990 million (2012: DKK 17,036 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 12,802 million
(2012: DKK 11,539 million). Please refer to note 4.6 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 two
out of the three selected ratings agencies: Standard and Poor’s, Moody’s
and Fitch. 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

2013
AAA-range
AA-range
A-range
BBB-range
Not rated or
below BBB-range

Cash at
bank or
on hand

Marketable
securities1

Derivative
ﬁ nancial
instruments

6,497
3,999
141

2,726
1,013

544
977

Total

2,726
8,054
4,976
141

Total

10,728

3,741

1,521

15,990

2012
AAA-range
AA-range
A-range
BBB-range
Not rated or
below BBB-range

6,930
4,011
469

143

4,544

466
180
285

4,544
7,396
4,191
754

151

Total

11,553

4,552

931

17,036

1. Redemption yield on the bond portfolio is 0.41% (0.73% in 2012).

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
CAD

2013

2012

12 months
14 months
12 months
12 months
10 months

12 months
13 months
12 months
12 months
8 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
CAD

Estimated for
2014

1,300
145
220
75
60

2013

975
200
110
85
55

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

2013
Other comprehensive income
Income statement

Total

2012
Other comprehensive income
Income statement

Total

5% increase in all
currencies against
DKK and EUR

5% decrease in all
currencies against
DKK and EUR

(1,318)
(76)

(1,394)

(1,313)
(117)

(1,430)

1,397
54

1,451

1,376
106

1,482

The foreign exchange sensitivity analysis comprises effects from the Group’s
Cash, Trade receivables and Trade payables, Current and non-current loans,
Current and non-current ﬁ nancial investments and Foreign exchange
forwards and Foreign exchange options.

Not included are anticipated currency transactions, investments and
non-current assets.

NOVO NORDISK ANNUAL REPORT 2013

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CONSOLIDATED FINANCIAL STATEMENTS

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 derivative ﬁ nancial instruments 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.

4.2 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 60.5% at the end of the year (61.9% at the end
of 2012).

4.3 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, 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:

(cid:129) hedges of the fair value of a recognised asset or liability or a ﬁ rm

commitment (fair value hedge)

(cid:129) hedges of the fair value of a forecast ﬁ nancial transaction (cash ﬂ ow

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.

Value adjustments of fair value hedges are recognised in the Income
statement along with any value adjustments of the hedged asset or liability
that is attributable to the hedged risk.

Value adjustments of cash ﬂ ow hedges are recognised directly in Other
comprehensive income, given hedge effectiveness. The cumulative value
adjustment of these contracts 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.

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NOVO NORDISK ANNUAL REPORT 2013

82 CONSOLIDATED FINANCIAL STATEMENTS

4.3 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

Contract
amount
at year-end

26,982
2,195
3,508

2013

Positive
fair value
at year-end

1,104
148
365

Total hedging activities

32,685

1,617

Total derivatives included in:
Derivative ﬁ nancial instruments (current assets)
Derivative ﬁ nancial instruments (current liabilities)
Equity, Other reserves

1,521

–

Presentation in the Income statement and Other comprehensive income

Negative
fair value
at year-end

Contract
amount
at year-end

2012

Positive
fair value
at year-end

Negative
fair value
at year-end

25,639
2,755
2,521

30,915

732
134
95

961

931

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

Total fair value adjustments through Other comprehensive income

Total fair value adjustments

Hedging of forecast transactions (cash ﬂ ow hedge)

2013

Positive
fair value
at year-end

Negative
fair value
at year-end

2012

Positive
fair value
at year-end

Negative
fair value
at year-end

19
365

384

1,233

1,617

–

19
95

114

847

961

–

DKK million

Hedging of forecast transactions qualifying
for hedge accounting

Contract
amount
at year-end

2013

Positive
fair value
at year-end

Negative
fair value
at year-end

Contract
amount
at year-end

2012

Positive
fair value
at year-end

Negative
fair value
at year-end

USD
JPY, GBP and other currencies

22,020
4,962

742
362

Total forward contracts (forecasted cash ﬂ ow)

26,982

1,104

USD
JPY

Total currency options (forecasted cash ﬂ ow)

Total cash ﬂ ow hedges for which hedge
accounting is applied

1,739
456

2,195

33
96

129

29,177

1,233

Other forecast transaction hedges for which
hedge accounting is not applied

Currency options for which hedge
accounting is not applied

–

Total contracts of forecast transactions

29,177

1,252

19,939
5,700

25,639

2,402
353

2,755

409
323

732

72
43

115

28,394

847

–

28,394

866

–

NOVO NORDISK ANNUAL REPORT 2013

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CONSOLIDATED FINANCIAL STATEMENTS

4.3 Derivative ﬁ nancial instruments

(continued)

Hedging of assets and liabilities (fair value hedge)

DKK million

USD
JPY, GBP and other currencies

Total forward contracts

Contract
amount
at year-end

1,355
2,153

3,508

2013

Positive
fair value
at year-end

141
224

365

Negative
fair value
at year-end

Contract
amount
at year-end

2012

Positive
fair value
at year-end

Negative
fair value
at year-end

–
–

–

698
1,823

2,521

–
95

30
18

The table above shows the fair value of fair value-hedging activities for 2013 and 2012 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 365 million in 2013 (a net gain of DKK 47 million in 2012).
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 excluding DKK
and EUR. Contract amount of other currencies at year-end are JPY at DKK 539 million (DKK 444 million in 2012), GBP at DKK 449 million (DKK 365 million in
2012), ‘other’ comprises AUD at DKK 525 million (DKK 475 million in 2012), CAD at DKK 208 million (DKK 138 million in 2012) and PLN at DKK 432 million
(DKK 401 million in 2012).

4.4 Cash and cash equivalents, ﬁ nancial

resources and free cash ﬂ ow

4.5 Change in working

capital

Accounting policies

Working capital is deﬁ ned as current assets less current liabilities and
measures the liquid assets Novo Nordisk has available for the business.

Change in working capital

DKK million

2013

2012

2011

Trade receivables
Other receivables and prepayments
Inventories
Trade payables
Other liabilities
Exchange rate adjustments

(1,268)
251
(9)
233
404
124

(290)
(329)
(110)
568
448
(13)

(849)
27
256
385
580
35

Total change in working capital

(265)

274

434

Cash and cash equivalents consist of cash offset by short-term bank loans.
Financial resources consist of cash and cash equivalents, marketable
securities with original maturity of less than three months and undrawn
committed credit facilities expiring after more than one year. The Statement
of cash ﬂ ows is presented in accordance with the indirect method
commencing with Net proﬁ t for the year.

DKK million

2013

2012

2011

Cash and cash equivalents

Cash at bank and on hand (note 4.2)
Current debt (bank overdrafts)

10,728
(215)

11,553
(500)

13,408
(351)

Cash and cash equivalents
at the end of the year

10,513

11,053

13,057

Financial resources

Cash and cash equivalents
Marketable securities
Undrawn committed credit facilities1

10,513
3,741
4,849

11,053
4,552
4,849

13,057
4,094
4,832

Total ﬁ nancial resources

19,103

20,454

21,983

1. The undrawn committed credit facility in 2013, 2012 and 2011 is a EUR 650 million
facility committed by a portfolio of international banks. The facility matures in 2016.

Free cash ﬂ ow

Net cash generated from
operating activities
Net cash used in investing activities
Net purchase of marketable securities

25,942
(2,773)
(811)

22,214
(4,070)
501

21,374
(3,459)
197

Free cash ﬂ ow2

22,358

18,645

18,112

2. Additional non-IFRS measure; please refer to p 93 for deﬁ nitions.

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NOVO NORDISK ANNUAL REPORT 2013

84 CONSOLIDATED FINANCIAL STATEMENTS

4.6 Financial assets and

liabilities

Accounting policies

Depending on the purpose of each investment, Novo Nordisk classiﬁ es
these into the following categories:

(cid:129) Available-for-sale ﬁ nancial assets
(cid:129) Loans and receivables
(cid:129) Financial assets at fair value through the Income statement (derivatives).

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 based on 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.

Financial assets by category

DKK million

2013

Other ﬁ nancial assets
Trade receivables (note 3.4)
Other receivables (note 3.5)
– less prepayments (note 3.5)
Marketable securities (bonds) (note 4.2)
Derivative ﬁ nancial instruments (note 4.3)
Cash at bank and on hand (note 4.4)

Available-for-sale ﬁ nancial assets
Available-for-sale ﬁ nancial assets consist of equity investments and
marketable securities. Equity investments 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 marketable securities) 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 allowance. Provision for allowance 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 allowance 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.

Available-
for-sale
ﬁ nancial
assets at
fair value

175

3,741

Financial
assets
measured at
fair value
through the
Income
statement

Loans
and
receivables

Cash
and cash
equivalents

376
10,907
2,454
(1,110)

1,521

10,728

Total

551
10,907
2,454
(1,110)
3,741
1,521
10,728

Total ﬁ nancial assets at the end of the year by category

3,916

1,521

12,627

10,728

28,792

Total ﬁ nancial assets at the end of the year by category, 2012

4,699

931

11,392

11,553

28,575

NOVO NORDISK ANNUAL REPORT 2013

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4.6 Financial assets and liabilities

(continued)

Financial liabilities by category

DKK million

2013

Current debt
Trade payables
Other liabilities (note 3.8)
– less VAT and duties payable (note 3.8)

CONSOLIDATED FINANCIAL STATEMENTS

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

215
4,092
9,386
(761)

Total

215
4,092
9,386
(761)

Total ﬁ nancial liabilities at the end of the year by category2

–

12,932

–

12,932

2012

Current debt
Trade payables
Other liabilities (note 3.8)
– less VAT and duties payable (note 3.8)
Derivative ﬁ nancial instruments (note 4.3)

Total ﬁ nancial liabilities at the end of the year by category2

2. All ﬁ nancial liabilities are due within one year.

500
3,859
8,982
(703)

500
3,859
8,982
(703)
48

12,638

–

12,686

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 4.2 and 4.3.

Fair value measurement hierarchy

DKK million

Active market data
Directly or indirectly observable market data
Not based on observable market data

2013

2012

3,908
1,521
8

4,625
931
74

Total ﬁ nancial assets at fair value

5,437

5,630

Active market data
Directly or indirectly observable market data
Not based on observable market data

Total ﬁ nancial liabilities at fair value

–
–
–

–

–
48
–

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 2013 or 2012.

