Novo Nordisk
Annual Report
2021
Morten Kruse-Jacobsen (to the right), Senior Director at Novo Nordisk and married to Anders.
Being a sustainable employer is a key priority for Novo Nordisk. This includes fostering a diverse
and inclusive workplace. From January 2022, Novo Nordisk will offer a minimum of eight weeks
paid parental leave to all non-birthing parents globally, regardless of gender.
Novo Nordisk A/S - Novo Allé 1, 2880 Bagsværd, Denmark - CVR no. 24256790
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
2
Contents
Management
review
Introducing Novo Nordisk
Letter from the Chair
Letter from the CEO
Novo Nordisk at a glance
Our business model: how we create value for society
Performance highlights
Strategic Aspirations
Purpose and sustainability (ESG)
Innovation and therapeutic focus
Commercial execution
Financials
Key risks
Risk management
Management
Board of Directors
Executive Management
4
5
6
7
8
11
24
30
33
41
44
47
Consolidated
statements and
additional information
Consolidated financial statements
Income statement
Cash flow statement
Balance sheet
Equity statement
Notes to the consolidated financial statements
Consolidated ESG statement
Consolidated statement of ESG performance
Notes to the consolidated ESG statement
Statements and Auditor's Reports
Statement by the Board of Directors and
the Executive Management
Independent Auditor's Reports on the Financial Statement
Independent Assurance Report on the ESG statement
Additional information
More information
Financial calendar
Product overview
50
51
52
53
54
85
86
92
93
95
96
97
97
Novo Nordisk Annual Report 2021 Introducing
Novo Nordisk
4
5
6
7
8
Letter from the Chair
Letter from the CEO
Novo Nordisk at a glance
Our business model:
how we create value for society
Performance highlights
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
4
Letter from the Chair
Our long-standing aspiration of creating value for society and
serving people living with diabetes and obesity but also making
Building for
the future
for our future business is more relevant than ever, given the
a positive impact in new therapeutic areas.
mounting threats to people’s lives and livelihoods posed by the
health and environmental challenges dominating today’s global
Our stable ownership structure with the Novo Nordisk
agenda. The past two years have underscored the essential role
Foundation as the main shareholder will help in this transition by
of science in tackling these challenges, whether managing a
supporting us through investment in research and development
rogue virus or reducing emissions.
for the long-term while maintaining a focus on high quality
operations and financial performance.
We have made good progress as a company in the past
year – despite the pandemic which continues to impact
the world and the initial challenges in meeting the
unprecedented demand for our new obesity treatment.
We continued to broaden our technology platforms
and product pipeline to strengthen the basis for long-
term growth whilst investing significantly in expanding
our future production capacity.
Continued investment in innovation is vital for patients, the future
of our company and for the wider benefits we can offer to society.
We must also ensure that Novo Nordisk has a diverse and truly
It is therefore gratifying to see the strides that have been made
in 2021 with the launch of new products – most notably Wegovy®
inclusive culture if we are to become a better and more innovative
company. With this in mind, we have set new 2025 aspirational
for obesity. Production challenges meant that we struggled to
targets for achieving a balanced gender representation across
meet the high patient demand for the treatment – a situation
managerial levels. We believe that this will also stimulate and
that served to underline the vital importance of investments
inspire the work we are doing to enhance other diversity
made in our global production capacity during 2021.
dimensions.
The opportunity for the coming years is to execute on the
At Board level, we are also committed to ensuring strong diversity
commercial potential of our innovative, new treatments while
and having the right competences to meet future challenges. In
ensuring that as many people as possible have access to quality
2021, the Board was delighted to welcome the election of Henrik
medicines. At the same time, we must succeed in developing the
Poulsen, whose deep experience in corporate transformations
medicines of the future. This means looking beyond our existing
and strong ESG credentials will be invaluable. I would also like to
focus areas and our successful GLP-1 molecule semaglutide,
thank Brian Daniels and Liz Hewitt, who stepped down from the
towards other therapy areas and new technology platforms to
Board in 2021, for their significant contributions to Novo Nordisk.
address unmet medical needs related to serious chronic diseases.
On behalf of the Board of Directors, I would like to offer my
To serve more patients with high quality medicines and to
sincere thanks to all Novo Nordisk employees for their dedication
continue to grow sustainably, we will evolve and challenge
and contribution to the good operational and strategic progress
ourselves in how we work and innovate. This also entails
in 2021; to CEO Lars Fruergaard Jørgensen and his team for their
combining our company’s deep in-house expertise with the
leadership and to our shareholders and other stakeholders for
best science from outside, through partnerships with other
continued support.
businesses, with universities around the world and with
research institutions. If we succeed, Novo Nordisk will look very
Helge Lund
different a decade from now, by which time we will not only be
Chair of the Board of Directors
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
5
Letter from the CEO
Our company’s strong commercial performance against a
We are also doing more than ever to mitigate our impact on the
Strong progress
and new learnings
During 2021 we exceeded expectations – growing
our business, serving more patients than ever and
expanding our pipeline for long-term success. But we
also disappointed patients and prescribers alike due to
supply challenges that we must learn from as we look
to the future.
backdrop of continued disruption caused by the pandemic
would not have been possible without the resilience and
environment, with a 43% reduction in CO2 emissions compared
to pre-pandemic, and an action plan to drive emissions down
collaborative spirit shown by colleagues across the organisation
further in transportation, which is our largest residual source of
and our many partners.
CO2. This includes converting our fleet of cars to electric vehicles,
as well as working with a shipping partner to increasingly
This momentum was driven by our portfolio of GLP-1 based
transport our products using biofuel.
therapies where buoyant demand for our semaglutide-based
medicines Ozempic® and Rybelsus® contributed to a total GLP-
We have bold ambitions to diversify our product pipeline
1 growth of 28% in 2021, thereby strengthening our global
into adjacent therapy areas such as NASH (non-alcoholic
leadership in diabetes in the process.
steatohepatitis) and cardiovascular disease, where we believe
Such was the demand in the US for another semaglutide product
Wegovy® , that five weeks after launch, as many prescriptions
were written for the anti-obesity medication as in the four years
that followed the launch of its predecessor Saxenda®. This
we can be among the best in the world. Our collaboration with
Heartseed for stem cell-based heart failure therapy reflects
these efforts and we expect to take a significant step forward by
initiating the first human trials this year.
underscored the high unmet need among people living with
Our acquisition of Dicerna, which develops RNAi-based therapies
obesity but also presented initial challenges for us in supply
to selectively silence genes that cause or contribute to disease,
capacity – exacerbated when a key partner experienced issue
demonstrates our ambition to innovate within both established
with Good Manufacturing Practices (GMP) in December.
and new therapy areas for Novo Nordisk. Our commitment
to achieving further breakthroughs within diabetes remains
Whilst we continue to focus on providing treatment to already-
as strong as ever. Driving this innovation requires creativity –
initiated patients, we are taking steps within our global
something I am convinced is fostered through inclusion. To enable
production to enable us to fully meet US demand in the second
this, we are making Novo Nordisk a more diverse and inclusive
half of this year and to enable much-anticipated launches in
workplace in which both new and long-serving employees have
broader markets.
the opportunity to achieve their full potential.
Importantly, we continue to reach more patients in need around
the world. Our Changing Diabetes® in Children partnership, for
I would like to thank all my colleagues around the globe for their
hard work and commitment during another demanding year,
example, has provided free, holistic diabetes care to nearly 32,000
as well as the Board of Directors and our shareholders for their
children and adolescents living with type 1 diabetes in low- and
continued support.
middle-income countries. Our diabetes products now reach 34.6
million people worldwide, with more than 5 million receiving them
Lars Fruergaard Jørgensen
through our access and affordability programmes.
President & Chief Executive Officer
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
6
Novo Nordisk
at a glance
Our corporate strategy
Novo Nordisk is a global healthcare company, headquartered
Our corporate strategy has four distinct focus areas in
leading positions within Biopharm and establish a
in Denmark. Our key contribution is to discover and develop
which we operate. It is built on our purpose, the Novo
strong presence in other serious chronic diseases such
innovative biological medicines and make them accessible to
Nordisk Way and our ambition to be a sustainable
as NASH, cardiovascular disease and Alzheimer’s disease.
patients throughout the world. We aim to lead in all disease
business. We aim to strengthen our leadership and
Succeeding in this will drive sustainable growth for
areas in which we are active.
treatment options in Diabetes and Obesity care, secure
Novo Nordisk.
140,800
DKK million in net sales
168
countries with marketed products
58,644
DKK million in operating profit
80
countries with affiliates
29,319
DKK million in free cash flow
5
countries with R&D facilities
48,478
employees worldwide
Diabetes care
Strengthen leadership
by offering innovative
medicines and driving
patient outcomes
o
N
v o N ordisk W
a
y
Obesity care
Strengthen treatment options
through market development
and by offering innovative
medicines and driving
patient outcomes
Driving change to
defeat diabetes
and other serious
chronic diseases
Biopharm
S
u
stainabl e b u s i n
Secure a leading position
by leveraging full portfolio
and expanding into
adjacent areas
e ss
Other serious
chronic diseases
Establish presence by
building competitive pipeline
and scientific leadership
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
Novo Nordisk Annual Repor t 2021
7
Resources
Our business model
How we create
value for society
Value
* Number of unique HCPs educated by independent medical
education activities supported through educational grants
Sustainable taxpayerDKK 32,593 million total tax contribution> 5 million patients reachedvia access and affordability initiativesNovo Nordisk Foundation and other shareholdersDKK 40,964 million paid out via dividends and share buy-backs34.6 million patients reached with our diabetes productsHealthcare professionals trained>950,000*Direct suppliers>60,000Climate43% reduction of CO2 emissions compared to 201948,478 employees, of whom 7,580 were new hires in 2021R&D investmentsDKK 41.9 billionInsights from healthcare experts, patients and partnersExpertise from public and private institutionsFinancial resourcesDiverse talentRaw materialsManufacturingDistributionCommercialR&D Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
8
2021
Highlights
Purpose and sustainability (ESG)
Strategic
Aspirations 2025
Adding value to society:
– Medical treatment provided to 34.6 million people living with diabetes in 2021
– 46 new vulnerability assessments conducted enabling access to insulin to
Progress towards zero environmental impact:
– 43% reduction in CO2 emissions compared to 2019
around 82,000 people living with diabetes
– Reaching 18 countries and around 32,000 children in Changing Diabetes®
Evolve culture and ensure distinct core capabilities:
– Launch of an aspirational gender diversity target
– Being respected for adding value to society
– Progress towards zero environmental impact
– Ensure distinct core capabilities and evolve culture
in Children
Innovation and therapeutic focus
Further raise innovation bar for diabetes treatment:
– Approval of Xulthophy® and Ozempic® in China for the treatment
of type 2 diabetes
Strengthen and progress Biopharm pipeline:
– Sogroya® phase 3 programme in children with growth
hormone deficiency successfully completed
– Resubmission of semaglutide 2.0 mg in the US and approval
– First Mim8 phase 1/2 trial cohorts successfully completed
in the EU in January 2022
– Phase 1 trial completed with a glucose-sensitive insulin
Develop superior treatment solutions for obesity:
– Approval of Wegovy®, semaglutide 2.4 mg, in the US and approval in
the EU in January 2022
– Phase 3a development initiated with 50 mg oral semaglutide in obesity
Establish presence in other serious chronic diseases:
– Phase 3a development initiated with ziltivekimab in cardiovascular
disease and semaglutide in NASH and Alzheimer's disease
Acquisition of Dicerna Pharmaceuticals and its RNAi platform
to be applied across therapy areas
– Further raise the innovation bar for diabetes treatment
– Develop a leading portfolio of superior treatment solutions
for obesity
– Strengthen and progress the Biopharm pipeline
– Establish presence in other serious chronic diseases focusing
on cardiovascular disease (CVD), NASH and chronic kidney
disease (CKD)
Commercial execution
Strengthen diabetes leadership to more than one-third:
– Diabetes value market share increased by 0.8 percentage point
to 30.1% (MAT)
Financials
Deliver solid sales and operating profit growth:
– Sales growth at 14% (CER)
– International Operations sales growth of 14% (CER)
– US sales growth of 13% (CER) with 60% of sales coming
from products launched since 2015
– Operating profit growth of 13% (CER)
Strengthen obesity leadership and double sales:
– Obesity care sales increased by 55% (CER) to DKK 8.4 billion
Secure a sustained growth outlook for Biopharm:
– Biopharm sales increased by 4% (CER) to DKK 19.2 billion
– Strengthen diabetes leadership – aim at global value market
share of more than 1/3
– Strengthen obesity leadership and double 2019 reported sales
– Secure a sustained growth outlook for Biopharm
Drive operational efficiencies:
– Continued productivity gains in Product Supply
Enable attractive capital allocation to shareholders:
– Free cash flow of DKK 29.3 billion
– Share buyback of DKK 20 billion
– Total dividend of DKK 10.40 per share and payout ratio of 49.6%
– Deliver solid sales and operating profit growth:
– Deliver 6–10% sales growth in IO
– Transform 70% of sales in the US (from 2015 to 2022)
– Drive operational efficiencies across the value chain to enable
investments in future growth assets
– Deliver free cash flow to enable attractive capital allocation to
shareholders
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
Performance highlights
Financial
highlights
Sales by geographic area
North America
EMEA
Region China
Rest of World
14%
11%
27%
Sales by therapeutic area
DKK million
Financial performance
Net sales
Sales growth as reported
Sales growth in constant exchange rates (CER)1
Operating profit
Operating profit growth as reported
Operating profit growth in constant exchange rates (CER)1
Depreciation, amortisation and impairment losses
Net financials
Profit before income taxes
Effective tax rate2
Net profit
Purchase of intangible assets2
Purchase of property, plant and equipment2
Cash used for acquisition of businesses
Free cash flow1
Total assets
Equity
Financial ratios
Gross margin2
48%
Sales and distribution costs in percentage of sales
Research and development costs in percentage of sales
Operating margin2
Net profit margin2
Cash to earnings1
Diabetes care
Obesity care
Biopharm
Operating profit after tax to net operating assets1
14%
6%
80%
Dividend payout ratio2
Share performance
Basic earnings per share/ADR in DKK2
Diluted earnings per share/ADR in DKK2
Total number of shares (million), 31 December
Dividend per share in DKK
Total dividend (DKK million)
Share repurchases (DKK million)
Closing share price (DKK)
2017
2018
2019
2020
2021
111,696
111,831
122,021
126,946
140,800
(0.1%)
2.3%
48,967
1.1%
4.8%
3,182
(287)
48,680
21.7%
38,130
1,022
7,626
—
32,588
102,355
49,815
84.2%
25.4%
12.5%
43.8%
34.1%
85.5%
143,2%
50.4%
15.42
15.39
2,500
7.85
19,206
16,845
335
0.1%
4.6%
47,248
(3.5%)
2.8%
3,925
367
47,615
18.9%
38,628
2,774
9,636
—
32,536
110,769
51,839
84.2%
26.3%
13.2%
42.2%
34.5%
84.2%
116,7%
50.6%
15.96
15.93
2,450
8.15
19,547
15,567
298
9.1%
5.6%
52,483
11.1%
5.6%
5,661
(3,930)
48,553
19.8%
38,951
2,299
8,932
—
34,451
125,612
57,593
83.5%
26.1%
11.7%
43.0%
31.9%
88.4%
98.0%
50.5%
16.41
16.38
2,400
8.35
19,651
15,334
387
4.0%
6.7%
54,126
3.1%
6.8%
5,753
(996)
53,130
20.7%
42,138
16,256
5,825
—
28,565
144,922
63,325
83.5%
25.9%
12.2%
42.6%
33.2%
67.8%
82.8%
50.0%
18.05
18.01
2,350
9.10
21,066
16,855
427
10.9%
13.8%
58,644
8.3%
12.7%
6,025
436
59,080
19.2%
47,757
1,050
6,335
18,283
29,319
194,508
70,746
83.2%
26.3%
12.6%
41.7%
33.9%
61.4%
69.0%
49.6%
20.79
20.74
2,310
10.40 3
23,711 3
19,447
735
1. See 'Non-IFRS financial measures' 2. See 'Financial definitions'. 3. Total dividend for the year including interim dividend of DKK 3.50 per share, corresponding to DKK 8,021 million,
which was paid in August 2021. The remaining DKK 6.90 per share, corresponding to DKK 15,690 million, will be paid subject to approval at the Annual General Meeting.
9
2020-21
Change
11%
8%
11%
13%
(94%)
9%
3%
34%
12%
15%
15%
(2%)
14%
13%
15%
72%
Novo Nordisk Annual Report 2021 Strategic
Aspirations
Innovation and therapeutic focus
11 Purpose and sustainability (ESG)
24
30 Commercial execution
33 Financials
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
11
43%
decrease in our overall CO2 emissions compared
to pre-COVID levels in 2019
31,846
children reached through our Changing Diabetes® in
Children programme in 2021. This corresponds to an
increase of 13% compared to 2020
The “Key ESG priorities” overview is meant to inform our ESG
reporting in the future and will be refreshed regularly. Overall,
we aim to progress towards zero environmental impact, be
respected for adding value to society and ensure distinct core
capabilities, evolve culture as well as maintain and build trust
across the E, S and G dimensions.
Purpose and sustainability (ESG)
Driving a
Sustainable
Business
Expectations of what it means to be a sustainable
business are evolving rapidly. The COVID-19 pandemic,
access to care and the climate crisis have accelerated
demands for the private sector to demonstrate how
it adds value to society and mitigates long-term risks.
Given Novo Nordisk’s central position in the healthcare
ecosystem, our company is at the forefront of these
challenges – and we are stepping up our commitments
to patients and society as we further integrate
sustainability into everything we do.
Our key ESG topics
In 2021, we completed a thorough process aimed at addressing
materiality and prioritising our key Environmental, Social and
Governance (ESG) topics. We identified key ESG topics across
two dimensions: (1) how our activities impact society and planet
and (2) how society and planet impact our activities. Those ESG
topics that are of highest impact and materiality are covered
in this integrated annual report. All applicable remaining ESG
topics are covered via our reporting on relevant ESG standards
and frameworks (please refer to the Sustainability Standards
section on pages 22 and 23).
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
12
Novo Nordisk
Society & planet
Topics
Key ESG priorities
Environmental
– CO2 emissions
– Energy consumption
Social
– Access & affordability
– Diversity & inclusion
– Environmental management
– Employees
– Plastic
– Waste & circularity
– Water
– Human rights
– Innovation
– Prevention of serious
chronic diseases
– Sustainable tax
Governance
– Bioethics
– Business ethics
– Corporate governance
– Culture & values
– Product safety
– Remuneration
– Risk management
– Suppliers
Our environmental responsibility:
progressing towards zero environmental
impact
The sixth assessment report from the Intergovernmental Panel
on Climate Change from August 2021 delivered the starkest
warning yet about the impact of climate change on lives and
livelihoods.
The message is clear: climate change is resulting in poorer
health outcomes and increasing mortality and constitutes a
driver for health inequities globally. It adversely affects people
who are already living with chronic diseases in particular. Health
systems worldwide are increasingly acting on the urgent need
to reduce their emissions and are working to become more
resilient to climate change. All with a view to better adapt to
future climate scenarios and protect populations from their
impacts. In the fall of 2021, the COP26 Health Programme was
launched to spearhead this transformation at a global level –
and we look forward to contributing our part.
It is clear that fast-growing and successful companies like Novo
Nordisk have an obligation and a vital role to play in addressing
the climate crisis and in helping to reverse the accumulation
of greenhouse gas emissions responsible for today’s warming
world and an even warmer future. In 2021, we made a clear and
ambitious pledge to reach net-zero emissions across our entire
value chain by 2045.
Our environmental performance in 2021 showed good progress
compared to our 2019 baseline year by minimising the impact
despite increasing production globally. We have made particular
progress in the reduction of CO2 emissions and the use of water
in water scarce areas.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
13
Ambitious emission targets
Operations
We are assessing, preparing for and mitigating the risks from
We are building on our landmark 2020 achievement of using
climate change and have set ambitious emission reduction
100% renewable power across our global production network.
targets with an emissions trajectory in line with the 1.5 degree
The next step is to transform our business processes to eliminate
pathway in the Paris Agreement. Action is required now,
the negative environmental footprint from all our operations. We
which is why we have defined several ambitious climate and
environmental targets in the near to medium-term future,
plan to have zero net emissions of CO2 from our own production
facilities, global office buildings and laboratories by 2030, and are
leading to 2030.
striving to reduce our emissions year-on-year.
In 2021, Novo Nordisk’s CO2 emissions from in-house operations
and transport decreased by 43% compared to the 2019 level,
Transportation
Transportation is an important element in the environmental
bringing total emissions down to 174,000 tonnes of CO2. This
reduction was driven by our renewable energy projects and the
equation. We have made good progress towards achieving our
target of transitioning to 100% electric company cars by 2030,
impact of COVID-19 on travelling. 2019 is used as the baseline
with 50% of vehicles in our home market of Denmark now using
for CO2 emissions as 2020 was impacted by the pandemic.
electrical or plug-in technology. Entering into an agreement
with Maersk to transport our products with CO2 neutral ships
was another important milestone. We are also minimising
Total CO2 emissions from operations and transportation
emissions from business air travel by using digital platforms for
1,000
tonnes
350
300
250
200
150
100
50
0
2018
2019
2020
2021
virtual collaboration wherever possible.
Supply Chain
We are now stepping up our work with supply chain partners to
ensure they also use renewable power when producing for Novo
Nordisk. Currently, direct suppliers representing 41% of supply
chain CO2 emissions have committed to using renewable power.
18% of these emissions have already been reduced due to an
50% of vehicles in our home market of Denmark
now using electrical or plug-in technology
early shift to renewable power, cutting our supply chain emissions
we made a significant commitment in 2021 to reach net-zero
by approximately 50,000 tonnes. We expect all our direct suppliers
emissions across our entire value chain by 2045. Achieving this
to source 100% renewable power by 2030. Successful conversion
reduction calls for an ambitious plan to tackle Scope 3
to renewable power among all our suppliers would result in a
further 300,000 tonnes of CO2 being eliminated every year.
CO2 emissions, e.g., purchased goods and services, capital
goods and employee commuting, among others. With more
than 60,000 suppliers in our value chain, engaging with
As part of our drive to encourage greater environmental
them all to progress towards net-zero emissions is a major
responsibility among all the partners we do business with,
undertaking. Our role in sharing lessons learnt with peers on
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
14
the use of renewable power was recognised during Climate
Week New York City in September 2021, when Novo Nordisk
was awarded the RE100 Key Collaborator Award for its work in
What are Scope 1, 2 & 3 emissions?
accelerating the global transition to 100% renewable energy.
A company’s greenhouse gas emissions can be classified into three scopes. These scopes are
Stepping up to the plastic challenge
the hardest to monitor and address. Novo Nordisk’s reporting of Scope 3 emissions is currently
defined with reference to how directly a company influences the emissions – with Scope 3 being
limited to product distribution and business flights. This means that the data shown below do not
include a significant proportion of the Scope 3 emissions from our value chain.
Scope 1
Scope 2
Scope 3
Direct emissions from company-
owned and controlled resources
(including emissions from production
processes and transport)
Indirect emissions from the
generation of energy purchased from
a utility provider (including electricity,
steam, heat and cooling)
All indirect emissions – not included
in Scope 2 – that occur in the value
chain of the reporting company
(including both upstream and
downstream emissions)
77,000
tonnes of CO2
16,000
tonnes of CO2
Novo Nordisk’s reporting of
Scope 3 emissions is currently
limited to product distribution
and business flights
81,000
tonnes of CO2
174,000 tonnes
22 and 23 for more information on our reporting in the
Total CO2 emissions from operations and transportation
environmental dimension.
Cutting CO2 emissions is only a part of our ambitious goal of
creating a business with zero environmental impact. We also
recognise the need to minimise the use of fossil-based plastic,
which is one of our major challenges, as we produce more than
600 million pre-filled pens every year, which are an essential daily
companion for people living with diabetes. We must find good
solutions to minimise the use of fossil-based plastic by innovating
new products, shifting to more sustainable material and
establishing recycling opportunities for our pre-filled pens globally.
We use more than 12,000 tonnes of plastic every year in the
production of our devices. As medical waste, they are difficult to
recycle. However, a pioneering take-back initiative piloted over the
past year in Denmark shows that it is possible to reclaim and reuse
the plastic that makes up three-quarters of these devices. Material
from scrapped insulin pens has already been successfully used for
the manufacture of lamps and office furniture. Over the next three
years, we also aim to roll out pen recycling pilots in other markets,
starting with the UK, France and Brazil.
Further out, we are investigating the potential to develop non
fossil fuel-derived plastics by harnessing waste carbon and
hydrogen from energy supply processes, including through the
use of carbon capture.
Please refer to the Sustainability Standards section on pages
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
15
Our social responsibility:
being respected for adding value to society
With approximately 537 million adults in the world living with
diabetes – a figure that is projected to rise to 783 million by
2045 if no action is taken – our Defeat Diabetes strategy is a
We are driven by our purpose to defeat diabetes and other
cornerstone of our social responsibility work. We are striving to
serious chronic diseases including obesity, haemophilia and
bend the curve of diabetes through product innovations that will
growth hormone disorders. While innovation is our core
improve lives, while at the same time working with partners to
contribution to this fight, we know that complex inequalities in
prevent the rise of new cases of both type 2 diabetes and obesity,
healthcare remain the biggest barrier. By playing an active role
as well as ensuring that vulnerable patients in every country can
in improving access to innovative and affordable solutions for
access and afford the care they need. With a growing health
people with chronic conditions across the globe, our aim is to
challenge of this magnitude, we know that we are nowhere close
deliver real change in the communities we serve.
to defeating diabetes, but we are committed to doing nothing
short of that and fortunately, we are not alone in this fight.