4.7 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. As of 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

2013

2012

2011

Interest income
Foreign exchange gain on forward
contracts (net)
Cash ﬂ ow hedge transferred from
Other comprehensive income (net)
Income from other ﬁ nancial assets

124

822

809
15

–

–
1

274

240

–
–

Total ﬁ nancial income

1,702

125

514

Financial expenses

DKK million

2013

2012

2011

Interest expenses
Foreign exchange loss (net)
Foreign exchange loss on forward
contracts (net)
Foreign exchange loss on currency
options (net)
Loss on investments etc
Other ﬁ nancial expenses
Cash ﬂ ow hedge transferred from
Other comprehensive income (net)

55
435

–

50
20
96

58
161

275
256

1,276

147
118
83

200
27
99

–

1,182

(1,170)

Total ﬁ nancial expenses

656

1,788

963

NOVO NORDISK ANNUAL REPORT 2013

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86 CONSOLIDATED FINANCIAL STATEMENTS

Section 5
Other disclosures

This section provides details on notes that by their nature are of statutory or 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 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

Expensed in the Income statement

DKK million

2013

2012

2011

Restricted stock units to employees
Long-term share-based incentive
programme (Senior Management
Board)1
Long-term share-based incentive
programme (Management group below
Senior Management Board)2

Share-based payment expensed
in the Income statement

188

170

185

166

409

308

319

1. Expense for the year reﬂ ects the full value at launch of the programme for the year.
2. Expense for the year reﬂ ects the value at launch of the last four programmes,

amortised over four years.

Restricted stock units to employees

In 2008 and 2010, a general employee share programme was implemented.
Outside Denmark the programme was structured as restricted stock units.
The cost of the 2008 programme was amortised over the period
2008–2011. The cost of the 2010 programme has been amortised over the
period 2010 –2013.

Following the 90th anniversary in 2013, all employees in the company
(excl NNE Pharmaplan and NNIT) were offered 100 restricted stock units.
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. The cost of the DKK 440 million programme is amortised over
the period 2013–2016 at an annual amount of DKK 135 million.

Long-term share-based incentive programme

For a description of the programme, please refer to ‘Remuneration’ in
‘Governance, leadership and shares’, pp 49 –51.

Senior Management Board
On 29 January 2014, the Board of Directors approved the establishment,
for members of the Senior Management Board, of a joint pool for the
ﬁ nancial year 2013 by allocating a total of 254,417 Novo Nordisk B shares.
This allocation amounts on average to 4.75 months of ﬁ xed base salary
plus pension contribution per member of Executive Management and 4.2
months of ﬁ xed base salary for Senior Vice Presidents, corresponding to
a value at launch of the programme of DKK 51 million. This amount was
expensed in 2013. The share price used for the conversion was the average
share price (DKK 202.40) for Novo Nordisk B shares on NASDAQ OMX
Copenhagen in the period 31 January – 14 February 2013. Based on the
split of participants when the joint pool was established, approximately
40% of the pool will be allocated to members of Executive Management
and 60% to other members of the Senior Management Board.

The shares allocated to the joint pool for 2010 (842,880 shares) were
released to the individual participants subsequent to the approval of the
Annual Report 2013 by the Board of Directors and after the announcement
of the 2013 full-year ﬁ nancial results on 30 January 2014. The shares
allocated correspond to a value at launch of the programme of DKK 64
million, expensed in 2010.

Management group below Senior Management Board
The management group below the Senior Management Board has a share-
based incentive programme with similar performance criteria. For 2013, a
total of 622,190 shares were allocated to the pool for this group.

The shares allocated to the pool for 2010 (2,744,680 shares) were released
to the individual participants subsequent to the approval of the Annual
Report 2013 by the Board of Directors and after the announcement of the
2013 full-year ﬁ nancial results on 30 January 2014. The shares allocated
correspond to a value at launch of the programme of DKK 208 million
amortised over the period 2010 –2013. The number of shares to be
transferred (2,475,090) 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.

Share options

No share options have been granted since 2006 as the long-term incentive
programme from 2007 onwards has been share-based.

The 2005 –2006 share options were exercisable three years after the issue
date and will expire after eight years. The exercise price for options granted
based on performance targets for the ﬁ nancial years 2005 –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. Each option
gives the right to purchase one Novo Nordisk B share.

NOVO NORDISK ANNUAL REPORT 2013

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5.1 Share-based payment schemes

(continued)

Assumptions
The fair value of the Novo Nordisk B share options has been calculated
using 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)

2013

2012

2011

1
21%
4.50

1
21%
3.60

2
23%
2.80

0.14%

0.00%

0.20%

CONSOLIDATED FINANCIAL STATEMENTS

Outstanding restricted stock units

2013

2012

Outstanding at the beginning of the year

12,374,845

13,913,515

Released restricted stock units to employees
Released shares from 2009
Management pools
Cancelled shares from Management pool
Issued restricted stock units – NNIT
Issued restricted stock units to employees
Shares allocated to Management pools

(1,356,000)

(5,750)

(3,529,670)
(207,410)
–
2,370,000
876,607

(3,275,030)
(340,155)
35,300
–
2,046,965

Outstanding at the end of the year

10,528,372

12,374,845

Exercisable share options

Exercisable at the beginning of the year

5,040,700

9,534,920

Exercised
Cancelled

(2,017,700)
(221,080)

(4,175,470)
(318,750)

198.80

183.30

132.00

Exercisable at the end of the year

2,801,9201

5,040,7001

1. Average exercise price per option (excluding restricted stock units) amounts to

DKK 34 (DKK 26 in 2012), and calculated fair value per option amounts to DKK 161
(DKK 152 in 2012).

Outstanding restricted stock units
and exercisable share options

Issued2

Released

Cancelled

Outstanding

Amount
DKK million

Restricted stock units to employees1
2010 Restricted stock units
2012 Restricted stock units – NNIT
2013 Restricted stock units

1,356,000
35,300
2,370,000

(1,356,000)
–
–

Outstanding restricted stock units to
employees at the end of 2013

3,761,300

(1,356,000)

Shares allocated to joint pools
for Senior Management Board1
2010 Shares allocated to joint pool
2011 Shares allocated to joint pool
2012 Shares allocated to joint pool
2013 Shares allocated to joint pool3

Outstanding shares in joint pool to
Senior Management Board

Shares allocated to pools
for management group below
Senior Management Board1
Joint pool related to prior years, not released
2010 Shares allocated to pool
2011 Shares allocated to pool
2012 Shares allocated to pool
2013 Shares allocated to pool3

842,880
448,560
487,730
254,417

2,033,587

69,640
2,744,680
1,485,665
1,559,235
622,190

Outstanding shares in pool to management
group below Senior Management Board

6,481,410

–
–
–
–

–

–
–
–
–
–

–

–
–
–

–

–
–
–
–

–

–
35,300
2,370,000

2,405,300

842,880
448,560
487,730
254,417

2,033,587

–
(269,590)
(86,565)
(35,770)
–

69,640
2,475,090
1,399,100
1,523,465
622,190

(391,925)

6,089,485

64
57
73
51

208
188
234
126

Vesting date

1/12/13
1/12/14
1/04/16

30/1/14
Q1 2015
Q1 2016
Q1 2017

Issued2

Exercised

Cancelled

Exercisable

Exercise
price DKK

Exercise period

Exercisable share options1
2004 Share options
2005 Share options
2006 Share options

8,094,160
8,202,340
11,145,420

(7,315,830)
(6,918,250)
(7,862,735)

(778,330)
(829,590)
(935,265)

–
454,500
2,347,420

26.8
30.6
35.0

31/01/08 – 30/01/13
31/01/09 – 30/01/14
31/01/10 – 30/01/15

Exercisable share options at the end of 2013 27,441,920

(22,096,815)

(2,543,185)

2,801,920

Outstanding/exercisable
at the end of 2013

39,718,217

(23,452,815)

(2,935,110)

13,330,292

1. Comparative ﬁ gures have been restated throughout the note to reﬂ ect the change in trading unit from DKK 1 to DKK 0.20 due to the stock split as of 2 January 2014.
2. All restricted stock units, shares allocated to Management pools and share options are hedged by treasury shares.
3. 2013 programme released subsequent to the approval of the Annual Report 2013 on 30 January 2014.

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88 CONSOLIDATED FINANCIAL STATEMENTS

5.1 Share-based payment schemes

(continued)

Average market price of Novo Nordisk B shares per trading period in 2013

31 January – 14 February
1 May – 15 May
8 August – 22 August
31 October – 14 November

Total exercised options1

1. In addition, 1,356,000 restricted stock units were released in Q4 2013.

5.2 Management’s holdings of Novo Nordisk shares

and share options

Average
market price
DKK

202.40
197.90
195.37
187.82

Exercised
share
options

810,325
243,000
400,250
564,125

2,017,700

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.

Management’s holding of shares

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

Göran Ando
Bruno Angelici
Jeppe Christiansen
Henrik Gürtler
Liz Hewitt
Ulrik Hjulmand-Lassen
Thomas Paul Koestler
Anne Marie Kverneland
Søren Thuesen Pedersen
Hannu Ryöppönen
Stig Strøbæk

Board of Directors in total

Lars Rebien Sørensen
Jesper Brandgaard
Lars Fruergaard Jørgensen
Lise Kingo
Jakob Riis
Kåre Schultz
Mads Krogsgaard Thomsen

10,500
2,500
–
–
2,000
5,405
8,000
12,225
1,615
11,250
1,950

55,445

274,850
168,210
79,610
26,970
52,150
285,120
232,240

2,500

13,000
2,500
–
–
2,000
5,405
8,000
11,735
1,615
11,250
1,950

490

2,500

490

57,455

78,820
52,505
26,250
52,505
26,250
52,505
58,505

28,820
22,500
15,000
17,505
26,250
17,625
33,325

324,850
198,215
90,860
61,970
52,150
320,000
257,420

Executive Management in total

1,119,150

347,340

161,025

1,305,465

Other members of the Senior Management Board

766,055

1,066,645

1,274,755

557,945

2.6
0.5
–
–
0.4
1.1
1.6
2.3
0.3
2.2
0.4

11.4

64.6
39.4
18.0
12.3
10.4
63.6
51.2

259.5

110.9

Joint pool for Executive Management and
other members of the Senior Management Board2

2,540,765

255,242

1,051,098

1,744,9093

346.9

Total

4,481,415

1,671,727

2,487,368

3,665,774

728.7

1. Calculation of the market value is based on the quoted share price of DKK 198.80 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 40% of the pool will be allocated to the members of Executive Management and approximately 60% 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. Joint pool includes 2010 programme released on 30 January 2014 and excludes 288,678 shares assigned to retired Senior Management Board members.