5+ million
patients reached via our access and affordability
efforts, corresponding to approximately
14%
of all our diabetes patients
include local health authorities, partners and civil society in all
Improving access to life-changing care in low-
implementation activities. Shared ownership and involvement are
and middle-income countries
critical to value creation for the end users and the health system,
Given our dedication to improve the lives of people with
as well as for the sustainability of the solution.
diabetes and other serious chronic diseases, including obesity,
haemophilia and growth hormone disorders, we strive not
The Changing Diabetes® in Children partnership is one example of
only to identify new innovative treatments but also to support
this work. The programme has to date provided free care to nearly
a strong healthcare system that ensures patient access and
32,000 children and youth living with type 1 diabetes in low- and
affordability for the medications they need.
middle-income countries, putting it almost one-third along the way
towards achieving our aspiration of reaching 100,000 children in
We recognise that access to affordable medicines is a challenge
low-resource settings by 2030. The partnership is present in 18
for many people, and not only in low-income countries. This is
countries, following the addition of Ghana, Indonesia, Pakistan and
why we are expanding our initiatives and partnerships to reach
Peru in 2021. Five more countries (Mozambique, Rwanda, Malawi,
more underserved people with affordable care worldwide. Each
Jordan and Lebanon) are launching in early 2022 as part of an
initiative is tailored to the local context, unmet needs and health
expanded partnership project with the World Diabetes Foundation.
system challenges. Our access and affordability efforts now
reach more than 5 million patients out of the 34.6 million who
For the many other vulnerable people who are living with both
use our diabetes care products around the world.
type 1 and type 2 diabetes and who are struggling to access the
care they need, we are leveraging our global organisation and
Rebecca Commanda has type 2
diabetes and lives in Canada
Ensuring not only that access to care for patients is achieved but
using our presence on the ground to develop and implement
that it is done in a sustainable manner is the most important
country-based solutions. An example of this is the iCARE to Defeat
consideration in our initiatives. This is why we always aim to
Diabetes strategy launched in our Sub-Saharan business unit.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
16
The strategy adopts an ambitious and holistic approach
complex, and there is no single solution. In 2021, we provided
Copay Savings Cards: Defray high out-of-pocket costs for
to addressing barriers to access to care, and it engrains
30 billion USD in sales discounts and rebates, amounting to
commercially insured patients. In 2021, Novo Nordisk provided
the objective of reaching more people with diabetes into
75% of US gross sales (74% in 2020), which primarily helped to
~$100 million in copay assistance for insulin to patients.
the organisational incentives of the business unit. Globally,
secure broad formulary access for most patients with reasonable
vulnerability assessments were made in a total of 67 countries
copays. In addition, we have continued to provide a full suite of
Reaching people where they are is vital, so we invested in
in 2021, up from 21 assessments in 2020. Based on these
affordability offerings through which we helped more than one
broad communications to ensure awareness. We also made
assessments, affordability plans are being implemented and
million patients with diabetes in the US afford Novo Nordisk
enhancements to create a positive user experience and make
around 82,000 people with diabetes have obtained access
insulin in 2021. These affordability options include:
to diabetes care across Ethiopia, Ghana, Ivory Coast, Kenya,
NovoCare.com, our one-stop patient access and affordability
support resource, easy to use. NovoCare® helps support one
Nigeria, Syria, Peru and Panama.
My$99Insulin: 30-day supply of a combination of Novo Nordisk
patient every ten seconds.
insulin products (up to three vials or two packs of pens) for 99
As the world's leading supplier of insulin, we reaffirm our
USD for eligible patients.
Access to Insulin Commitment ensuring affordable insulin for
vulnerable patients. Under this commitment, we offer human
insulin vials at a ceiling price of USD 3 to 76 countries, as well
NNPI Unbranded Biologics: Unbranded versions of fast-acting
(NovoLog®) and premix insulin (NovoLog® Mix), available from
The second tenet is working with all stakeholders to simplify
and transform the healthcare system, while we work towards
longer-term reform. We support policies that make insurance
work better for patients. These include first-dollar coverage for
as to selected humanitarian organisations and UN agencies
Novo Nordisk Pharma, Inc. (NNPI), at a 50% list price discount
chronic medications and changes to Part D, such as capping
providing humanitarian relief. Long-term agreements are
versus branded versions.
annual out-of-pocket costs, smoothing cost-sharing over the
currently in place with 10 organisations. An estimated 1.7
benefit year and passing manufacturer discounts on to patients.
million patients accessed care under this commitment in 2021,
Human insulin: Available for about 25 USD per vial at national
and an additional estimated 2.2 million patients were reached at
pharmacies, including Walmart and CVS. Nearly 500,000
The third tenet is limiting any potential future list price increases
or below the ceiling price in countries outside the commitment.
Americans are obtaining Novo Nordisk human insulin through
to no more than single-digit percentages annually.
these retailers.
Improving access and affordability in the United States
US Product Portfolio1 %, Change vs. Prior Year
Affording healthcare is not only a challenge in low- and middle-
Patient Assistance Program: Offers free diabetes medication
2017
2018
2019
2020
2021
income countries. In the United States, some people are also
to people in need who meet certain eligibility criteria, including
List Price Change - Avg.2
6.9%
5.0%
5.5%
2.3%
2.0%
finding it increasingly hard to pay for treatments, including
annual household income at or below 400% of government-
Net Price Change - Avg.2
-9.0%
-8.6% -13.2% -16.9% -12.3%
insulin. Ensuring access and affordability is a responsibility we
defined poverty level. Over 50,000 Americans received free
share with all stakeholders in the United States’ healthcare
insulin annually from this program in 2021. This was expanded
Total US Insulin Portfolio %, Change vs. Prior Year
system. We are committed to doing our part, focusing on three
during the pandemic to offer 90-day free insulin to those
main tenets.
impacted by COVID-19 job loss.
The first tenet is finding ways to lower the out-of-pocket cost
Immediate Supply Program: A free, one-time, immediate
to patients with high-deductible health plans or those with no
supply of Novo Nordisk insulin (up to 3 vials or 2 packs of pens)
insurance. The issues driving patient affordability challenges are
to eligible patients who may be at risk of rationing.
2017
2018
2019
2020
2021
List Price Change - Avg.2
6.3%
4.5%
4.4%
0.2%
0.0%
Net Price Change - Avg.2
-13.5% -14.8% -17.4% -27.7% -10.2%
1. NN US Product Portfolio is inclusive of Diabetes, Obesity and BioPharm products
2. % change represents a sales weighted average list and net price for the respective
calendar year compared to the sales weighted average list and net price for the prior
year and is not reflective of the magnitude of individual list price actions
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
17
Alejandro Treviño is living with
obesity in Mexico
Improving access in resource-poor settings
urban settings. In 2021, Cities Changing Diabetes reached more
Further to the description of our US specific initiatives above,
places than ever before, with 41 cities now participating in the
improved access can also be driven by better science. We
initiative, up from 36 in 2020. These cities are home to more than
are leveraging our expertise in research to bring life-saving
220 million people. In Cities Changing Diabetes, some of the
products to more people in resource-poor settings. This
activities that cities engage in include health promotion, COVID-19
includes ongoing work to deliver insulins with extended storage
response, working with community organisations to reach isolated
time outside of refrigeration in order to improve access and
and vulnerable populations, improving bicycling and walking
benefit patients and healthcare professionals living and working
infrastructure and addressing challenges in access to healthy food.
in humanitarian settings or countries with challenging weather
conditions and limited access to refrigeration. As a first step,
A diverse and inclusive workplace
in 2021 we filed for EMA assessment of label updates on two
As a global employer, we are of the view that offering an
of our human insulins to potentially enable them to be kept
inclusive and diverse working environment is an integrated
outside of refrigeration for up to four weeks before use.
part of being a sustainable business. We fundamentally believe
Strengthening our prevention efforts
for Novo Nordisk by increasing innovation, enabling a diverse
Prevention is the other vital pillar in our strategy to defeat
line of thought and providing all employees with equitable
diabetes. Diabetes and obesity prevalence continue to grow
opportunities to realise their potential.
that diversity of people and inclusive leadership drive value
on all continents and the burden on individuals, families,
workplaces and society is large and growing. Ensuring access
Launching aspirational targets
to our medicines will help reduce the burden for people
At Novo Nordisk, we believe that diversity is any dimension that
with chronic disease but we must also work to prevent these
differentiates people and enables a diverse line of thought - for
diseases from developing in the first place. Our aim is to
example background, education, experience, ethnicity, race or
find, pilot and scale effective interventions to prevent both
age, nationality, disability status or sexual orientation. Whilst
diabetes and obesity. These efforts, which explore innovations
legal constraints mean we currently do not have consistent
in place-based interventions, digital solutions and new ways
global measures on all the aspects of diversity, gender
of collaborating with financial services sector participants
diversity is a space in which we have identified a need to set
in support of common objectives, are evidence-based and
an aspirational target to ensure accountability among leaders
partnership-driven for the greatest possible impact.
and accelerate progress. As of 2021, women fill 43% of all
leadership positions and 36% of senior leadership positions1 at
Our work in collaboration with UNICEF to prevent childhood
Novo Nordisk. While several initiatives have been launched to
overweight and obesity is one example of this. However, we also
progress gender diversity in senior leadership positions, we are
continue to expand our successful public-private partnership,
not yet satisfied with the current state.
Cities Changing Diabetes, which is designed to address diabetes
1. Defined as vice presidents, corporate vice presidents, senior vice presidents
and obesity prevention amongst vulnerable populations in
and executive management
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
18
Our aspirational target was announced alongside two
non-binary gender, recognising that some employees may not
Driving progress in diversity and inclusion
others in 2021:
wish to be categorised.
– Create an inclusive culture where all employees have a sense
of belonging and equitable opportunities to realise their
Women in leadership
potential
– Achieve a balanced gender representation across all
managerial levels
– Achieve a minimum of 45% women and a minimum of 45%
EVP/SVP
CVP
VP
men in senior leadership positions by the end of 2025
Senior leadership
We define balance as the range between 45%-55% to leave up
to 10% flexibility for women and men while also allowing for
Director
Manager
All leaders
2017
2018
2019
2020
2021
14%
28%
33%
31%
42%
40%
40%
13%
31%
35%
32%
41%
40%
40%
18%
33%
35%
33%
43%
40%
40%
24%
37%
36%
35%
41%
42%
41%
28%
39%
36%
36%
44%
43%
43%
To create an inclusive workplace, we continuously review
our processes and policies. In 2021, we announced a new
global parental leave policy. From January 2022, we will offer
a minimum of eight weeks paid leave within the first year
of becoming a parent to all non-birthing parents globally,
regardless of gender. Our ambition is that recognition of
the non-birthing parents' right to leave will result in greater
inclusion and equality for parents - both at work and at home.
In addition, we conduct yearly equal pay reviews and take
mitigating actions in case of any identified pay gaps. Out of
the 34,000 positions2 covered in the pay review in 2021, we
identified 1% with an equal pay gap3 and have taken corrective
action. Of the positions where an equal pay gap was identified,
152 are occupied by female employees and 131 are occupied
by male employees, indicating that there is no structural gender
bias in the way we pay.
Finally, in 2021 we introduced our global “Inclusion Index” as
part of our annual employee engagement survey. The index
is a numerical indicator of how our employees rate the state
of inclusion at Novo Nordisk. In 2021, 78% of employees rated
the statements about inclusion favourably. The score is below
average when benchmarked against other highly engaged
organisations. As a result, we have encouraged all leaders to
engage their employees in dialogue around how to improve
local inclusion and to identify concrete actions.
Mandy Marquardt is a professional track cyclist and is living with type
1 diabetes. She is representing Team Novo Nordisk, the world's first
all-diabetes professional cycling team
2. Excluding some populations and locations due to local regulations such as in the US
where a local process is in place
3. “Equal Pay gap” is defined as the employee’s pay being significantly above or below the
expected pay given the employee’s job level, tenure, job family and other parameters
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
19
Diversity and inclusion challenges and opportunities vary
Corporate income taxes by region – three year average
Human rights' risk management
depending on the local context and the societies that we serve.
Share of category
To ensure we consider the local context, drive impact at all levels
and hold our leaders accountable for driving progress, all our
Intellectual
property
senior leaders across the company have been asked to define
Region
rights1 Production2 Sales3
local diversity and inclusion aspirations and associated action
International Operations
plans.
We expect all our leaders to embrace their role as inclusive
leaders by being committed to building diverse teams of
complementary strengths, valuing diverse perspectives and
creating a psychologically safe space in which all employees feel
free to speak up.
Progress of diversity and inclusion has been anchored in both
short-term and long-term incentive programmes and we follow
up and track progress on a regular basis.
– Denmark
– EMEA (excluding Denmark)
– China
– Rest of World
North America Operations
– Of which the US
Total
1. Intellectual property rights based on sales from where intellectual property rights are located
2. Production based on production employees in the region
3. Sales based on the location of the customer
We are committed to respecting human rights as per the UN
Guiding Principles on Business and Human Rights (please refer
to the Governance section on page 20 and novonordisk.com).
We continue to integrate human rights risks into our risk
management process, across our operations and business
relationships.
2021
Corporate
income taxes
(DKK billion)
9.3
8.0
0.6
0.4
0.3
1.3
1.2
10.6
Please refer to note 8.5 on Gender diversity on page 89 for
entities perform their functions under contract on behalf
further information. Please refer to the Corporate Governance
of the principals and are allocated an activity-based profit
Report available at novonordisk.com for further information on
according to a benchmarked profit margin. The tax outcome
D&I targets regarding the Board of Directors.
of this operational model is reflected in the overview above,
structure' in line with OECD principles, meaning all legal
Sustainable tax approach
which shows our corporate income taxes by region. To ensure
alignment between taxing authorities about the allocation
Our overall guiding principle within taxation is to have a
of profit between our entities, we have Advance Pricing
'sustainable tax approach', emphasising our business anchored
Agreements in place for geographies representing around 65%
approach to managing the impact of taxes while remaining
of our revenue worldwide.
true to the Novo Nordisk values of operating our business in a
responsible and transparent manner. This means that we pay
Our tax policy has been approved by the Board of Directors.
tax where value is generated and always respect international
Read more about this topic at novonordisk.com.
and domestic tax rules.
As a global business, we conduct cross-border trading, which
Please refer to note 8.6 on Total tax contribution on page 90 for
Sierra Clark lives with Glanzmann
Thrombasthenia in Canada
is subject to transfer pricing regulations. We apply a 'Principal
further information.
In addition to corporate income taxes, we also pay other taxes.
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
20
Our governance responsibility:
maintaining and building trust
At Novo Nordisk, we categorise governance into
three dimensions. The first dimension is Corporate
Governance and covers our governance and ownership
structure. Governing Processes, the second dimension,
refers to how we run our business. Sustainability
Standards, which is about how we oversee and
prioritise our sustainability and ESG agenda, is the
third dimension.
Foundation ownership
Novo Nordisk has prepared a separate Remuneration Report
Novo Holdings A/S, a Danish company wholly owned by the
describing the remuneration awarded or due during 2021 to
Novo Nordisk Foundation, holds the majority of votes at
the Board and Executives registered with the Danish Business
general meetings.
Authority. The Remuneration Report is submitted to the Annual
General Meeting for an advisory vote.
The combination of foundation ownership and stock listing
enables Novo Nordisk to embark on long-term sustainable
The Remuneration Policy and Remuneration Report are available
strategies while maintaining short-term transparency on
at: www.novonordisk.com/about/corporate-governance.html
performance. Our foundation ownership supports the
overarching imperative to be both commercially successful and
Reporting on diversity is included in the social responsibility
responsive to the wider needs of society.
section on pages 17 to 19, in the social performance section on
page 89, and for the Board of Directors also in the Corporate
Corporate Governance
The objective of the Novo Nordisk Foundation is to provide a
Governance Report. Novo Nordisk’s diversity policy is available
stable basis for the commercial and research activities of Novo
at novonordisk.com.
Governance Structure
Nordisk as well as Novozymes and support broader scientific,
The shareholders of Novo Nordisk exercise their rights at the
humanitarian and social purposes. Please refer to page 7 for
Disclosure regarding change of control provisions
general meeting, which is the supreme governing body of the
an illustration of how we create value for society in conjunction
The EU Takeover Bids Directive, as partially implemented by the
company. The general meeting inter alia adopts the company’s
with the Novo Nordisk Foundation. For more information about
Danish Financial Statements Act, requires listed companies to
Articles of Association, approves the annual report and elects
the ownership structure of Novo Nordisk, see page 37.
disclose information that may be of interest to the market and
the Board of Directors.
potential take-over bidders, in particular in relation to disclosure
Corporate Governance Reporting
of change-of-control provisions in material contracts.
Any shareholder has the right to raise questions at general
Novo Nordisk reports in accordance with the Danish Corporate
meetings. Resolutions can generally be passed by a simple
Governance Recommendations designated by Nasdaq
Novo Nordisk discloses that the Group has one significant
majority. However, resolutions to amend the Articles of
Copenhagen as well as the Corporate Governance Standards
agreement with a US payer which takes effect, alters or
Association require two-thirds of the votes cast and capital
of the New York Stock Exchange applicable to foreign private
terminates upon a change of control of the Group. If effected, a
represented, unless other adoption requirements are imposed
issuers. In 2021 Novo Nordisk complied with the Danish
takeover could – at the discretion of the relevant counterparty –
by the Danish Companies Act.
Corporate Governance Recommendations as we either complied
lead to the termination of such agreement. Given the ownership
with or explained our approach to the recommendations. You
structure of Novo Nordisk, the risk is considered to be remote.
Novo Nordisk has a two-tier management structure consisting
can find further information about our corporate governance
of the Board of Directors and Executive Management.
practices in our 2021 Corporate Governance Report.
In relation to the registered management of Novo Nordisk
The governance structure and rules of Novo Nordisk are
A/S, the current employment contracts allow for severance
further described in our Articles of Association and our
Corporate Governance Report in accordance with section 107b
payments of up to 24 months' fixed base salary plus pension
Corporate Governance Report, both of which are available at
of the Danish Financial Statements Act:
contributions in the event of a merger, acquisition or takeover
novonordisk.com.
www.novonordisk.com/about/corporate-governance.html
of Novo Nordisk.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
21
Governing Processes
The Novo Nordisk Way – Essentials
Group Internal Audit assesses that the level of business ethics
compliance is sound. Management action plans and closure
Novo Nordisk Way
1.
We create value by having a patient centred
of findings progressed as planned and there were no overdue
The Novo Nordisk Way is a set of guiding principles which
business approach.
management actions or findings at the end of the year.
underpins every decision we make. We use a unique, systematic
2. We set ambitious goals and strive for excellence.
approach known as facilitation to ensure that everyone lives
3.
We are accountable for our financial, environmental
In 2021, data ethics principles were enhanced and will be
up to the Novo Nordisk Way. In 2021, 34 facilitations and eight
and social performance.
implemented through policies and trainings across the
special assignments were completed. Any issues are addressed
4.
We provide innovation to the benefit of
organisation in 2022. Our data ethics principles support ethical
locally and a consolidated report is shared with the Board of
our stakeholders.
decision-making when using data across the value chain. We
Directors and Executive Management.
5.
We build and maintain good relations with
further strengthened the global integration of data protection
our key stakeholders.
and human rights risks in the business ethics risk management
In 2021, five units were found not to be operating in full
6. We treat everyone with respect.
process. Please find more information at novonordisk.com.
accordance with the Novo Nordisk Way, a similar percentage
7. We focus on personal performance and development.
to 2020 but still a concern. In most cases the root causes were
8. We have a healthy and engaging working environment.
Product quality and supplier audits
grounded in leadership style and behaviours not living up to
9. We strive for agility and simplicity in everything we do.
In 2021, as in 2020, Novo Nordisk had no failed inspections
the Novo Nordisk Way. There were no findings around quality or
10. We never compromise on quality and business ethics.
among those resolved by the relevant health authority at
business ethics mindset.
Company reputation
Code of Conduct and international and local standards for
year-end. However, a contract manufacturer filling syringes for
Wegovy® failed an inspection causing disruption in the supply
of Wegovy®. During the year, 97 inspections were conducted,
The Novo Nordisk reputation score among key stakeholders (i.e.,
responsible business conduct. Business ethics covers anti-fraud,
compared with 77 in 2020. At year-end, 86 inspections were
the informed general public, people with diabetes, people with
anti-bribery, anti off-label promotion, transparency in dealing
passed and 11 were unresolved, as final inspection reports
obesity, healthcare professionals and diabetes specialists) is an
with healthcare professionals and healthcare organisations, the
had not been received or the final authority acceptance was
indicator of the extent to which we live up to society’s expectations.
protection of personal data, as well as respect for human rights
pending. Follow-up on unresolved inspections continues in
with the aim of minimising any potential risks to our patients,
2022. Please see note 9.4 on page 91 for further information.
We achieved a reputation score of 82.6 points in 2021
business, people and stakeholders.
measured on a scale of 0-100. As the only company among our
In 2021, a total of 253 supplier audits were conducted to assess
selected peers, Novo Nordisk enjoys a score above 80 points
Annual training in business ethics is mandatory for all
compliance levels with our supplier standards.
for Products & Services, which is the most important driver
employees, including all new hires. In 2021, 98% of employees
of reputation across all stakeholder groups, and thus the key
completed and documented their training, with the remaining
In 2021, we had 1 product recall from the market. Please see
driver of the positive overall result.
2% missing mainly due to employees being on leave. In
note 9.3 on page 91 for further information.
2021, 37 business ethics reviews were completed with 129
Business ethics
findings, compared with 32 reviews with 107 findings in
Financial and ESG assurance
Our approach to business ethics is acting with integrity and
2020. Consolidated findings are reported to our Executive
We are committed to ensuring the accuracy of our financial and
in compliance with the Novo Nordisk Way, our Business Ethics
Management and the Audit Committee.
ESG reporting. Our financial reporting and the internal controls
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
22
of financial reporting processes are audited by an independent
aligned with 23 of 25 metrics. Our VRF/ SASB adherence
future. We therefore welcome that SBTi launched a new net-zero
audit firm elected at the Annual General Meeting. As part of our
document is available on our ESG Portal at novonordisk.com.
standard in October 2021 and we have committed to have our
ESG responsibility, we voluntarily include an Assurance Report
net-zero CO2 emissions in 2045 target validated by them in 2022.
from an independent external auditor for ESG reporting in the
Using the TCFD framework, we continue to take a stepwise
Annual Report. The assurance provider reviews whether the ESG
approach to incorporating material climate-related risk-
For the United Nations Sustainable Development Goals (SDGs),
performance information covers aspects that are deemed to
assessments into our governance, strategy and execution on
we focus our efforts on Goal 3, 'health' and Goal 12, 'responsible
be material and verifies the internal control processes for the
climate and environmentally related initiatives. This includes the
consumption and production', as this is where we believe we
information reported.
consideration of operational risks related to the environment,
can maximise our positive impact.
such as current and emerging environmental and climate-
Our internal audit function provides independent and objective
related litigation, access to resources, such as water and raw
We will publish further information on our adherence to selected
assurance, primarily within internal control of financial processes,
materials, and exposure to acute physical risks that could
standards on our ESG Portal on an ongoing basis. This applies to
IT security and business ethics. To ensure that the internal
disrupt production. As recommended by the TCFD, we work to
the VRF/ SASB, TCFD and WEF's Stakeholder Capitalism Metrics in
financial audit function operates independently of Executive
identify, assess and mitigate short-, medium- and long-term
particular. Please also refer to the consolidated ESG statement in
Management, its charter, audit plan and budget are approved
climate-related risks within our operations and supply chain.
this Annual Report and to novonordisk.com for more information
by the Audit Committee. The Audit Committee must approve
on our sustainability governance.
the appointment, remuneration and dismissal of the head of the
In addition to the TCFD, we have been working with the Science
internal audit function. As part of our ESG responsibility, the Audit
Committee also oversees our ESG reporting. We thereby ensure
that our ESG reporting is subject to the same robust governance
Based Targets initiative (SBTi) for a number of years, where our
CO2 emissions reduction targets for 2030 are validated. We
believe external validation and transparency are paramount
ESG "rankers and raters"
We perform on par with peers according to selected raters but
with room to improve, particularly with respect to S&P Global
that applies to our financial reporting.
measures to ensure rapid progress towards a decarbonised
and Access to Medicine Index.
Sustainability Standards
Sustainability standards and performance
We report on our ESG performance in accordance with relevant
disclosure standards, including those of the Value Reporting
Foundation (VRF)/ Sustainability Accounting Standards Board
(SASB), the Taskforce on Climate-related Financial Disclosures
(TCFD) and the Carbon Disclosure Project (CDP).
We strive to adhere to the disclosure requirements of the VRF/
SASB, as they apply to the pharmaceuticals industry. We do
this to demonstrate our commitment to being transparent and
accountable for how we operate. Having further assessed our
adherence and disclosure in 2021, we are now fully or partially
High
Medium
MSCI’s ESG Rating is designed to measure a company’s resilience to long-term, industry-material ESG risks.
Novo Nordisk continued to hold an AAA leadership ESG rating in line with the past five years.
Sustainalytics' ESG Risk Ratings score the ESG performance of more than 12,000 companies, from “negligible” to
“severe”. Novo Nordisk received an ESG risk rating of 24.1 (“medium”). Novo Nordisk ranked among the top 10%
in the Industry Group ‘Pharmaceuticals’, with a ranking of 94 out of 1028 based on those companies reviewed.