Management’s holding of share options

Share options in Novo Nordisk

Executive Management
Other members of the Senior Management Board

At the
beginning
of the year

–
283,375

Exercised
during
the year

–
121,875

Total

283,375

121,875

161,500

4. The fair value has been calculated using Black-Scholes model with the parameters existing at year-end of the respective year.

At the end
of the year

Fair value4
DKK million

–
161,500

–
26

NOVO NORDISK ANNUAL REPORT 2013

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5.3 Adjustments

for non-cash items

For the purpose of presenting the Statement of cash ﬂ ows, 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:

CONSOLIDATED FINANCIAL STATEMENTS

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 4.7)
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)

Other adjustments
(Gains)/losses from sale of property, plant and equipment
Unrealised (gain)/loss from other ﬁ nancial assets
Reclassiﬁ cation from working capital (other liabilities)
Other, including unrealised exchange (gain)/loss etc

Total adjustments for non-cash items

2013

2012

2011

7,355
2,799
(1)
409
–

6,379
2,693
(66)
308
–

4,828
2,737
1
319
4

858

1,339

1,467

(1)
(17)
–
(664)

21
43
739
(203)

(3)
28
–
(264)

10,738

11,253

9,117

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NOVO NORDISK ANNUAL REPORT 2013

90 CONSOLIDATED FINANCIAL STATEMENTS

5.4 Commitments

Commitments

The operating lease commitments are related to non-cancellable operating
leases primarily related to premises, company cars and ofﬁ ce equipment.
Approximately 62% of the commitments are related to leases outside
Denmark. The lease costs for 2013 and 2012 were DKK 1,175 million and
DKK 1,100 million respectively.

The total contractual obligations and recognised non-current debt can be
speciﬁ ed as follows (payments due by period):

2013

DKK million

Less
than
1 year

1–3
years

3 –5
years

More
than
5 years

Total

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.

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

558

688

558

688

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 the cardiovascular outcomes study for
Tresiba®, the DEVOTE programme.

924
1,969

1,452
369

1,072
44

2,426
–

5,874
2,382

DKK million

2,612

1,875

789

–

5,276

5,505

3,696

1,905

2,426

13,532

5,533

3,749

1,954

2,984

14,220

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

2013

2012

830

635

230

200

2012

DKK million

Less
than
1 year

1–3
years

3 –5
years

More
than
5 years

Total

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

651

760

651

760

881
1,955

1,311
1,241

884
34

1,968
–

5,044
3,230

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

1. No material ﬁ nance lease obligations exist in 2013 and 2012.

World Diabetes Foundation (WDF)

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 in the period 2011–2017 of 0.125% 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 2013, the donation amounts to DKK 64 million (DKK 64 million and
DKK 65 million in 2012 and 2011 respectively), which is recognised in
Administrative costs in the Income statement. The 2012 donation included
an extra donation of DKK 11 million to support predetermined WDF
activities.

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’ on
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 2013

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CONSOLIDATED FINANCIAL STATEMENTS

5.6 Licence income and other

operating income, net

Accounting policies

Licence income and other operating income, net, comprises licence income
and income of a secondary nature in relation to the main activities of Novo
Nordisk. Licence income is recognised on an accrual basis in accordance
with the terms and substance of the relevant agreement. Non-Novo
Nordisk-related net proﬁ t from the two wholly owned subsidiaries NNIT A/S
and NNE Pharmaplan A/S is recognised as other operating income. Licence
income and other operating income also includes income from sale of
intellectual property rights.

5.7 Fee to statutory

auditors

DKK million

2013

2012

2011

Statutory audit
Audit-related services
Tax advisory services
Other services

Total fee to statutory auditors

24
4
11
5

25
4
12
6

24
5
13
3

5.5 Related party

transactions

Novo Nordisk A/S is controlled by Novo A/S (incorporated in Denmark),
which owns 25.5% of the share capital in Novo Nordisk A/S, representing
74% 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 and Xellia
Pharmaceuticals due to joint ownership, associated companies, the
directors and ofﬁ cers of these entities, and Management of Novo Nordisk
A/S.

In 2013, Novo Nordisk A/S acquired 12,750,000 B shares, worth DKK 2.5
billion, from Novo A/S as part of the DKK 14.0 billion share repurchase
programme. The transaction price was DKK 196.4 per share and was
calculated as the average market price from 1 May to 3 May 2013 in the
open window following the announcement of the ﬁ nancial results for the
ﬁ rst quarter of 2013.

In 2012, Novo Nordisk A/S acquired 25,500,000 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 164.6 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 25,500,000 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 114.2 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.

The Group has had the following material transactions with related parties,
(income)/expense:

DKK million

2013

2012

2011

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

Novozymes
Services provided by Novo Nordisk
Services provided by Novozymes

(45)

(46)

(45)

(4)
2,504

(2)
4,198

(2)
2,912

(214)
109

(255)
92

(268)
73

There have not been any material transactions with any director or ofﬁ cer
of Novo Nordisk, Novozymes, Novo A/S, the Novo Nordisk Foundation,
Xellia Pharmaceuticals 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 2013, 2012 or 2011.

There are no material unsettled transactions with related parties at the end
of the year.

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NOVO NORDISK ANNUAL REPORT 2013

92 CONSOLIDATED FINANCIAL STATEMENTS

5.8 Companies in the

Novo Nordisk Group

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 Pharmaceutical Services 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

North America

– (cid:129) (cid:129) (cid:129) (cid:129)

(cid:129)
(cid:129) (cid:129)

(cid:129)
(cid:129)

(cid:129)
100
(cid:129)
100
(cid:129)
100
(cid:129)
100
(cid:129)
100
(cid:129)
100
100 (cid:129) (cid:129)
100
100
100
100
100 (cid:129)
100
100
100
100
100
100
100
100
100
100
100

(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)

100
100
100
100

100
100
100
100
100
100
100

(cid:129)
(cid:129)
(cid:129)
(cid:129)

(cid:129)
(cid:129)
(cid:129) (cid:129)
(cid:129) (cid:129)
(cid:129)

(cid:129)

Percentage of
shares owned

Activity

Company and country

Percentage of
shares owned

Activity

International Operations

100
100
100
100
100

100
100
100
100
100
100
100
100
100

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 Colombia SAS, Colombia
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
Novo Nordisk Pharmaceuticals (Philippines) Inc.,
100
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

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

100 (cid:129) (cid:129)
(cid:129)
100
(cid:129)
100
(cid:129)
100
100 (cid:129)

(cid:129)
(cid:129)
(cid:129)

(cid:129)
(cid:129)

(cid:129)
(cid:129) (cid:129)
(cid:129)

(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)

(cid:129)

(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)

(cid:129)

(cid:129)
(cid:129)

(cid:129)

100
100 (cid:129)
100
100
100
49
100
100
100
100

(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)

100 (cid:129) (cid:129)
100

(cid:129)

100
100
100

100
100

(cid:129)
(cid:129)
(cid:129)

(cid:129)
(cid:129)

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 (cid:129)
Novo Nordisk Inc., United States

100
100
100

100

(cid:129)

(cid:129)
(cid:129)

(cid:129) (cid:129)

Japan & Korea

Novo Nordisk Region Japan & Korea A/S, Denmark
Novo Nordisk Pharma Ltd., Japan
Novo Nordisk Pharma Korea Ltd., South Korea

(cid:129)

100
100 (cid:129) (cid:129)
(cid:129)
100

Other subsidiaries
NNIT A/S1, Denmark
NNE Pharmaplan A/S1, Denmark

1. In addition to the listed companies, NNIT A/S and NNE Pharmaplan A/S have their

own subsidiaries.

Activity:
(cid:129) Production
(cid:129) Sales and marketing
(cid:129) Research and development
(cid:129) Services / investments

NOVO NORDISK ANNUAL REPORT 2013

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CONSOLIDATED FINANCIAL STATEMENTS

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:
(cid:129) Cash to earnings
(cid:129) Financial resources at the end of the year
(cid:129) Free cash ﬂ ow
(cid:129) Operating proﬁ t after tax to net operating assets
(cid:129) 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’.

Net asset value per share
Deﬁ ned as the company value per share, calculated by dividing the total
net asset value of Novo Nordisk A/S by the number of shares outstanding.

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
the prior year measured at prior-year average exchange rates.

5.9 Financial

deﬁ nitions

ADR
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 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:

(cid:129) Exchange rate adjustments of investments in subsidiaries
(cid:129) Remeasurements of deﬁ ned beneﬁ t plans
(cid:129) 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 2013

94 QUARTERLY FINANCIAL FIGURES 2012 AND 2013

Part of Management’s review

Quarterly ﬁ nancial ﬁ gures 2012 and 2013

DKK million

Net sales

Sales by business segment:
Modern insulins (insulin analogues)
Human insulins
Victoza®
Protein-related products
Oral antidiabetic products (OAD)

Diabetes care total

NovoSevenn®
Norditropin®
Other biopharmaceuticals

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 income and other operating income, net
Operating proﬁ t
Net ﬁ nancials
Proﬁ t before income taxes
Income taxes

2012

2013

17,751

19,468

19,845

20,962

19,983

21,380

20,511

21,698

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

8,991
2,824
2,678
606
694

9,626
2,779
2,877
643
681

9,393
2,572
2,847
666
504

10,143
2,694
3,231
640
367

13,916

14,961

15,539

16,471

15,793

16,606

15,982

17,075

1,909
1,346
580

2,451
1,440
616

2,153
1,451
702

2,420
1,461
610

2,027
1,537
626

2,542
1,479
753

2,428
1,436
665

2,259
1,662
702

3,835

4,507

4,306

4,491

4,190

4,774

4,529

4,623

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

9,009
4,761
3,094
1,239
1,880

16,374
5,530
2,657
801
176
7,562
207
7,769
1,787

10,038
5,123
3,077
1,368
1,774

17,774
5,834
2,715
815
175
8,585
96
8,681
1,947

9,763
4,994
2,697
1,312
1,745

16,986
5,529
2,795
822
152
7,992
307
8,299
1,884

10,214
5,185
3,139
1,398
1,762

18,298
6,487
3,566
1,070
179
7,354
436
7,790
1,737

Net proﬁ t

4,664

5,346

5,667

5,755

5,982

6,734

6,415

6,053

Depreciation, amortisation and impairment losses

638

656

644

755

691

676

643

789

Total assets
Total equity

Financial ratios

As percentage of sales
Sales and distribution costs
Research and development costs
Administrative costs
Gross margin1
Operating margin1
Equity ratio1