CDP scores companies from “D-“ to “A”. In 2021, Novo Nordisk continued to hold an “A” leadership ranking in
CDP Climate, and a “B” ranking in CDP Water.
The ATMI evaluates 20 of the world’s largest pharmaceutical companies in areas where they have the biggest
potential and responsibility to make change, such as R&D. Novo Nordisk ranked 10th, with a score of 2.96 and
strong performance in Governance of Access and Product Delivery.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
23
We follow and adhere to legal requirements, international
standards, recommendations and commitments including:
Standards
Legal requirements
– Value Reporting Foundation/
– The Danish Financial Statements Act
Sustainability Accounting Standards
– UK Bribery Act
Board
– UK and Australian Modern
– Taskforce on Climate-related
Slavery Acts
Financial Disclosures
– US Foreign Corrupt Practices Act
– Science Based Targets initiative
– World Economic Forum's
Recommendations and
Stakeholder Capitalism Metrics
commitments
– UN Global Compact Ten Principles
– UN Guiding Principles on Business
and Human Rights
– UN Political Declaration on
Universal Health Coverage
– UN Sustainable Development Goals
– OECD Guidelines for Multinational
Enterprises on Responsible
Business Conduct
For more information, see
novonordisk.com.
Regulatory compliance
We are committed to comply with all applicable rules
and regulations. As a listed company with more than 500
employees, we are in scope of the EU Taxonomy Regulation.
We do not currently consider our core economic activities to
be in scope of the EU Taxonomy Regulation’s technical annexes
on climate change mitigation and climate change adaptation.
Based on our current understanding, available data and
assessment of requirements, we have zero eligible activities
to report on within revenue, Opex and Capex. We note that
the EU Taxonomy Regulation will keep evolving and that we
will continue to consider its impact as well as future reporting
obligations.
Remuneration
As described in the Remuneration Report, executive
remuneration is linked to performance on financials as well as
non-financials (e.g., innovation, sustainability).
Strategic Aspirations
2025 Purpose and
sustainability
– Being respected for adding value to society
– Progress towards zero environmental impact
– Ensure distinct core capabilities and evolve culture
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
24
Innovation and therapeutic focus
In pursuit of
life-changing
innovation
We are active in late
stage assets across all
our therapy areas
Since 1923, Novo Nordisk has pursued scientific
breakthroughs within serious chronic diseases. To
enable us to drive change for society throughout
another century, we are exploring higher levels of
innovation by deploying novel technology platforms
across more therapy areas than at any point in our
history. In doing so, we are building on our heritage
within diabetes care with the ambition to become the
world’s foremost cardiometabolic disease company.
more technologies than ever before, not least within the rapidly
evolving cardiometabolic disease space. This journey can deliver
for those who for decades have relied on our innovation within
diabetes and haemophilia, but also in the future may have the
potential to deliver for others at risk of diseases such as NASH
and dyslipidaemia (high cholesterol).
To achieve our ambitions, we will not only leverage our existing
capabilities in protein and peptide engineering and delivery,
but also invest in new platforms such as cell therapy, RNA
The COVID-19 pandemic has exacerbated the mounting social,
interference and gene editing. Much of this work will be done
economic and human burden of serious chronic diseases
through partnerships.
that affect hundreds of millions of people. By exposing the
vulnerability of these populations, it has highlighted the complex
interactions between communicable and non-communicable
diseases, underscoring the need for ground-breaking
innovation.
We are meeting the challenge by creating an increasingly broad
pipeline of life-changing products in areas including diabetes,
obesity, cardiovascular disease, non-alcoholic steatohepatitis
(NASH), and Alzheimer’s disease. The innovations we are
pursuing today take our company into more therapy areas and
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
25
Towards holistic, integrated healthcare
In the meantime, our R&D is continuing to deliver significant
Our Research and Development (R&D) strategy has led us to
a point in time where we now have more clinical programmes
advances. Major milestones in the past year include the US
approval of Wegovy® – a pivotal new treatment of obesity
with more participants than at any time in our 99-year history.
and the initiation of phase 3 clinical trials investigating oral
To make this possible, we have re-organised R&D operations,
semaglutide for both obesity and Alzheimer’s disease.
creating a Research & Early Development unit to fuel and
validate our early pipeline, and a patient solutions-focused
Entering a new century of diabetes innovation
Development organisation to take our most promising
In the 101 years since the discovery of insulin, there have been
candidates forward.
many advances in the treatment of diabetes, yet the number of
people living with the condition continues to climb. As a result,
Throughout this work, we are focused on the power of
there remains an urgent need for better, more patient-focused
digitalisation and connected healthcare. We are evolving
therapies to continue to reduce the burden of diabetes.
from a molecule-focused pharmaceutical company to a
patient solutions-oriented enterprise where drug, device,
Our potential future treatment and device innovations may offer
digital, diagnostics and data are fully integrated to deliver
this step change in care. They include the once-weekly basal
leading treatment solutions to patients. This ‘5D’ approach will
insulin icodec, which entered final-stage phase 3 development
bring improvements right along the value chain, from more
in November 2020, which has the potential to offer patients
convenient and better products and devices for patients – who
greater convenience than the current option of once-daily basal
can check and track their health status in real time via apps and
insulins. We have also progressed our work on glucose-sensitive
other systems – to faster, more efficient product development.
insulin, which is designed to activate when glucose levels rise,
Moustapha Djamil Cissé is living with type 1 diabetes
and is enrolled in our Changing Diabetes® in Children
programme, Senegal
thereby potentially providing better disease control and a lower
Our electronic Patient Interaction Device, for example, allows
risk of hypoglycaemia.
the collection of real-time clinical trial data. This technology is
already being used by more than 4,000 patients in 36 countries
Beyond insulin, we have continued the rollout of Rybelsus®, our
for patients living with obesity), and the other looking at
and forms a central plank of our ‘moonshot’ aspiration of being
once-daily oral GLP-1 therapy, while once-weekly semaglutide
combination of semaglutide and GIP (gastric inhibitory
able to submit new products for market authorisation in four
2.0 mg for type 2 diabetes received a positive opinion
polypeptide).
key markets within four days of the last patient visiting a pivotal
recommending marketing authorisation in the EU in November
trial site.
2021, and has been re-submitted for US regulatory approval
Leading the treatment of obesity
This is a journey that will take time to complete, but it is already
& Drug Administration in March 2021. We have also launched
creating an innovative pipeline of differentiated projects that
two phase 2 trials investigating fixed-dose combination
successful launch of our pioneering injectable GLP-1 product
Wegovy® in the US and the advancement in our pipeline of
has the potential to secure long-term sustainable growth of our
therapies for type 2 diabetes – one focusing on semaglutide
next-generation therapies that we hope will deliver even greater
offering to patients beyond 2030.
in combination with cagrilintide (which is also being explored
weight loss efficacy.
following the receipt of a Refusal to File letter from the US Food
We are making major strides in tackling obesity, both with the
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
26
study looking at a combination of cagrilintide and semaglutide.
Broadening our horizons across serious chronic diseases
Cagrilintide, a long-acting amylin analogue, works by reducing the
We are actively widening our therapeutic focus as we explore
signaling of hunger to the brain, and early phase 1b data suggests
a more holistic approach to cardiometabolic diseases – a
that its combination with semaglutide provides additive weight loss
trend exemplified by the potential of semaglutide to improve
efficacy without compromising gastrointestinal tolerability.
outcomes in a wide range of disorders.
Alongside this, we have initiated a phase 3 trial of high-dose
Significantly, the push into new areas includes the treatment of
semaglutide 50 mg as an oral treatment for obesity. This would
Alzheimer’s disease, where we are testing oral semaglutide 14
offer patients a new option and could potentially address issues
mg in two phase 3a trials that will run for three years. We have
associated with injections.
also started a phase 3 programme with semaglutide in patients
with NASH, while two major phase 3 trials are exploring the
Innovating in rare diseases
potential of semaglutide in treating heart disease.
The rare blood and endocrine disorders that our Biopharm
business seeks to treat are areas of continuing high unmet
Beyond semaglutide, our antibody drug ziltivekimab has
need, and we are advancing several key new products in
entered phase 3 development for atherosclerotic cardiovascular
our pipeline. This includes the planned initiation of phase
disease and we are exploring a novel oral PCSK9i agent for
3 development of Mim8, a next-generation subcutaneous
high cholesterol in phase 2. Meanwhile, new partnerships with
prophylactic treatment for haemophilia A, in 2022. We are also
Prothena and Heartseed have strengthened our pipeline in
awaiting the results from phase 3 trials with concizumab in
cardiovascular disease, with the latter building our expertise in
Nadia Sadi is living with non-alcoholic
steatohepatitis (NASH) in Denmark
Wegovy®, once-weekly subcutaneous semaglutide 2.4 mg, takes
patients with haemophilia A or B, with or without inhibitors,
the exciting new field of cell therapy.
the medical treatment of obesity to a new level, as an adjunct to
while a phase 3 trial investigating the efficacy and safety of
diet and exercise, with an average sustained weight loss from
baseline of 17-18%4 sustained over 68 weeks in clinical trials.
concizumab for pediatric use is expected to be initiated in 2022.
The implications of such weight loss can be profound since
Furthermore, we are seeking to harness disruptive technologies
people with obesity face a range of health risks, from cancer,
such as gene editing and RNA interference to develop next-
type 2 diabetes and heart disease, to severe symptoms and
generation treatments for rare diseases. In December, we
complications of COVID-19.
announced the completion of the acquisition of Dicerna
Strategic Aspirations
2025 Innovation and
therapeutic focus
Pharmaceuticals – a Boston-based biotech firm specialising
– Further raise the innovation-bar for diabetes treatment
Our ultimate aspiration is to close the gap between current
in RNAi therapeutics for rare and common diseases. The
– Develop a leading portfolio of superior treatment
pharmacological treatment options and bariatric surgery through
acquisition builds on a successful collaboration initiated with
solutions for obesity
combination therapies. This work will take a significant step
Dicerna in 2019 to discover and develop selective gene-silencing
– Strengthen and progress the Biopharm pipeline
forward next year with the planned initiation of a large phase 3
therapies for liver-related cardio-metabolic diseases using
– Establish presence in other serious chronic diseases
4. Based on the trial product estimand (secondary statistical approach): treatment effect
if all people adhered to treatment and did not initiate other anti-obesity therapies.
When using a treatment policy estimand, 15-17% weight loss was reported
Dicerna’s proprietary RNAi technology platform, and we will now
focusing on Cardiovascular disease (CVD); Non-alcoholic
seek to expand the application of this innovative technology
steatohepatitis (NASH)
across all our therapy areas.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
27
Pipeline overview
Diabetes care
Project
Indication Description
Phase
Semaglutide 2.0 mg
NN9535
Oral semaglutide HD1
NN9924
Type 2
diabetes
Type 2
diabetes
A long-acting GLP-1 analogue for once-weekly
treatment.
A long-acting oral GLP-1 analogue, 25 and 50 mg,
intended for once-daily oral treatment.
Icodec
NN1436
Icosema
NN1535
FDC Sema – OW GIP
NN9389
CagriSema in T2D
NN9388
Type 1 and
2 diabetes
A long-acting basal insulin analogue intended for
once-weekly treatment.
Type 2
diabetes
Type 2
diabetes
Type 2
diabetes
A combination of GLP-1 analogue semaglutide
and insulin icodec intended for once-weekly treatment.
A combination of semaglutide and novel GIP
intended for once-weekly treatment.
A combination of amylin analogue and GLP-1 analogue
semaglutide intended for once-weekly treatment.
Insulin 965
NN1965
Type 1 and
2 diabetes
A novel basal insulin analogue intended for once-daily
treatment.
Glucose-sensitive insulin
NN1845
Type 1 and
2 diabetes
A glucose-sensitive insulin analogue intended for
once-daily treatment.
Ideal Pump Insulin
NN1471
DNA Immunotherapy
NN9041
Type 1
diabetes
Type 1
diabetes
A novel insulin analogue ideal for use in a closed loop
pump device as delivery.
A novel plasmid encoding pre- and pro-insulin intended
for preservation of beta cell function.
Obesity care
Oral Sema Obesity
NN9932
PYY1875
NN9775
Cagrilintide
NN9838
CagriSema
NN9838
LA-GDF15
NN9215
Obesity
Obesity
Obesity
Obesity
Obesity
A long acting GLP-1 analogue intended for
once-daily treatment.
A novel analogue of the appetite-regulating hormone,
PYY, intended for once-weekly treatment.
A novel long-acting amylin analogue intended
for once-weekly treatment.
A combination of amylin analogue cagrilintide and GLP-1
analogue semaglutide intended for once-weekly treatment.
A long-acting GDF15 analogue intended for appetite
regulation leading to weight loss.