Share ratios

61,210
32,358

60,978
31,334

66,620
35,660

65,669
40,632

62,447
33,801

64,289
35,357

68,134
39,125

70,337
42,569

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%

27.7%
13.3%
4.0%
81.9%
37.8%
54.1%

27.3%
12.7%
3.8%
83.1%
40.2%
55.0%

27.0%
13.6%
4.0%
82.8%
39.0%
57.4%

29.9%
16.4%
4.9%
84.3%
33.9%
60.5%

Basic earnings per share/ADR (in DKK)2
Diluted earnings per share/ADR (in DKK)2

1.68
1.66

1.94
1.93

2.08
2.07

2.12
2.11

2.21
2.20

2.50
2.49

2.41
2.39

2.28
2.27

Average number of shares outstanding (million) – basic2
Average number of shares outstanding (million) – diluted2

2,784
2,803

2,746
2,762

2,723
2,739

2,715
2,730

2,708
2,724

2,689
2,703

2,668
2,682

2,653
2,667

Employees

Number of full-time employees at the end of the period

32,252

32,819

33,501

34,286

35,154

35,869

36,851

37,978

1. For deﬁ nitions, please refer to p 93.
2. Comparative ﬁ gures have been restated to reﬂ ect the change in trading unit from DKK 1 to DKK 0.20.

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Supplementary information

CONSOLIDATED SOCIAL STATEMENT

Statement of social performance
for the year ended 31 December

Patients

Patients reached with Novo Nordisk diabetes care products in millions (estimate)
Least developed countries where Novo Nordisk sells insulin according
to the differential pricing policy
Donations (DKK million)
Animals purchased for research
New patent families (ﬁ rst ﬁ lings)

Employees

Employees (total)
Employee turnover
Working the Novo Nordisk Way (scale 1– 5)
Diverse senior management teams
Annual training costs per employee (DKK)
Frequency of occupational accidents (number/million working hours)
Employment impact worldwide (direct and indirect jobs created)

Assurance

Relevant employees trained in business ethics
Business ethics audits
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)

1. Comparative numbers have been restated – read more in note 3.2.

Note

2013

2012

2011

2.1

2.2
2.3
2.4
2.5

3.1
3.1

3.1

3.2
3.3

4.1
4.2
4.3

24.3

22.8

20.9

35
83
72,662
77

35
84
73,601
65

36
81
66,401
80

38,436
8.1%
4.4
70%
9,352
3.5
139,700

34,731
9.1%
4.3
66%
9,951
3.61
125,600

32,632
9.8%
4.3
62%
10,479
3.61
118,700

97%
45
96%
221
6
1
5.8

99%
48
94%
219
6
1
5.7

99%
46
93%
177
5
0
5.6

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NOVO NORDISK ANNUAL REPORT 2013

96 CONSOLIDATED SOCIAL STATEMENT

Supplementary information

Notes

In the Consolidated social statement, Novo Nordisk reports on three dimensions of performance: patients,

employees and assurance. Progress is reported on three long-term targets: reach more patients with diabetes care prod-
ucts, ensure that the organisation is working the Novo Nordisk Way and nurture a diverse working environment.

Sections in the Consolidated social statement
Section 1 Basis of preparation
Read this section to get an overview of the social accounting policies and
standards used for reporting on social performance.

Section 3 Employees
Read this section to get more information about 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 accidents, p 100
3.3 Employment impact worldwide (direct and indirect jobs created), p 100

Section 4 Assurance
Read this section to get more information about 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

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 information. 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 who 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.

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 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.

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.

1. Basis of preparation, p 96

Section 2 Patients
Read this section to get more information about efforts related to
improving availability, accessibility, affordability and quality of care through
discovery, development and dissemination of medical treatments and
capacity-building.

2.1 Patients reached with Novo Nordisk diabetes care products

(estimate), p 98

2.2 Least developed countries where Novo Nordisk sells insulin according

to the differential pricing policy, p 98

2.3 Donations (DKK million), p 98
2.4 Animals purchased for research, p 98
2.5 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), sections 99a and 99b. 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. Read Novo
Nordisk’s Communication on Progress 2013 at
novonordisk.com/annualreport and on UN Global Compact’s website at
unglobalcompact.org/COP. Section 99b requires Novo Nordisk to
account for the gender diversity at Board level by reporting on targets and
policies ensuring increased gender diversity over time – read more in the
diversity report at novonordisk.com/annualreport.

Novo Nordisk adheres to the following internationally recognised voluntary
reporting standards and principles (for overview, read more on p 112):

(cid:129) UN Global Compact. As a signatory to the UN Global Compact, a

strategic policy initiative for businesses that are committed to aligning
their operations and strategies with 10 universally accepted principles in
the areas of human rights, labour, environment and anti-corruption,
Novo Nordisk reports on progress during 2013 in its 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 its sustainability governance
and management processes through the Blueprint for Corporate
Sustainability Leadership, which is also part of the Communication on
Progress.

(cid:129) 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.

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Supplementary information

CONSOLIDATED SOCIAL STATEMENT

Other accounting policies

Working the Novo Nordisk Way
Working the Novo Nordisk Way is an employee assessment 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 2013, the eVoice response rate was
89% compared with 91% in 2012.

Annual training costs per employee
Training costs cover internal and external training costs as deﬁ ned by Novo
Nordisk and recorded in the ﬁ nancial accounts, calculated per employee.

Relevant employees trained in business ethics
The mandatory business ethics training is based on globally applicable
standard operating procedures (SOPs) and related tests released annually
by the Business Ethics Compliance Ofﬁ ce. The target groups for the
individual SOPs vary in size but cover all employees in Novo Nordisk at the
end of the reporting period except employees on leave, student assistants,
PhDs and post docs. The percentage of employees completing the training
is calculated as the percentage of completion of both the SOPs and the
related tests, based on internal registrations.

Business ethics audits
The number of business ethics audits 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 trend reports and review of third parties.

Fulﬁ lment of action points from facilitations of the Novo Nordisk Way
Facilitation is the internal audit process for assessing compliance with the
Novo Nordisk Way. The percentage of fulﬁ lment of action points arising
from facilitations 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.

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) of peers collected through interviews with
primary and secondary healthcare professionals who are current prescribers
of Novo Nordisk injectable diabetes products. Each market is surveyed
every year. The survey is carried out by an independent external consultancy
ﬁ rm.

In addition, Novo Nordisk reports with reference to the content elements
and guiding principles of the International Integrated Reporting Framework
developed by the International Integrated Reporting Council. The
framework, which was released in a ﬁ nal version in December, has been
piloted by a group of companies, including Novo Nordisk.

In continuation of the efforts to advance integrated reporting, Novo Nordisk
will, as of this year, discontinue publishing a separate report in accordance
with the Global Reporting Initiative’s (GRI) Sustainability Reporting
Guidelines (G3). The disclosures previously referenced in the GRI report
continue to be included in the annual report and the UN Global Compact
Communication on Progress, and additional contextual information
about Management approach and oversight is, as before, available on the
corporate website.

Deﬁ ning materiality

It is Novo Nordisk’s responsibility to ensure that those areas in which the
Group has signiﬁ cant impact are addressed. Issues with respect to social
and environmental reporting are prioritised, and the issues considered most
material are included in the printed annual report.

In assessing which information to include in the annual report, legal
requirements and disclosure commitments made by Novo Nordisk are
considered. Furthermore, it is assessed whether information is tied directly
or indirectly to Novo Nordisk’s ability to create value. Short- and long-term
value creation is taken into consideration.

The outcomes of formal reviews, research, stakeholder engagement and
internal materiality discussions are presented as a proposal for annual
reporting content 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 the Novo Nordisk
Group comprising 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.

Disclosures taken out

The following disclosures have been taken out to align with management
priorities:

(cid:129) ’Healthcare professionals trained or educated in diabetes’ is expected to

be reintroduced in the future in a different format to align with the
updated strategy for access to health once implemented in the business.
(cid:129) ‘People with diabetes trained’ is expected to be reintroduced in the future

in a different format to align with the updated strategy for access to
health once implemented in the business.

(cid:129) ‘People participating in clinical trials’ is replaced by reporting on patient
years in clinical trials in the Management review – read more on p 10.

(cid:129) ‘Absence’ has been removed as it is not used as Management information

at a consolidated level.

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98 CONSOLIDATED SOCIAL STATEMENT

Supplementary information

Section 2
Patients
2.1 Patients reached with Novo Nordisk

diabetes care products in millions
(estimate)

2.3 Donations

Accounting policies

The number of patients reached with Novo Nordisk 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.

Donations by Novo Nordisk to the World Diabetes Foundation and 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 made. For additional information regarding the World Diabetes
Foundation, please refer to note 5.4 in the Consolidated ﬁ nancial
statements.

Development
The estimated number of patients reached with Novo Nordisk’s diabetes
care products increased by 7% from 22.8 million in 2012 to 24.3 million
in 2013. The majority of this growth is driven by the insulin business and
Victoza®.

Donations in DKK million

2013

2012

2011

World Diabetes Foundation
Novo Nordisk Haemophilia Foundation

Total

64
19

64
20

65
16

2.2 Least developed countries where

Novo Nordisk sells insulin according
to the differential pricing policy

2.4 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

2013

2012

2011

Mice and rats
Pigs
Rabbits
Dogs
Non-human primates
Other rodents1

69,741
1,177
1,124
238
240
142

70,668
1,170
691
434
355
283

64,056
953
535
344
186
327

Total

72,662

73,601

66,401

1. Other rodents are gerbils, guinea pigs and hamsters.

The number of animals purchased for research in 2013 was at the
same level as in 2012 (1% decrease), reﬂ ecting the continued high level
of research activity in the area of discovery and development of new
pharmaceuticals within diabetes, haemophilia and inﬂ ammation. In all,
96% of the animals purchased were rodents.

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 initiatives to promote access to healthcare for all
LDCs. The purpose of the policy is to offer human insulin in vials to all LDCs
at or below a market 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 US, 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. In 2013 and 2012, 49
countries were on the UN LDC list, against 48 in 2011.