2020
2021
Phase 1
Phase 2
Phase 3
Submission and/or approval
1. High dose 2. GHD: Growth hormone deficiency 3. HGH: Human growth hormone 4. NASH: Non-alcoholic steatohepatitis
5. CVD: Cardiovascular disease 6. Alpha-1-AntiTrypsin Deficiency related liver disease 7. Asset without NN project ID
8. This project also includes a phase 2b study in F4 in a collaboration with Gilead
Biopharm
Project
Sogroya®
NN8640
Somapacitan
NN8640
Concizumab
NN7415
Macimorelin
EX2020
Mim8
NN7769
Nedosiran7
Eclipse
NN7533
Indication
Description
Phase
Adult GHD2
GHD2
A long-acting HGH3 derivative intended for
once-weekly subcutaneous administration in adults.
A long-acting HGH3 derivative intended for once-
weekly subcutaneous administration in children.
Haemophilia
A and B w/wo
inhibitors
A monoclonal antibody against tissue factor pathway
inhibitor (TFPI) intended for subcutaneous prophylaxis
treatment.
GHD2
An oral diagnostic agent used for the diagnosis of
GHD in adolescents and children.
Haemophilia A
with or without
inhibitors
A next generation FVIII mimetic bispecific antibody
for subcutaneous prophylaxis of haemophilia A
regardless of inhibitor status.
Primary
Hyperoxaluria
An siRNA targeting lactate dehydrogenase A (or LDHA)
for once monthly subcutaneous treatment.
Sickle cell
disease
An oral combination treatment of sickle cell disease
and beta thalassaemia. Project is developed in
collaboration with EpiDestiny.
Other serious chronic diseases
Semaglutide8
NN9931
NASH4
A long-acting GLP-1 analogue for once-weekly
treatment of NASH4.
Semaglutide Alzheimer
NN6535
Alzheimer’s
A long-acting GLP-1 analogue for once-daily treatment
of Alzheimer’s disease.
Ziltivekimab
NN6018
Belcesiran7
Oral PCSK9i
NN6435
FGF-21 NASH
NN9500
PRX004
NN6019
DCR-AUD7
CVD5
AATD6
CVD5
NASH4
CVD5
A novel once-monthly monoclonal antibody
intended for inhibition of IL-6 activity.
An siRNA targeting Alpha-1-AntiTrypsin (AAT) for once
monthly subcutaneous treatment.
A long-acting PCSK9 inhibitor for oral treatment.
A long-acting FGF21 analogue for once-weekly
treatment of NASH.
An anti-amyloid immunotherapy treatment for ATTR5.
Alcohol Use
Disorder
An siRNA targeting ALDH2 for once monthly
subcutaneous treatment.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
28
Research and
development progress
Diabetes
Obesity
Biopharm
Other serious chronic diseases
Regulatory events
– A market authorisation application was resubmitted to
the FDA for approval of semaglutide 2.0 mg May 2021.
– Approval by the EU of Ozempic 2.0 mg.
– Xultophy® was approved in China for diabetes
management.
– Ozempic® was approved in China for diabetes
management.
– A label extension for Insulatard® and Actrapid® was
submitted to EMA to increase the non-refrigerated
storage time prior to opening by 4 weeks.
Clinical progress
– A phase 3b trial was initiated with high dose Rybelsus®,
25 and 50 mg, in people with type 2 diabetes (T2D).
– The phase 3a programme, COMBINE, was initiated
investigating the once-daily combination of Icodec and
semaglutide in people with T2D.
– Phase 3a, ONWARDS trials were initiated investigating
once-weekly Icodec in people with type 1 (T1D) and
(T2D).
– A Phase 2 trial was initiated to investigate the effects
of the combination of semaglutide and novel GIP in
people with T2D.
– A Phase 2 trial was initiated to investigate the effects
of the combination of semaglutide and cagrilintide in
people with (T2D).
– A Phase 1 trial for glucose sensitive insulin was
completed.
– A Phase 1 trial was initiated to investigate tolerogenic
DNA plasmid in for preventive treatment of diabetes in
people with T1D.
Regulatory events
– Once-weekly sc semaglutide 2.4 mg was approved
Regulatory events
– The once-weekly growth hormone derivative,
Clinical progress
– A phase 3a programme, ESSENCE, was initiated
under the brand name Wegovy® for weight
management in adults with obesity or overweight and
at least one weight-related comorbidity in the US. A
marketing authorisation application for semaglutide
2.4 mg obesity was submitted to the Japanese Health
Authorities and approved in the EU.
– Saxenda® was granted a label expansion to include the
use in adolescents (aged 12 to <18 years) with obesity
or overweight in the US and Europe.
Clinical progress
– A phase 3a trial was initiated to investigate the effects
of once-weekly sc semaglutide 2.4 mg on physical
function, symptoms and body weight in people with
obesity-related heart failure with preserved ejection
fraction (HFpEF).
– A phase 3a trial OASIS-1 was initiated to investigate
oral semaglutide 50 mg in people with obesity.
somapacitan, was approved in Japan and Europe for
adults with growth hormone deficiency.
investigating once-weekly semaglutide in people with
Non-alcoholic steatohepatitis (NASH).
– Regulatory file to support a prophylaxis indication for
– A phase 3a programme, EVOKE, was initiated
Rebinyn® was submitted.
– Regulatory file to support a new indication for
NovoSeven® in women with Postpartum haemorrhage
was submitted.
Clinical progress
– Initial results from the phase 3a programme, REAL
4; investigating the once-weekly growth hormone
derivative, somapacitan, in children with Growth
Hormone Deficiency (GHD) were compiled.
– Results from a phase 2 trial, REAL 5, in children, with
short stature and born short for gestational age were
compiled.
– First cohorts of phase 1/2 trial with Mim8 successfully
completed.
investigating once-weekly semaglutide in people with
Alzheimer’s Disease.
– A phase 3a cardiovascular outcome trial, ZEUS, was
initiated investigating once-monthly monoclonal
antibody Ziltivekimab in people with Atherosclerotic
Cardiovascular Disease (ASCVD), Chronic Kidney
Disease (CKD) and residual inflammatory risk.
– In collaboration with Gilead, a phase 2b trial was
initiated investigating semaglutide in combination
with Gileads investigational FXR agonist cilofexor and
investigational ACC inhibitor firsocostat in people with
compensated cirrhosis (F4) due to NASH.
– A phase 2 trial was initiated investigating orally
administrated PCSK9i for LDL-cholesterol lowering in
people with ASCVD or general CV risk.
– A phase 3a trial for macimorelin was initiated
investigating an oral diagnostic agent used for the
diagnosis of GHD in adolescents and children.
– Novo Nordisk acquired phase 2 ready antibody PRX004
for the rare heart disease ATTR cardiomyopathy from
Prothena Corporation PLC.
– A phase 2 trial was initiated investigating once-weekly
FGF21 in people with NASH. As part of phase 2 trial
an additional treatment arm with Cagrilintide in
combination with semaglutide is included in the trial.
– Collaboration with Staten Biotechnology terminated.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
29
Patent status for
marketed products
The patent expiry dates for the products are shown in the
Key marketed products in main markets (active ingredients)
table on the right. The dates provided are for expiry in
the US, China, Japan and Europe of patents on the active
Diabetes:
ingredient, unless otherwise indicated, and include actual
Human insulin and Modern insulins1
and estimated extensions of patent term, when applicable.
NovoNorm® (Prandin®)
For several products, in addition to the active ingredient
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 and/or
orphan exclusivity may apply.
Victoza®9
Tresiba®
Ryzodeg®
Xultophy®
Fiasp®
Ozempic®
Rybelsus®
Obesity:
Saxenda®
Wegovy®
Biopharm:
Norditropin® (SimpleXx®)
Sogroya®
NovoSeven®
NovoEight®
NovoThirteen® (TRETTEN®)
Refixia® (REBINYN®)
Esperoct®
Vagifem® 10 mcg
US
China
Japan
Europe8
Expired
Expired
Expired
Expired
Expired
Expired
Expired
Expired
2023
2029
2029
2029
20303
2032
20324
Expired
2024
2024
2024
20303
2026
20264
2022
2027
20242
20242
20303
2031
20314
2023
2032
Expired
Expired
2026
2031
2023
2028
2028
2028
20303
2031
20314
2023
2031
Expired
Expired
Expired
Expired
2034
2031
2036
2036
Expired5
Expired5
Expired5
Expired5
No patent
No patent
No patent
No patent
Expired
No patent
No patent
No patent
2028
2032
2022
2029
2027
2034
2027
2034
20226,7
No patent
Expired
Expired
1. Modern insulins are NovoRapid® (NovoLog®), NovoMix® 30 (NovoLog® Mix 70/30) and Levemir® 2. Patent term extension until 2027 may apply 3. Formulation patent; active ingredient
patent has expired 4. Tablet formulation and once-daily treatment regimen are protected by additional patents expiring in 2031-2034 5. Room temperature-stable formulation patent
until 2023 in China, Japan and Germany and until 2025 in the US 6. Patent covers low-dose treatment regimen 7. Licensed to several generic manufacturers from October 2016
8. Patent status varies from country to country. The figures in the table are based on Germany 9. We have granted and pending patents covering the Victoza® formulation.
These patents generally expire in November 2024, except for the US where the formulation patent expires in February 2026
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
30
Commercial execution
Maintaining
commercial
excellence
30.1%
Value market share for diabetes
8,400
DKK million sales in obesity treatment
The COVID-19 pandemic provided the backdrop to
Novo Nordisk’s commercial operations in 2021. The
increased risk of serious illness from coronavirus
among people living with diabetes and obesity and
other serious chronic diseases – and the growing
incidence of these conditions around the world –
has made delivering our products to patients more
imperative than ever.
Despite the economic and social disruptions caused by the
pandemic, we successfully launched important new products
and grew market share in 2021, allowing us to make progress
across our strategic aspirations. This robust performance was
underpinned by strong demand for our diabetes treatments
and our new obesity medication, Wegovy®.
We are working towards achieving a global diabetes market
value share of one third by 2025. We are also committed to
We are increasingly providing a holistic solution to the
consolidating and expanding our leading position in obesity
challenges of inter-linked cardiometabolic diseases – such
treatment, while our Biopharm division is building a diversified
as diabetes, obesity and other serious chronic diseases – by
platform for sustainable growth.
offering products to patients, healthcare professionals and
payers. In this way we are driving change and adding value for
society, while at the same time building a sustainable business
for the future.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
31
Delivering on our ambitions even during these exceptional
understanding of the need to address obesity is winning
times has required our commercial teams to rapidly adopt
healthcare system reimbursement in select sub-populations
new ways of doing business and increase their use of digital
across a growing number of markets, creating a solid platform
Kara Richadrson Whitely lives with obesity
in the US. She has hiked Mount Kilimanjaro
three times
tools. This shift was necessitated by the pandemic, but it
for the increasing uptake of anti-obesity medications.
has now become standard practice across the organisation.
Today, we are embracing virtual customer interactions in
We are the global leader in obesity treatment, with a value
multiple settings and developing new digital competences as
market share of 77.8% of branded prescription sales, and there
we apply a market-fit approach to our operations.
is substantial scope for further growth in the years ahead. There
A watershed year in obesity therapy
Obesity was an important stand-out in 2021, both for
patients and for our business. The US launch of Wegovy®
in June 2021 marked the start of a new era in obesity care
and underscored the value that our innovations can bring to
society. The exceptional demand for the therapy – exceeding
are currently around 650 million people living with obesity, and
in 10 years the total is likely to be closer to 1 billion.
all expectations – was testament to the high unmet need
Diabetes value market share
among people living with the disease, while the fact that our
GLP-1
Insulin
Diabetes
medicine helps patients achieve unprecedented weight loss,
fuelled extensive media attention. Acceptance by payers
was also highly encouraging, with US commercial formulary
access now around 73%.
As a result of this exceptional interest, initial demand for
Wegovy® exceeded supply, requiring careful management
to ensure continuity of care for individual patients who had
already started treatment. Despite increasing production
efforts, additional supply chain challenges encountered
towards the end of 2021 mean we do not expect to be able
to meet demand in the US until the second half of 2022
- with relatively few new patients expected to be able to
initiate treatment as a result.
47.5%
44.5%
28.6%
%
55
50
45
40
35
30
25
20
50.4%
52.7%
44.3%
43.8%
29.3%
30.1%
Outside the US, our first-generation obesity product
Saxenda® has now been launched in 62 countries. Better
Source: IQVIA data
2019
2020
2021
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
32
Growing value market share in diabetes
In the highly competitive diabetes market, we improved our
Obesity sales
Sales as reported
Growth at CER
value market share by 0.8 percentage points to 30.1%, reflecting
strong demand for GLP-1 products across both North American
and International Operations. There is a clear shift to greater
use of GLP-1 therapies around the world and this segment’s
value share of the total diabetes market has increased to
26.5% compared with 21.9% 12 months ago. We continue to
be the global market leader with our type 2 diabetes products
Rybelsus®, Ozempic® and Victoza®, with a 52.7% share by value.