Number of LDCs

2013

2012

2011

LDCs with insulin sold according
to pricing policy
LDCs not buying according
to pricing policy
LDCs with no sales

Total

3
11

2
12

2
10

Novo Nordisk operated in Laos, Kiribati and Nepal but did not sell insulin at
the differential price here. The governments in those three countries were
offered the opportunity to buy insulin at the differential price but the insulin
sold there in 2013 was sold to the private market. While the number of
countries buying insulin in accordance with this policy is stable, the volume
sold under this policy increased by 7% from 2012 to 2013.

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. 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.

In 11 LDCs Novo Nordisk had no sales in 2013 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.

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Supplementary information

CONSOLIDATED SOCIAL STATEMENT

2.5 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.

Development
A total of 77 new patent families were established in 2013, an increase of 18% compared with the ﬁ ling activity in 2012 when 65 patent families were
established. The increase was driven by a higher level of patent-ﬁ ling activity in the device area. By the end of 2013, Novo Nordisk had 796 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, Germany, 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 be
relevant for exclusivity beyond the expiration of the active ingredient patent. Furthermore, regulatory data protection may apply.

Marketed products in key markets (active ingredients)

Germany

China

Japan

Diabetes care:
NovoRapid ® (NovoLog ®)
NovoMix ® 30 (NovoLog ® Mix 70/30)
Levemir ®
NovoNorm® (Prandin®)
PrandiMet ®
Victoza®
Tresiba®
Ryzodeg ®

Biopharmaceuticals:
Norditropin® (Norditropin® SimpleXx ®)
NovoSeven®
NovoThirteen®
Vagifem® 10 mcg

20141
2014
2019
Expired
20182
2022
20303
20303

Expired1
2015
2018
Expired
Pending
2022
20283
20283

20154
Expired5
20216
20227, 8

20174
Expired5
N/A
20217

Expired1
Expired
2014
Expired
N/A
2017
2024
2024

20174
Expired5
N/A
N/A

Expired1
2014
2019
2016
Pending
2022
20273
20273

20174
Expired5
N/A
20217

1. Formulation patent until 2017. It has been revoked in China, but the decision has been appealed.
2. Combination patent providing exclusivity to the combined use of two or more different medicines for treatment of a particular disease.
3. Current estimate.
4. Formulation patent providing exclusivity to the composition of excipients used in the drug products.
5. Room temperature-stable formulation patent until 2024.
6. Data protection runs until 2025.
7. Patent covers low-dose treatment regimen.
8. Validity of the US patent is challenged in litigation.

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

2013

2012

2011

North America
Europe
– of which in Denmark
International Operations
Japan & Korea
Region China

6,162
20,286
16,027
6,054
1,084
4,850

5,758
18,715
14,792
5,143
1,071
4,044

4,870
18,215
14,064
4,549
1,010
3,988

Total employees

38,436

34,731

32,632

Employees (FTEs)

37,978

34,286

32,136

Employee turnover

8.1%

9.1%

9.8%

Increase in employees

11%

The growth in headcount is in line with expectations. Employee turnover
decreased slightly overall, primarily due to decreases in Brazil, Russia, India
and China.

Diversity in the company’s senior management teams increased from
66% (19 of 29 teams) in 2012 to 70% (23 of 33 teams) in 2013. Among
employees as a whole, the gender split was 50/50 in 2013, which is the
same level as in 2012.

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100 CONSOLIDATED SOCIAL STATEMENT

Supplementary information

3.2 Frequency of occupational

accidents

Accounting policies

The frequency of occupational accidents is measured as the number of
accidents reported for all employees, excluding externals, employees on
unpaid leave, interns, bachelor and master thesis employees, and
substitutes, per million nominal working hours. An occupational accident
is any work-related accident causing at least one day of absence in addition
to the day of the accident.

Following the roll-out of uniform occupational health and safety
management procedures on a global scale during 2013, a discrepancy
related to reporting of occupational accidents in 2011 and 2012 has been
identiﬁ ed. Consequently, the comparative ﬁ gures have been restated
from a frequency per million working hours of 3.4 in 2011 and 3.2 in 2012
to 3.6 for both years.

Development
In 2013, as in 2012, there were no work-related fatalities. The number of
occupational accidents with absence increased by 8% compared with 2012,
which is in line with the growth in number of employees. The frequency
of occupational accidents decreased slightly from 3.6 per million working
hours in 2012 to 3.5 per million working hours in 2013.

3.3 Employment impact worldwide

(direct and indirect jobs created)

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,
Economic Multipliers for the US Economy (the Economic Policy Institute),
the Organisation for Economic Co-operation and Development (OECD)
and the China Statistical Yearbook.

Section 4
Assurance
4.1 Supplier

audits

Accounting policies

The number of supplier audits concluded (audit reports received) is recorded
as the number of responsible sourcing and quality audits conducted in the
areas of direct and indirect spend on materials.

By type of audit

2013

2012

2011

Responsible sourcing audits
Quality audits

Total

25
196

221

45
174

219

32
145

177

One critical ﬁ nding was issued in connection with a responsible sourcing
audit regarding excessive overtime. A continuous improvement and
engagement programme has been initiated with the supplier in order to
address the issue.

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.

NOVO NORDISK ANNUAL REPORT 2013

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 reinvestments in the Group.

Jobs created

2013

2012

2011

Direct impact
Indirect impact – production1
Indirect impact – employee
consumption1

38,000
70,100

34,300
63,300

32,100
60,400

31,600

28,000

26,200

Total

139,700

125,600

118,700

1. Jobs created in the supply chain.

Cash value distribution

2013

2012

Suppliers
Employees
Investors/funders
Public sector (taxes)
Reinvested in the Group

30%
30%
29%
12%
(1%)

35%
28%
26%
14%
(3%)

2011

34%
30%
26%
8%
2%

Total

100%

The distribution of cash value to suppliers, employees and investors/funders
remained stable in 2013 compared with 2012.

Development
In 2013, Novo Nordisk had six instances of product recalls, which is the
same as in 2012. 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. Local health authorities were
informed in all six instances to ensure that distributors, pharmacies, doctors
and patients received appropriate information.

4.3 Warning Letters and

re-inspections

Accounting policies

The number of Warning Letters is measured as the number of Warning
Letters received from the US Food & Drug Administration (FDA). The
number of re-inspections is measured as the number of failed inspections
by an ISO-certifying body, FDA, EMA or PMDA in connection with GxP-
regulated or ISO-certiﬁ ed areas with global reach and high business impact,
ie withdrawn marketing authorisation involving top-level management
in the containment and preparation of corrective actions.

Development
Following the receipt in December 2012 of a Warning Letter from the US
Food and Drug Administration (FDA), a re-inspection was carried out in
August 2013. In January 2014 Novo Nordisk received conﬁ rmation from the
agency that the violations had been addressed satisfactorily.

In total, 84 inspections were conducted in 2013, compared with 130 in
2012, 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

2013

2012

2011

2.1
2.2

3.1
3.1
3.1
3.2
3.2
3.3
3.3
3.4

2,572
2,685

2,433
2,475

2,187
2,136

125
2
59
2,457
897
91,712
85%
14

122
3
55
2,272
723
82,802
84%
27

94
3
53
2,036
446
41,376
70%
22

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NOVO NORDISK ANNUAL REPORT 2013

102 CONSOLIDATED ENVIRONMENTAL STATEMENT

Supplementary information

Notes

In the Consolidated environmental statement, Novo Nordisk reports on two dimensions of performance: resources,

and emissions and waste. Progress is reported on long-term targets to continuously reduce environmental impacts.

Sections in the Consolidated environmental statement
Section 1 Basis of preparation
Read this section to get an overview of the accounting policies and
standards used for reporting on environmental performance.

Section 3 Emissions and waste
Read this section to get more information about performance related to
outputs from production sites. Disclosures encompass data on realised
emissions and waste as well as efforts to reduce environmental impacts.

1. Basis of preparation, p 102

Section 2 Resources
Read this section to get more information about performance related to
consumption of resources at production sites. 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

General reporting standards and principles

The Consolidated environmental statement is prepared in accordance with
the same standards as those for the Consolidated social statement.
Read more in section 1 ‘Basis of preparation’ of the Consolidated social
statement on p 96.

Principles of consolidation

The Consolidated environmental statement covers the production sites,

Section 2
Resources
2.1 Energy

consumption

Accounting policies

Energy consumption 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.

Energy consumption in 1,000 GJ

2013

2012

2011

Diabetes care
Biopharmaceuticals
Not allocated1

Total

1,762
362
448

1,680
316
437

1,515
280
392

2,572

2,433

2,187

1. Not allocated consists of consumption that cannot be directly linked to the
production of either diabetes care or biopharmaceuticals, ie ofﬁ ce buildings.

In 2013 energy consumption increased by 6%, compared with 11% in
2012, due to increased production and start-up of new production facilities.

NOVO NORDISK ANNUAL REPORT 2013

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

except for CO2 emissions from transport, which covers forwarders used to
distribute Novo Nordisk products.

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.

Please refer to the accounting policies stated in the notes for information
on the environmental disclosures.

2.2 Water

consumption

Accounting policies

Water consumption is measured based on meter readings and invoices. It
includes drinking water, industrial water and steam.

Water consumption in 1,000 m3

2013

2012

2011

Diabetes care
Biopharmaceuticals
Not allocated1

Total

2,261
244
180

2,156
201
118

1,853
142
141

2,685

2,475

2,136

1. Not allocated consists of consumption that cannot be directly linked to the
production of either diabetes care or biopharmaceuticals, ie ofﬁ ce buildings.

In 2013 water consumption increased by 8%, compared with 16% in 2012,
due to increased diabetes care production as well as start-up of new
production facilities.

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Supplementary information

CONSOLIDATED ENVIRONMENTAL STATEMENT

103

Section 3
Emissions and waste
3.1 CO2 emissions

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.

CO2 emissions in 1,000 tons

2013

2012

2011

CO2 emissions from energy consumption
– Diabetes care
– Biopharmaceuticals
– Not allocated1
CO2 emissions from refrigerants
CO2 emissions from transport

Total

125
96
11
18
2
59

186

122
95
9
18
3
55

180

94
70
8
16
3
53

Development
The increase in water consumption led to an increase in the total volume of
wastewater of 8%, from 2,272,000 m3 in 2012 to 2,457,000 m3 in 2013.
The quantity of discharged COD in the wastewater increased by 24%, from
723 tons in 2012 to 897 tons in 2013, primarily due to increased activity,
especially in Kalundborg and Bagsvaerd.