Ozempic®, our once-weekly injectable semaglutide, is now
available in 69 countries – including China – and Rybelsus®,
our oral formulation of semaglutide, has been launched in 30
countries.
DKK
billion
10
8
6
4
2
0
55%
42%
3%
60%
64%
The smart pen initiative also paves the way for the digitalisation
of the patient journey in other therapy areas in the future. The
aim is simple: to use smart technology to help patients lead as
normal a life as possible.
Further growth in Biopharm
In Biopharm, sales growth across International and North
America Operations was driven by our treatments for rare blood
disorders, including the newly launched products Esperoct®
and Refixia®, as well as NovoEight® and NovoSeven®. Sales of
haemophilia A and haemophilia B products increased by 23%
and 23% respectively.
Overall demand for rare endocrine disorder products was
flat, with an increase in international sales offset by a decline
Increasingly, healthcare providers are demanding diabetes
2017
2018
2019
2020
2021
in North America. We remain the market leader in the global
treatments that not only control blood glucose levels but
also have cardiovascular benefits. The fact that Ozempic® has
been shown to significantly reduce the risk of major adverse
Biopharm sales
human growth disorder market with a value share of 36.3%,
against 35.6% a year ago, reflecting the new indications that
have been approved for our products and the global roll-out of
cardiovascular events compared with placebo in people living
Sales as reported
Growth at CER
our next-generation injection device.
with type 2 diabetes and ASCVD (atherosclerotic cardiovascular
disease) is particularly important in this regard.
DKK
billion
25
Insulin sales in 2021 were mixed, with the growth driven by
International Operations partially offset by lower sales in the
US However, 2021 was a landmark year for digital health in our
20
-16%
-1%
4%
1%
4%
diabetes business, with the first launch of our smart insulin pens
15
in Sweden and Germany followed by the UK launch in January
2022. By automatically recording insulin dosing information and
viewing this alongside blood sugar information, the pens allow
patients to better manage their disease with greater accuracy.
This is a key part of our drive to provide more personalised
treatment guidance to ensure patients using insulin maximise
their time in the correct glycaemic range.
10
5
0
2017
2018
2019
2020
2021
Strategic Aspirations
2025 Commercial
execution
– Strengthen Diabetes leadership – aim at global value
market share of more than 1/3
– Strengthen Obesity leadership and double current sales
(based on reported sales in 2019)
– Secure a sustained growth outlook for Biopharm
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
33
Financials
2021 performance
and 2022 outlook
Financial performance
Sales development across therapeutic areas
Sales increased by 11% measured in Danish kroner and by 14%
Sales in Diabetes care increased by 11% measured in Danish
Financials performance
at CER to DKK 140,800 million in 2021. Sales in International
Operations increased by 12% measured in Danish kroner
kroner and by 13% at CER. Sales of Obesity care products,
Saxenda® and Wegovy®, increased by 50% measured in
and by 14% at CER. The strategic aspiration for International
Danish kroner and by 55% at CER. Sales of Biopharm products
Operations is sales growth between 6-10%. Sales in North
increased by 1% measured in Danish kroner and by 4% at CER.
America Operations increased by 10% measured in Danish
kroner and by 14% at CER. The strategic aspiration of
In the following sections, unless otherwise noted, market
transforming 70% of sales in the US has progressed, and 60.3%
data are based on moving annual total (MAT) from November
of sales are now derived from products launched since 2015.
2021 and November 2020 provided by the independent data
Geographic sales development
provider IQVIA.
Diabetes care
Sales in International Operations increased by 12% measured
Sales in Diabetes care increased by 11% measured in Danish
in Danish kroner and by 14% at CER. Sales in EMEA increased
kroner and by 13% at CER to DKK 113,197 million driven by
by 10% measured in Danish kroner and by 12% at CER. Sales
GLP-1 growth. Novo Nordisk has improved the global diabetes
in Region China increased by 14% measured in Danish kroner
value market share over the last 12 months from 29.3% to
NAO net sales IO net sales Growth at CER
14%
6%
7%
2%
5%
DKK
billion
150
120
90
60
30
0
and by 11% at CER. Sales in Rest of World increased by 14%
30.1%. The market share increase was driven by market share
2017
2018
2019
2020
2021
measured in Danish kroner and by 19% at CER.
gains in both International Operations and North America
Sales in North America Operations increased by 10% measured
in Danish kroner and by 14% at CER.
Operations.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
34
GLP-1 therapy for type 2 diabetes
Sales of GLP-1 products for type 2 diabetes
(Rybelsus®, Ozempic® and Victoza®) increased by 28% measured
by North America Operations and International Operations.
Saxenda® has been launched in 65 countries, and Wegovy® was
launched in the US in June 2021. Novo Nordisk currently has
in Danish kroner and by 32% at CER to DKK 53,597 million. The
a value market share of 77.8% of the global branded obesity
GLP-1 segment’s value share of the total diabetes market has
prescription drug market. The strategic aspiration for Obesity
increased to 26.5% compared with 21.9% 12 months ago.
care is to more than double reported sales from the base in
2019 of DKK 5,679 million by 2025.
Rybelsus® sales increased by 158% measured in Danish kroner
and by 168% at CER to DKK 4,838 million. Sales growth was
Biopharm
driven by North America Operations as well as EMEA and Rest of
World. Rybelsus® has now been launched in 29 countries.
Sales of Biopharm products increased by 1% measured in
Danish kroner and by 4% at CER to DKK 19,203 million in line
with the strategic aspiration of sustained growth in Biopharm.
Ozempic® sales increased by 59% measured in Danish kroner
The sales growth at CER was driven by both North America
and by 64% at CER to DKK 33,705 million. Sales growth was
Operations and International Operations. Sales growth was
driven by both North America Operations and International
Operations. Ozempic® has now been launched in 72 countries.
driven by Rare blood disorders.
Sales by therapeutic area
Diabetes care Obesity care Biopharm Growth at CER
14%
6%
7%
2%
5%
DKK
billion
150
120
90
60
30
0
Victoza® sales decreased by 20% measured in Danish kroner
Sales of Rare blood disorder products increased by 6%
and by 18% at CER to DKK 15,054 million as the GLP-1 market is
measured in Danish kroner and by 9% at CER to DKK 10,217
Sales split in Diabetes care
Rare blood disorders
2017
2018
2019
2020
2021
moving towards once-weekly and tablet-based treatments. The
sales decline was driven by North America Operations, EMEA
and Rest of World, partially offset by higher sales in Region
China.
Insulin sales
million. The increasing sales were driven by the launch products
Esperoct® and Refixia® as well as NovoSeven® and NovoEight®.
Insulin sales GLP-1 sales Other diabetes care Growth at CER
Rare endocrine disorders
Sales of Rare endocrine disorder products decreased by 5%
measured in Danish kroner and by 2% at CER to DKK 7,303
DKK
billion
120
100
6%
4%
13%
4%
8%
Sales of insulin decreased by 1% measured in Danish kroner
million. The sales development was driven by North America
and increased by 1% at CER to DKK 56,006 million. Sales
Operations' sales decreasing by 12% at CER, partially offset by
growth at CER was driven by increased sales in International
International Operations sales increasing by 5% at CER. Novo
Operations, partially offset by declining sales in the US.
Nordisk is the leading company in the global human growth
Obesity care
Sales of Obesity care products, Saxenda® and
Wegovy®, increased by 50% measured in Danish kroner and
by 55% at CER to DKK 8,400 million. Sales growth was driven
disorder market with a value market share of 36.3% compared
to 35.6% a year ago.
80
60
40
20
0
2017
2018
2019
2020
2021
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
35
Development in costs and operating profit
The cost of goods sold increased by 13% measured in Danish
kroner and by 15% at CER to DKK 23,658 million, resulting in a
gross margin of 83.2% measured in Danish kroner compared
with 83.5% in 2020. The decline in gross margin reflects lower
realised prices in the US, a negative currency impact of 0.2
and North America Operations. In International Operations,
promotional spend is related to launch activities for Rybelsus®
and Ozempic® as well as Obesity care market development
primarily through foreign exchange forward contracts. The
foreign exchange result was a net gain of DKK 344 million
compared with a net loss of DKK 747 million in 2020. This
activities. In North America Operations, the cost increase is
driven by promotional activities for Rybelsus® and Ozempic®
reflects gains on hedged currencies, primarily the US dollar.
as well as market development activities for Obesity care and
launch costs for Wegovy®, partially offset by lower promotional
As per the end of December 2021, a negative market value of
financial contracts of approximately DKK 1.7 billion has been
percentage points and amortisation of intangible assets related
spend related to insulin.
deferred for recognition in 2022.
to the acquisition of Emisphere Technologies Inc. in 2020. This
is countered by a positive product mix driven by increased GLP-
Research and development costs increased by 15% measured
The effective tax rate is 19.2% in 2021 compared with an
1 sales and productivity improvements in line with the strategic
in Danish kroner and by 16% at CER to DKK 17,772 million.
effective tax rate of 20.7% in 2020, mainly reflecting non-
aspiration of driving operational efficiencies.
Increased activities within Other serious chronic diseases are
recurring impact from acquisitions in 2020 and 2021.
Sales and distribution costs increased by 12% measured
pipeline within cardiovascular disease and NASH. The growth
Net profit increased by 13% to DKK 47,757 million and diluted
in Danish kroner and by 15% at CER to DKK 37,008 million.
The increase in costs is driven by International Operations
is impacted by amortisation of the priority review voucher for
Wegovy® in the US in 2020.
earnings per share increased by 15% to DKK 20.74 DKK.
driving the cost increase reflecting the progression of the
Administration costs increased by 2% measured in Danish
Cash flow and capital allocation
Operating profit and margin
kroner and by 4% at CER to DKK 4,050 million, reflecting low
Free cash flow was DKK 29.3 billion compared with DKK 28.6
Operating profit (left axis) Operating profit margin (right axis)
spend in 2020 due to COVID-19 impact on activities.
billion in 2020 supporting the strategic aspiration to deliver
Growth at CER
DKK
billion
5%
3%
60
50
40
30
20
10
0
6%
7%
13%
Other operating income and expenses (net) was DKK 332
driven by higher net profit and higher provisions for rebates
million compared with DKK 460 million in 2020.
in the US partially driven by changed distribution policy for the
340B programme. This increase is partially countered by an
Operating profit increased by 8% measured in Danish kroner
unfavourable impact from change in working capital.
attractive capital allocation to shareholders. The increase is
and by 13% at CER to DKK 58,644 million.
Financial items (net) and tax
Capital expenditure for property, plant and equipment was DKK
6.3 billion compared with DKK 5.8 billion in 2020.
Financial items (net) showed a net gain of DKK 436 million
Novo Nordisk’s financial reserves were DKK 16.1 billion by
compared with a net loss of DKK 996 million in 2020.
end of December 2021 comprising cash at bank, marketable
In line with Novo Nordisk’s treasury policy, the most significant
and undrawn credit facilities less overdrafts and loans repayable
foreign exchange risks for Novo Nordisk have been hedged,
within 12 months.
securities (measured at fair value based on active market data)
%
60
50
40
30
20
10
0
2017
2018
2019
2020
2021
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
36
Cash flow and capital allocation
impact sales development. Given the current exchange rates
The free cash flow is expected to be DKK 50-55 billion. The
Dividend for prior year Interim dividend Share repurchases
versus the Danish krone, growth reported in DKK is now
increase in free cash flow compared to 2021 reflects the impact
DKK
billion
50
40
30
20
10
0
expected to be around 5 percentage points higher than at CER.
from the acquisition of Dicerna Pharmaceuticals in 2021.
All of the above expectations are based on assumptions that the
Operating profit growth is expected to be 4% to 8% at CER. The
global or regional macroeconomic and political environment will
expectation for operating profit growth primarily reflects the sales
not significantly change business conditions for Novo Nordisk
growth outlook and continued investments in current and future
during 2022, including the potential implications from major
growth drivers within research and development and commercial.
healthcare reforms and legislative changes as well as outcome
Across the operating units, commercial investments are related
to the continued roll-out of Ozempic® and Rybelsus® as well as
global investments in building the anti-obesity market and the
launch of Wegovy®. Furthermore, resources are allocated to both
of legal cases including litigations related to the 340B Drug
Pricing Programme in the US, and that the currency exchange
rates, especially the US dollar, will remain at the current level
versus the Danish krone. Neither does the guidance include the
early and late-stage pipeline activities. The acquisition of Dicerna
financial implications of any significant business development
Pharmaceuticals Inc. is negatively impacting operating profit
transactions during the remainder of 2022.
growth by around 3 percentage points due to higher operating
2018
2019
2020
2021
2022E*
exchange rates versus the Danish krone, growth reported in DKK is
invoicing currencies and, all other things being equal, movements
costs and amortisations of intangible assets . Given the current
Novo Nordisk has hedged expected net cash flows in a number of
*Expectations for 2022
2022 outlook
For 2022, sales growth is expected to be 6% to10% at CER.