3.3 Waste

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 of.

Tons of waste

2013

2012

2011

Non-hazardous waste
– Organic production waste for biogas1
– Other non-hazardous waste
Hazardous waste
– Ethanol
– Other hazardous waste

78,233
65,437
12,796
13,479
9,992
3,487

69,937
58,193
11,744
12,865
9,825
3,040

29,131
16,765
12,366
12,245
9,179
3,066

Total waste

91,712

82,802

41,376

Non-hazardous waste (of total waste)

85%

84%

70%

150

Waste treatment

2013

2012

2011

1. Not allocated consists of consumption that cannot be directly linked to the
production of either diabetes care or biopharmaceuticals, ie ofﬁ ce buildings.

CO2 emissions from energy consumption increased by 2% in 2013
compared with 2012, when emissions increased by 30%. The increase
is linked to energy consumption, but is less than the increase in energy
consumption. This is due to a decrease in energy consumption at
production facilities with CO2-intensive energy supply and an increase in
energy consumption at production facilities with less CO2-intensive energy
supply.

The emission of refrigerants decreased mainly due to replacement of
refrigerants with high global-warming potential.

CO2 emissions from transport (product distribution) increased by 7% due
to increased distribution volumes. Distributing as many products as possible
by sea is a priority for Novo Nordisk, as it reduces both CO2 emissions and
costs.

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 site’s total consumption of water 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.

Recycling
Incineration with energy recovery
Incineration without energy recovery
Special treatment2
Landﬁ lling

84%
9%
1%
5%
1%

71%
16%
1%
10%
2%

Total

100%

1. Until 2011, most of the non-hazardous organic production waste was used as animal
feed and classiﬁ ed as a by-product. Since October 2011, all this organic production
waste has been sent for energy recovery in biogas plants and is therefore reported
as waste.

2. Waste handled by companies specialised in chemical waste disposal. In 2013, 67%
was either process wastewater requiring special treatment or waste containing
medicine.

In 2013, total waste increased by 11%. Of this, 81% is non-hazardous
organic production waste from Diabetes care. All of this organic production
waste is recycled for energy recovery in biogas plants.

3.4 Breaches of regulatory

limit values

Accounting policies

Breaches of regulatory limit values covers all breaches reported to the
authorities.

Development
Breaches of regulatory limit values decreased by 48%, from 27 breaches in
2012 to 14 in 2013. Most breaches are short-term violations of limit values
for pH in wastewater with no impact on the environment.

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NOVO NORDISK ANNUAL REPORT 2013

104 FINANCIAL STATEMENTS OF THE PARENT COMPANY

Financial statements
of the parent
company 2013

The following pages encompass the ﬁ nancial statements of the parent company being the legal entity Novo Nordisk
A/S. Apart from ownership of the subsidiaries in the Novo Nordisk Group, the activity within the parent company mainly
comprises sales, 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 income 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 2013

Note

2013

2012

2
3

3
3
3

10
4
4

49,500
11,711

37,789

10,483
9,903
1,560
832

16,675

12,134
1,573
394

49,834
12,271

37,563

11,626
9,071
1,439
796

16,223

9,914
139
1,792

29,988

24,484

4,798

3,037

25,190

21,447

11,866
2,255
11,069

25,190

9,715
731
11,001

21,447

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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

Marketable securities
Derivative ﬁ nancial instruments
Cash at bank and on 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

Non-current liabilities

Current debt
Derivative ﬁ nancial instruments
Trade payables
Amounts owed to afﬁ liates
Tax payable
Other liabilities

Current liabilities

Total liabilities

Total equity and liabilities

FINANCIAL STATEMENTS OF THE PARENT COMPANY

105

Note

2013

2012

7
8
10

6
11

1,299
15,221
19,848

36,368

1,279
4,894
1,220

7,393

1,490
9,332
3,021
794

1,153
14,628
18,046

33,827

1,268
3,824
1,857

6,949

1,509
8,921
1,052
756

14,637

12,238

3,739
1,521
9,605

36,895

4,544
931
10,693

35,355

73,263

69,182

550
10,591
31,428

42,569

171
776

947

–

1
–
1,901
23,724
183
3,938

29,747

560
8,771
31,301

40,632

52
704

756

–

137
48
1,764
22,401
–
3,444

27,794

73,263

69,182

NOVO NORDISK ANNUAL REPORT 2013

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Fair value adjustments of ﬁ nancial assets categorised as ‘Available for sale’
in the parent company are recognised in the Income statement.

Total ﬁ nancial income

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 61– 62.

Supplementary accounting policies for the parent company

Financial assets

In the ﬁ nancial statements of the parent company, investments
in subsidiaries are recorded under the equity method, which is at the
respective share of the net asset values in subsidiaries. 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. 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
companies. Novo Nordisk A/S and its Danish subsidiaries are included in
the joint taxation of the parent company, Novo A/S.

Statement of cash ﬂ ows

No separate statement of cash ﬂ ows has been prepared for the parent
company; please refer to the Statement of cash ﬂ ows for the Group
on p 58.

2 Sales

DKK million

Sales by business segment
Diabetes care
Biopharmaceuticals

Total sales

Sales by geographical segment
North America
Europe
International Operations
Japan & Korea
Region China

Total sales

2013

2012

49,275
225

49,479
355

49,500

49,834

20,829
12,978
8,370
2,377
4,946

20,463
13,201
7,986
3,992
4,192

49,500

49,834

Sales are attributed to geographical segment based on location of the
customer. For deﬁ nitions of segments, please refer to note 2.2 to the
Consolidated ﬁ nancial statements.

NOVO NORDISK ANNUAL REPORT 2013

3 Employee

costs

DKK million

Wages and salaries
Share-based payment costs
Pensions
Other social security contributions
Other employee costs

Total employee costs

2013

2012

7,792
174
727
192
300

7,076
167
663
183
264

9,185

8,353

Change in employee costs included in inventories

(7)

For information regarding remuneration to the Board of Directors and
Executive Management, please refer to ‘Remuneration’ on pp 49 –51 and
note 2.3 to the Consolidated ﬁ nancial statements.

2013

2012

12,849

12,003

2013

2012

42
1,531

1,573

25
308
61

394

31
108

139

70
148
1,574

1,792

Average number of full-time
employees in Novo Nordisk A/S

4 Financial income and

ﬁ nancial expenses

DKK million

Interest income relating to subsidiaries
Other ﬁ nancial income

Interest expenses relating to subsidiaries
Foreign exchange loss (net)
Other ﬁ nancial expenses

Total ﬁ nancial expenses

5 Income

taxes

Following developments in tax disputes, uncertain tax positions
previously presented net, are as of 2013 presented individually as part of
tax receivables/tax payables. Novo Nordisk has applied the reclassiﬁ cation
in 2013 without restating previous years’ comparative amounts and
disclosures, as the change in classiﬁ cation has only immaterial impact.
Had comparative amounts been restated for 2012, tax receivables would
have decreased by DKK 456 million and tax payables increased by
DKK 181 million, both offset in ﬁ nancial assets.

Novo Nordisk A/S and its Danish subsidiaries’ tax contribution to the joint
taxation in 2013 amounts to DKK 4,251 million (DKK 3,527 million in
2012). In 2013, Novo Nordisk A/S paid income taxes of DKK 4,753 million
related to the current year (DKK 4,235 million in 2012) and DKK 2,550
million in taxes regarding prior years (DKK 3,620 million in 2012).
Furthermore, DKK 60 million has been paid in income taxes by Danish
subsidiaries (a payment of DKK 40 million in 2012).

6 Deferred income tax

assets/(liabilities)

DKK million

The deferred tax assets/liabilities are allocated
to the various balance sheet items as follows:
Property, plant and equipment
Indirect production costs
Unrealised internal proﬁ t
Other

2013

2012

(776)
(876)
2,024
(543)

(912)
(810)
2,024
(354)

Total income tax assets/(liabilities)

(171)

(52)

The Danish corporate tax rate was 25% in 2013. Deferred tax has been
calculated based on expected realisation reﬂ ecting the reduction in
the Danish corporate tax rate. The effect of the change (DKK 109 million)
is included in the total deferred income tax.

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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

2013

1,991
360
–

2,351

838
101
113

1,052

2012

1,872
119
–

1,991

713
97
28

838

1,299

1,153

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

2013

2012

10,803
432
(98)
524

14,568
562
(538)
866

1,990
102
(155)
37

3,710
1,288
–
(1,427)

31,071
2,384
(791)
–

29,307
2,177
(413)
–

Cost at the end of the year

11,661

15,458

1,974

3,571

32,664

31,071

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

4,413
488
4
(92)

10,658
1,098
22
(528)

1,372
152
5
(149)

–

16,443
1,738
31
(769)

15,050
1,704
86
(397)

Depreciation and impairment losses at the end of the year

4,813

11,250

1,380

–

17,443

16,443

Carrying amount at the end of the year

6,848

4,208

594

3,571

15,221

14,628

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
Other adjustments

Share
capital

Net
revaluation
reserve

560

8,771

2,255

(10)

(435)

Retained
earnings

31,301
11,069
11,866

(832)
1,205
(9,715)
174
57
(13,989)
65
10
(19)
236

2013

2012

40,632
11,069
11,866
2,255
(832)
1,205
(9,715)
174
57
(13,989)
65
0
(454)
236

37,448
11,001
9,715
731
1,118
832
(7,742)
167
31
(12,162)
266
0
(172)
(601)

Balance at the end of the year

550

10,591

31,428

42,569

40,632

Please refer to note 4.1 to the Consolidated ﬁ nancial statements regarding average number of shares, treasury shares and total number of A and B shares in
Novo Nordisk A/S.

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NOVO NORDISK ANNUAL REPORT 2013

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
Reclassiﬁ cation to unrealised internal proﬁ t
Amortisation and impairment
Reclassiﬁ cation effect of uncertain tax positions
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
Reclassiﬁ cation to value adjustment
Effect of exchange rate adjustment

Unrealised internal proﬁ t at the end of the year

Carrying amount at the end of the year

Investments
in subsidiaries

Amounts
owed by
afﬁ liates

Other
securities
and
investments

2013

2012

8,805
74

8,879

20,198
15,533
(2,564)
4,219

637
(10,423)

(1,124)
(130)

26,346

(11,334)
(835)
(37)
(4,219)
670

(15,755)

19,470

234
453
(477)

210

(4)

–

206

674
3
(163)

514

(531)

(26)

107
108

9,713
530
(640)

9,603

19,667
15,533
(2,564)
4,219
(26)
637
(10,423)
107
(1,020)
(130)

9,569
268
(124)

9,713

23,113
13,883
(3,340)
–
–
–
(13,039)
–
(482)
(468)

(342)

26,000

19,667

(11,334)
(835)
(37)
(4,219)
670

(15,239)
(627)
–
4,219
313

–

(15,755)

(11,334)

172

19,848

18,046

Carrying amount of investments in subsidiaries does not include capitalised goodwill at the end of the year. A list of companies in the Novo Nordisk Group is
found in note 5.8 to the Consolidated ﬁ nancial statements.

13 Commitments and

contingencies

2013

2012

DKK million

2013

2012

11 Other

provisions

DKK million

Non-current
Current

Total other provisions

465
311

776

480
224

704

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.

For information on pending litigations, please refer to note 3.6 to the
Consolidated ﬁ nancial statements.

12 Related party

transactions

For information on transactions with related parties, please refer to note 5.5
to the Consolidated ﬁ nancial statements.

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 2013 and 2012 were
DKK 315 million and DKK 335 million respectively.

Security for debt
Land, buildings and equipment etc.
at carrying amount

1,664

993

404
4,390

5,276
1,677

107
4,523

2,915
2,574

201
659
804

1,664

191
534
268

993

Novo Nordisk A/S and its Danish subsidiaries are jointly taxed with the
Danish companies in the Novo A/S Group. The joint taxation also covers
withholding taxes in the form of dividend tax, royalty tax and interest tax.
The Danish companies are jointly and individually liable for the joint
taxation. Any subsequent adjustments to income taxes and withholding
taxes may lead to a larger liability. The tax for the individual companies is
allocated in full on the basis of the expected taxable income.

For information on pending litigation and other contingencies, please refer
to notes 3.6 and 5.4 to the Consolidated ﬁ nancial statements.

NOVO NORDISK ANNUAL REPORT 2013

eng27 - 28.01 - 55-111.indd 108
eng27 - 28.01 - 55-111.indd 108

31/01/14 11.49
31/01/14 11.49

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 2013.

Further, the Consolidated financial statements, the Financial statements of
the parent company and Management’s Review are prepared in accordance
with additional Danish disclosure requirements for listed companies.

In our opinion, the Consolidated financial statements and the Financial
statements of the parent company give a true and fair view of the financial
position at 31 December 2013, the results of the Group’s and parent

company’s operations, and consolidated cash flows for the financial year
2013. Furthermore, in our opinion, Management’s Review includes a
true and fair account of the development in the operations and financial
circumstances, of the results for the year, and of the financial position
of the Group and the parent company as well as a description of the most
significant risks and elements of uncertainty facing the Group and the
parent company.

Novo Nordisk’s Consolidated social and environmental statements have
been prepared in accordance with the reporting principles of materiality,
inclusivity and responsiveness of AA1000APS(2008). They give a balanced
and reasonable presentation of the organisation’s social and environmental
performance.

We recommend that the Annual Report be adopted at the Annual General
Meeting.

Bagsværd, 29 January 2014

Executive Management

Lars Rebien Sørensen
President and CEO

Jesper Brandgaard
CFO

Lars Fruergaard Jørgensen

Lise Kingo

Jakob Riis

Kåre Schultz

Mads Krogsgaard Thomsen

Board of Directors

Göran Ando
Chairman

Jeppe Christiansen
Vice chairman

Bruno Angelici

Henrik Gürtler

Liz Hewitt
Audit Committee member

Ulrik Hjulmand-Lassen

Thomas Paul Koestler

Anne Marie Kverneland

Søren Thuesen Pedersen

Hannu Ryöppönen
Chairman of
the Audit Committee

Stig Strøbæk
Audit Committee member

NOVO NORDISK ANNUAL REPORT 2013

110

INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Reports

To the Shareholders of Novo Nordisk A/S

Report on Consolidated financial statements and
Financial statements of the Parent Company

We have audited the Consolidated financial statements and the Financial
statements of Novo Nordisk A/S for the financial year 2013, 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 financial statements are prepared in accordance with
International Financial Reporting Standards as issued by the International
Accounting Standards Board, and International Financial Reporting
Standards as endorsed by the EU. The Financial statements of the Parent
Company are prepared in accordance with the Danish Financial Statements
Act. Moreover, both the Consolidated financial statements and the
Financial statements of the Parent Company are prepared in accordance
with additional Danish disclosure requirements for listed companies.

Management’s Responsibility for the Consolidated
financial statements and the Financial statements of the
Parent Company
The Management is responsible for the preparation of the Consolidated
financial statements and the Financial statements of the Parent Company
that give a true and fair view in accordance with the above legislation
and accounting standards, and for such internal control as Management
determines is necessary to enable preparation of Consolidated financial
statements and Financial statements of the Parent Company that are free
from material misstatement, whether due to fraud or error.

Auditor’s Responsibility
Our responsibility is to express an opinion on the Consolidated financial
statements and the Financial statements of the Parent Company based on
our audit. We conducted our audit in accordance with International
standards on Auditing and additional requirements under Danish Audit
regulation. This requires that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the
Consolidated financial statements and the Financial statements of the
Parent Company are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the Consolidated financial statements and
the Financial statements of the Parent Company. The procedures selected
depend on the auditor’s judgement, including the assessment of the risks of
material misstatement of the Consolidated financial statements and the
Financial statements of the Parent Company, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control
relevant to the Company’s preparation of Consolidated financial 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 financial statements and the Financial statements of
the Parent Company.

We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.

Our audit has not resulted in any qualification.

Opinion
In our opinion, the Consolidated financial statements give a true and fair
view of the financial position at 31 December 2013 of the Group and of
the results of the Group’s operations and consolidated cash flows for the
financial year 2013 in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board, and
International Financial Reporting Standards as endorsed by the EU and
additional Danish disclosure requirements for listed companies. Moreover,
in our opinion the Financial statements of the Parent Company give a
true and fair view of the financial position at 31 December 2013 and of the
results of the Parent Company’s operations for the financial year 2013 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 financial
statements and the Financial statements of the Parent Company.

Bagsværd, 29 January 2014

PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab

Lars Holtug
Danish State Authorised
Public Accountant

Lars Baungaard
Danish State Authorised
Public Accountant

NOVO NORDISK ANNUAL REPORT 2013INDEPENDENT ASSURANCE REPORT

111

Independent Assurance Report on the social
and environmental reporting for 2013

To the Stakeholders of Novo Nordisk A/S

We have reviewed the Consolidated social and environmental information
in the Annual Report of Novo Nordisk A/S for the financial year 2013,
which comprises Management’s Review and the Consolidated social and
environmental statement on pp 1– 54, 94 and 95 –103.

The assurance engagement has furthermore covered the nature and
extent of Novo Nordisk A/S incorporation of the AA1000 AccountAbility
Principles Standard (AA1000APS(2008)) principles (inclusivity, materiality
and responsiveness) with respect to stakeholder dialogue.

Criteria for the preparation of reporting on data
The 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
information, specifying acceptable reporting criteria and choosing data
to be collected for intended users of the report. Also, adherence to
AA1000APS(2008) i.e. 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 A/S adherence to the AA1000APS(2008) principles.

Our team 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 information
and sustainability management, and thus qualifies to conduct this
independent assurance engagement. During 2013 we have not performed
any tasks or services for Novo Nordisk A/S or other clients that would
conflict with our independence. Furthermore, we have not been
responsible for the preparation of any part of the report; and therefore
qualify as independent as defined by in AA1000AS(2008).

Scope, standards and criteria used
We have planned and performed our work in accordance with the
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 A/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 information include data from the Group’s affiliates, and
that these data have been incorporated in compliance with the social
accounting policies and environmental accounting policies. Furthermore,
based on our assessment of materiality and risk, we have selected and
conducted interviews with data and reporting responsible personnel, and
based on requests and selected documentation, we have assessed the
existing systems for data collection and registration, and procedures to
ensure reliable information;

(ii) Inquiries and interviews with members of the Board of Directors,
Executive Management, Corporate Stakeholder Engagement, Operations,
Corporate Sustainability, as well as Management in the US affiliate,
regarding Novo Nordisk A/S commitment and adherence to the principles
of inclusivity, materiality and responsiveness, the existence of systems and
procedures to support adherence to the principles and embeddedness 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 2013 (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 A/S does not adhere to the AA1000APS(2008) principles.

Observations and recommendations
According to AA1000AS(2008), we are required to include observations
and recommendations for improvements in relation to adherence to the
AA1000APS(2008) principles:

Regarding inclusivity
Novo Nordisk A/S continues to demonstrate a strong commitment to
accountability with systems and processes in place to support stakeholder
engagement around sustainability issues at corporate level. Building
capabilities on stakeholder engagement and sustainability across the
business has been a focus in 2013. This has involved roll-out of guidelines,
workshops in China and Brazil and offerings, systems and contracts made
with affiliates to systematically support and clarify roles and responsibilities.

We have no significant recommendations regarding inclusivity.

Regarding materiality
Novo Nordisk A/S 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. The refined materiality filter and criteria applied in the
context of the Annual Report has resulted in the exclusion of certain data
types.

We have no significant recommendations regarding materiality.

Regarding responsiveness
Being responsive to stakeholder needs and concerns is key to Novo Nordisk
A/S and evident from the use of different channels to engage in dialogue
and convey messages. We notice that this year’s Annual Report serve as an
example of how stakeholders are engaged on dilemmas Novo Nordisk A/S
are facing.

We have no significant recommendations regarding responsiveness.

Novo Nordisk A/S demonstrates leadership in the area of establishing,
evaluating and communicating accountability. We recommend that Novo
Nordisk A/S strengthen this leadership position by reviewing the
opportunities to further integrate the Triple Bottom Line in management
and decision making processes.

Bagsværd, 29 January 2014

PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab

Lars Holtug
Danish State Authorised
Public Accountant

Lars Baungaard
Danish State Authorised
Public Accountant

NOVO NORDISK ANNUAL REPORT 2013
112 ADDITIONAL INFORMATION

More
information

Financial calendar 2014

Dividend

Announcement of financial results

20
March
2014

Annual
General
Meeting

21
March
2014

25
March
2014

26
March
2014

2
April
2014

Ex-
dividend

Record
date

Payment,
B shares

Payment,
ADRs

1
May
2014

First
three
months

7
August
2014

30
October
2014

30
January
2015

Half
year

First nine
months

Full
year

News and updates

For more news from Novo Nordisk, visit novonordisk.com/
press. Read TBL Quarterly for news about sustainability at
novonordisk.com/tblquarterly.

Follow Novo Nordisk on social media

facebook.com/novonordisk

twitter.com/novonordisk
twitter.com/novonordisktbl

linkedin.com/company/novo-nordisk

References: The one rule we have to break: 1. International Diabetes Federation. IDF
Diabetes Atlas, 6th edn. Brussels, Belgium. International Diabetes Federation, 2013. idf.org/
diabetesatlas. 2. Hart JT. Rule of Halves: implications of increasing diagnosis and reducing
dropout for future workload and prescribing costs in primary care. Br J Gen Pract. 1992;
42(356):116–119, and Smith WCS, Lee AJ, Crombie IK, Tunstall-Pedoe H. Control of blood
pressure in Scotland: the rule of halves. BMJ 1990; 300:981–983. 3. Stratton IM, Adler AI, Neil
HA et al., for the United Kingdom Prospective Diabetes Study Group. Association of glycaemia
with macrovascular and microvascular complications of type 2 diabetes (UKPDS 35):
prospective observational study. BMJ 2000; 321(7258):405–412. 4. Shah CP & Chen C. Review
of Therapeutic Advances in Diabetic Retinopathy. Ther Adv Endocrinol Metab. 2011 February;
2(1): 39–53. One size doesn’t fit all: 1. Klein O, Lynge J, Endahl J, Damholt B, Nosek L, Heise
T. Albumin-bound basal insulin analogues (insulin detemir and NN344): comparable
time-action profiles but less variability than insulin glargine in type 2 diabetes. Diabetes,
Obesity and Metabolism 9:290–299, 2007. 2. Evans et al. Lessons from early experience with
insulin degludec in routine clinical practice. IDF 2013 Abstract P-1050. Is obesity a disease?:
1. Ogden at al. NCHS Data Brief No. 82 2012. Available at cdc.gov/nchs/data/databriefs/db82.
pdf. 2. Must et al. JAMA. 1999 Oct 27; 282(16):1523–9. 3. Gami et al. Endocrinol Metab Clin
North Am 2003; 32:869–894 (from 3970 protocol) 4. Young T, Skatrud J, Peppard PE. Risk
factors for obstructive sleep apnea in adults JAMA 2004; 29120 13–6. 5. Eheman et al. Cancer.
2012 May 1; 118(9):2338–66. doi: 10.1002/cncr.27514. Epub 2012 Mar 28. 6. Prospective
Studies Collaboration. Lancet. 2009; 373:1083–96. 7. Peeters et al. Ann Intern Med. 2003;
138:24–32. 8. World Health Organization. Obesity and overweight. Fact sheet No 311.
September 2012. Available at: who.int/mediacentre/factsheets/fs311/en. 9. Tuomilehto et al.
N Engl J Med. 2001; 344:1343–50. 10. Knowler et al. N Engl J Med. 2002;346:393–403. 11. Li
et al. Lancet. 2008; 371:1783–9. 12. Dattilo & Kris-Etherton. Am J Clin Nutr. 1992; 56:320–8.
13. Dengo et al. Hypertension. 2010; 55:855–61. 14. Felson et al. Ann Intern Med. 1992;
116:535–9. 15. Foster et al. Arch Intern Med. 2009; 169:1619–26. 16. WHO. Factsheet 311.
2011. who.int 17. Williams G and Frühbeck G (eds). Obesity: Science to Practice. John Wiley &
Sons, Ltd., 2009. Available at: onlinelibrary.wiley.com/book/10.1002/9780470712221 (last
accessed: 7 October 2013). 18. Wren AM and Bloom SR. Gut hormones and appetite control.
Gastroenterology 2007; 132:2116–2130. A question of trust: 1. Patient View Quarterly.
The Corporate reputation of Pharma – the Patient Perspective Published 14 January 2013.

NOVO NORDISK ANNUAL REPORT 2013

Additional reporting
In addition to the Annual Report, Novo Nordisk provides
disclosure in separate reports to satisfy specific legal
requirements and stakeholder interests. Additional reports
can be downloaded at novonordisk.com/annualreport.

Form 20-F
Annual reporting requirement by the US Securities and
Exchange Commission (SEC) for foreign private issuers with
equity shares listed on exchanges in the United States. The
Form 20-F is made in a standardised reporting form 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 fulfils a requirement of the Danish Financial
Statements Act, section 99a. Novo Nordisk submits a
Communication on 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.

Diversity Report
Reporting of target figures and diversity policy for the
under-represented gender according to the Danish Financial
Statements Act.

Design and production: ADtomic Communications. Accounts and notes: Team2Graphics.
Printing: Bording PRO as, February 2014. Photography: ADtomic Communications,
BrakeThrough Media, Martin Brinks, Kevin Eilbeck, Ted Fahn, Getty Images, Willi Hansen,
Nimish Jain, Martin Juul, David Plakke, Søren Rønholt, Shutterstock, Kasper Veje, Jesper
Westley, John Ma Zhuoran and product portfolio.

6 2013 performance

and 2014 outlook

Business strategy:

‘Our focus is our strength’

Risks to be

aware of

One size

doesn’t ﬁ t all

Novo Nordisk’s

ﬁ ve regions

Contents

Accomplishments

and results 2013

Letter from the Chairman

Letter from the CEO

Novo Nordisk at a glance

2013 performance

and 2014 outlook

14 Performance highlights

Our business

Business strategy:

‘Our focus is our strength’

Pipeline overview

The one rule we have to break

24 One size doesn’t ﬁ t all

26 Changing diabetes

where it matters most

Is obesity a disease?

An important factor of life

Novo Nordisk’s ﬁ ve regions

The complexity of

insulin production

A question of trust

42 Risks to be aware of

Governance, leadership and shares

Shares and capital structure

Corporate governance

Remuneration

Board of Directors

54 Executive Management

Financial, social and

environmental statements

Consolidated ﬁ nancial,

social and environmental

statements

104

Financial statements

of the parent company

109

Management’s statement

and Auditor’s reports

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

version. In the event of any discrepancies, the Danish version

shall prevail.

ADDITIONAL INFORMATION

113

A selection of Novo Nordisk injection
devices. From the front: NovoPen® 5,
Tresiba® FlexTouch®, Victoza®
and Norditropin® FlexPro®.

The one rule we

have to break

Product overview

Diabetes care
New-generation insulins
• Tresiba®, insulin degludec
• Ryzodeg®, insulin degludec/insulin aspart

Glucagon-Like Peptide-1
• Victoza®, liraglutide

Modern insulins
• Levemir®, insulin detemir
• NovoRapid®, insulin aspart
• NovoMix® 30, biphasic insulin aspart
• NovoMix® 50, biphasic insulin aspart
• NovoMix® 70, biphasic insulin aspart

Human insulins
• Insulatard®, isophane (NPH) insulin
• Actrapid®, regular human insulin
• Mixtard® 30, biphasic human insulin
• Mixtard® 40, biphasic human insulin
• Mixtard® 50, biphasic human insulin

Diabetes devices
• FlexTouch®, prefilled insulin delivery system
• FlexPen®, prefilled insulin delivery system
• NovoPen Echo®, durable insulin delivery system with memory

function

• NovoPen® 5, durable insulin delivery system with memory

function

• NovoPen® 4, durable insulin delivery system
• InnoLet®, prefilled insulin delivery system
• NovoFine® Plus, needle
• NovoFine® AutoCover®, needle
• NovoFine®, needle
• NovoTwist®, needle
• GlucaGen®, glucagon
• GlucaGen® Hypokit, glucagon

Oral antidiabetic agents
• NovoNorm®, repaglinide
• PrandiMet®, repaglinide/metformin

Biopharmaceuticals
Haemostasis
• NovoSeven®, recombinant factor VIIa, also available with
prefilled syringe in an increasing number of countries

• NovoThirteen®, recombinant factor XIII
• NovoEight®, recombinant factor VIII

Human growth hormone
• Norditropin®, somatropin (rDNA origin)
• Norditropin® FlexPro®, prefilled multidose delivery system
• PenMate®, automatic needle inserter (available for
Norditropin® FlexPro®, NordiFlex® and SimpleXx®)

• Norditropin® NordiFlex®, prefilled multidose delivery system
• NordiPen®, durable multidose delivery system
• NordiPenMate®, automatic needle insertion
• NordiLet®, prefilled multidose delivery system

Hormone replacement therapy
• Vagifem®, estradiol hemihydrate
• Activelle®, estradiol/norethisterone acetate
• Estrofem®, estradiol
• Novofem®, estradiol/norethisterone acetate

Market data on pp 5, 17, 18, 32, 33, 34, 35 and 41 are from IMS Health, IMS MIDAS Customized
Insights (November 2013). Market definition for retail: Algeria, Argentina, Australia, Austria,
Belgium, Brazil, Bulgaria, Canada, Colombia, Czech Republic, Denmark, Egypt, Estonia, Finland,
Germany, Greece, Hungary, India, Ireland, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg,
Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Saudi Arabia, Slovakia,
Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, UK and US. Market definition for
hospitals: Australia, Bulgaria, Canada, China, Czech Republic, Denmark, Finland, Germany,
Hungary, Italy, Japan, Latvia, Lithuania, New Zealand, Norway, Poland, Romania, Slovakia,
Slovenia, South Africa, Spain, Sweden, Switzerland, UK and US. Retail data for France are
sourced from GERS (November 2013).

IMS Health data coverage for the Federal Facilities channel in the US has changed significantly
in the second half of 2013. This may effect the calculation of market share measured in volume
but has no material effect on market share measured in value.

NOVO NORDISK ANNUAL REPORT 2013

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

You can also help improve our reporting
by answering six questions at:
novonordisk.com/annualreport/feedback

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

Cover photo: A resident of Philadelphia, Jesse Crumpler has something
in common with 3.7 billion other people: he lives in a big city that is
becoming bigger by the day. And like 246 million people living in urban
areas, he has diabetes. Sadly, urban living and diabetes go hand in hand.
And not much is known about how to change the situation.