The guidance reflects expectations for sales growth in both
The effective tax rate for 2022 is expected to be in the range of
International Operations and in North America Operations,
20-22%.
mainly driven by Diabetes and Obesity care. Within Obesity care,
the guidance reflects an expectation of meeting the demand for
Wegovy® in the US in the second half of 2022.
expected to be around 7 percentage points higher than at CER.
in key invoicing currencies will impact Novo Nordisk’s operating
profit as outlined in note 4.3 in the financial statements.
For 2022, Novo Nordisk expects financial items (net) to amount to
a loss of around DKK 2.8 billion, mainly reflecting losses associated
with foreign exchange hedging contracts.
Expectations are as reported,
if not otherwise stated
Expectations
2 February 2022
6% to 10%
Around 5 percentage points higher than at CER
Sales growth
at CER
as reported
Operating profit growth
Capital expenditure is expected to be around DKK 12 billion in
at CER
4% to 8%
2022 primarily relating to investments in additional capacity
as reported
Around 7 percentage points higher than at CER
for active pharmaceutical ingredient (API) production at
Financial items (net)
Loss of around DKK 2.8 billion
Intensifying competition within both Diabetes care and
existing manufacturing sites. The expected increase in capital
Effective tax rate
Biopharm as well as an estimated negative impact on global
expenditure reflects progress of R&D projects based on the oral
Capital expenditure (PP&E)
sales growth of around 3 percentage points from Volume
technology platform.
Based Procurement of insulin in China are also reflected in
the guidance. Furthermore, continued pricing pressure within
Depreciation, amortisation and impairment losses are expected to
Diabetes care, especially in the US, is expected to negatively
be around DKK 6.5 billion.
Depreciation, amortisation
and impairment losses
Free cash flow (excluding impact
from business development) DKK 50-55 billion
20% to 22%
Around DKK 12.0 billion
Around DKK 6.5 billion
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
37
Forward-looking statements
These statements are based on current plans, estimates and
For an overview of some, but not all, of the risks that could
projections. By their very nature, forward-looking statements
adversely affect Novo Nordisk’s results or the accuracy of
Novo Nordisk’s reports filed with or furnished to the US
involve inherent risks and uncertainties, both general and
forward-looking statements in this Annual Report 2021,
Securities and Exchange Commission (SEC), including this
specific. Novo Nordisk cautions that a number of important
reference is made to the overview of risk factors in ‘Risk
statutory Annual Report 2021 and Form 20-F, which are
factors, including those described in this Annual Report 2021,
management’ of this Annual Report 2021.
both expected to be filed with the SEC in February 2022 in
could cause actual results to differ materially from those
continuation of the publication of this Annual Report 2021,
contemplated in any forward-looking statements.
Unless required by law, Novo Nordisk is under no duty and
and written information released, or oral statements made,
undertakes no obligation to update or revise any forward-
to the public in the future by or on behalf of Novo Nordisk,
Factors that may affect future results include, but are not
looking statement after the distribution of this Annual Report
may contain forward-looking statements. Words such as
limited to, global as well as local political and economic
2021, whether as a result of new information, future events,
‘believe’, ‘expect, ‘may’, ‘will’, ‘plan’, ‘strategy’, ‘prospect’, ‘foresee’,
conditions, including interest rate and currency exchange rate
or otherwise.
‘estimate’, ‘project’, ‘anticipate’, ‘can’, ‘intend’, ‘target’ and other
fluctuations, delay or failure of projects related to research and/
words and terms of similar meaning in connection with any
or development, unplanned loss of patents, interruptions of
Shares and capital structure
discussion of future operating or financial performance identify
supplies and production, including as a result of interruptions
forward-looking statements. Examples of such forward-looking
or delays affecting supply chains on which Novo Nordisk relies,
Through open and proactive communication, Novo Nordisk aims
statements include, but are not limited to:
product recalls, unexpected contract breaches or terminations,
to provide the basis for fair and efficient pricing of our shares.
– Statements of targets, plans, objectives or goals for future
government- mandated or market-driven price decreases for
operations, including those related to Novo Nordisk’s
Novo Nordisk’s products, introduction of competing products,
products, product research, product development, product
reliance on information technology including the risk of
Geographical split of shareholders1
introductions and product approvals as well as cooperation in
cybersecurity breaches, Novo Nordisk’s ability to successfully
% of share capital
relation thereto,
market current and new products, exposure to product
Denmark
North America
UK
Other
– Statements containing projections of or targets for
liability and legal proceedings and investigations, changes
revenues, costs, income (or loss), earnings per share, capital
in governmental laws and related interpretation thereof,
expenditures, dividends, capital structure, net financials and
including on reimbursement, intellectual property protection
other financial measures,
and regulatory controls on testing, approval, manufacturing
– Statements regarding future economic performance,
and marketing, perceived or actual failure to adhere to ethical
future actions and outcome of contingencies such as legal
marketing practices, investments in and divestitures of domestic
proceedings, and
and foreign companies, unexpected growth in costs and
– Statements regarding the assumptions underlying or relating
expenses, failure to recruit and retain the right employees,
25%
4%
40%
to such statements.
failure to maintain a culture of compliance, epidemics,
pandemics or other public health crises, and factors related
31%
In this Annual Report 2021, examples of forward looking
to the foregoing matters and other factors not specifically
statements can be found under the section related to our
identified herein.
1. Split of shareholders is denoted according to the location of legal deposit-owner
‘Strategic Aspirations’ and elsewhere.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
38
Ownership structure*
Novo Nordisk Foundation
Institutional and private investors
Novo Holdings A/S
76.7% of votes
28.1% of capital
23.3% of votes
71.9% of capital
537 million A shares
(nominal value DKK 107 million)
1,773 million B shares
(nominal value DKK 355 million)
Novo Nordisk A/S
* Treasury shares are included, however, voting rights of treasury shares cannot be exercised
As of 31 December 2021, Novo Holdings A/S also held a B share
capital of nominally DKK 22,103,800. Together with the A shares,
Novo Holdings A/S's total ownership amounted to nominally
DKK 129,591,000. Novo Holdings A/S's ownership is reflected in
the 'Ownership structure' chart.
There is no complete record of all shareholders; however, based
on available sources of information, as of 31 December 2021
it is estimated that shares were geographically distributed as
shown in the 'Geographical split of shareholders’ chart. As of 31
December 2021, the free float of listed B shares was 92.01% (of
which approximately 10.1% are listed as ADRs), excluding Novo
Holdings A/S's holding and Novo Nordisk’s holding of treasury
shares. As of 31 December 2021, Novo Holdings A/S and Novo
Nordisk’s holding of B shares equaled 141,618,276 shares
and had a nominal value of DKK 28,323,655. For details about
the share capital, see note 4.2 to the consolidated financial
statements.
Share capital and ownership
Novo Nordisk’s share capital of DKK 462,000,000.00 is divided
The company’s A shares are not listed and are held by Novo
Holdings A/S5, a Danish public limited liability company wholly-
Capital structure
Novo Nordisk’s Board of Directors and Executive Management
into A and B share capital. The A and B shares are calculated in
owned by the Novo Nordisk Foundation. According to the
consider that the current capital and share structure of Novo
units of DKK 0.20, amounting to 2.31 billion shares. The A share
Articles of Association of the Foundation, the A shares cannot
Nordisk serve the interests of the shareholders and the
capital, consisting of 537 million shares, has a nominal value of DKK
be divested.
107,487,200 and the B share capital, consisting of 1,773 million
company well. Novo Nordisk’s capital structure strategy offers
a balance between long-term shareholder value creation and
shares, has a nominal value of DKK 354,512,800. Each A share
Special rights attached to A shares include pre-emptive
competitive shareholder return in the short term.
carries 200 votes and each B share carries 20 votes. Novo Nordisk's
subscription rights in the event of an increase in the A share
B shares are listed on Nasdaq Copenhagen and on the New York
capital and pre-emptive purchase rights in the event of a
The capital structure has been adjusted following Novo
Stock Exchange (NYSE) as American Depository Receipts (ADRs).
sale of A shares, while B shares take priority for liquidation
Nordisk’s Eurobond issuance with an aggregate principal
The general meeting has authorised the Board of Directors
and B shares take priority for dividends between 0.5 and 5%.
the acquisition of Dicerna on 18 November 2021, worth DKK 18
to distribute extraordinary dividends, issue new shares in
However, in practice, A and B shares receive the same amount
billion net of cash which is mainly debt-financed.
proceedings. A shares take priority for dividends below 0.5%,
amount of EUR 1.3 billion. In addition, Novo Nordisk announced
accordance with the Articles of Association and repurchase
of dividend per share.
shares in accordance with authorizations granted.
5. Novo Holdings A/S's registered address is Tuborg Havnevej 19, DK-2900 Hellerup, Denmark
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
39
Dividend policy
The company’s dividend policy applies a pharmaceutical
be paid in March 2022, equivalent to a total dividend for 2021
Regulation (MAR). For the next 12 months, Novo Nordisk has
of DKK 10.40 and a payout ratio of 49.6%. The company expects
decided to implement a new share repurchase programme.
industry benchmark to ensure a competitive payout ratio
to distribute an interim dividend in August 2022. Further
The expected total repurchase value of B shares amounts
for dividend payments, which are complemented by share
information regarding this interim dividend will be announced
to a cash value of up to DKK 22 billion. The total programme
repurchase programmes. The final dividend for 2020 paid in
in connection with the financial report for the first six months
may be reduced in size if significant business development
March 2021 was equal to DKK 5.85 per A and B share of DKK
of 2022. Dividends are paid from distributable reserves. Novo
opportunities arise during 2022. Novo Nordisk expects to
0.20 including ADRs. The total dividend for 2020 was DKK 9.10
Nordisk does not pay a dividend on its holding of treasury
conduct the majority of the new share repurchase programme
per A and B share of DKK 0.20, corresponding to a payout ratio
shares.
of 50.0%, which was in line with the 2020 pharma peer group
average of 50.6%.
Share repurchase programme for 2021/2022
During the twelve-month period beginning 1 February 2021,
according to the safe harbour rules defined in MAR. At the
Annual General Meeting in March 2022, the Board of Directors
will propose a further reduction in the company’s B share
capital, corresponding to approximately 1.3% of the total share
In August 2021, an interim dividend was paid equaling DKK 3.50
Novo Nordisk repurchased shares worth DKK 20 billion. The
capital, by cancelling 30,000,000 treasury shares.
per A and B share of DKK 0.20 including ADRs. For 2021, the
share repurchase programme has primarily been conducted in
Board of Directors will propose a final dividend of DKK 6.90 to
accordance with the safe harbour rules in the EU Market Abuse
Share price performance 2021
Novo Nordisk share price and indexed peers1
Share price development
Novo Nordisk’s share price increased by 72.3% during 2021 until
its close on 31 December close of DKK 735.00. The total market
value of Novo Nordisk’s B shares, excluding treasury shares and
Novo Holdings A/S shares, was DKK 1,198,745,107,140, as of 31
Novo Nordisk
Pharmaceutical industry index2
OMXC25
December 2021.
DKK
1000
800
600
400
200
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
72.3%
25.5%
17.2%
Strategic Aspirations
2025 Financial
– Deliver solid sales and operating profit growth:
– Deliver 6–10% sales growth in International Operations
– Transform 70% of sales in the US (from 2015 to 2022)
– Drive operational efficiencies across the value chain to
enable investments in future growth assets
– Deliver free cash flow to enable attractive capital
allocation to shareholders
1. OMXC25 and pharmaceutical industry development have been rebased to Novo Nordisk share price in January 2021
2. AstraZeneca, Bristol-Myers Squibb, Eli Lilly & Co., Glaxo Smith Kline, Lundbeck, Merck & Co, Novartis AG, Pfizer, Roche, Sanofi-Aventis AG
Novo Nordisk Annual Report 2021 Key risks
41 Risk Management
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
41
Risk management
Innovation and competition
wide risk management set-up. We assess risks to potential
We are a scientific based company whose future is based on
financial loss and reputational damage.
To be a sustainable business, we must anticipate and
adapt to our environment to create new strategic
opportunities. Managing risks rigorously and
systematically is key in order for us to create and
protect value.
raising the innovation bar. To remain competitive in the future
and thereby mitigate the innovation risk, we invest significantly
Executive Management, the Board of Directors and Audit
in internal and external pipeline opportunities to ensure
Committee review a 'heat map' of our biggest operational
patients receive improved treatments.
risks every six months. This map is based on insights from
Digital disruption
management teams across the organisation and includes risks
that could cause significant disruptions to the business over
New digital technologies could bring new competitors into the
a three-year horizon. The following overview provides more
We apply a dual lensed approach to risk management. This
pharmaceutical industry. It also provides an opportunity for us
details of our key risks.
means we identify and mitigate both operational risks that pose
to deliver more value to our stakeholders and help patients live
a threat to our short to medium-term plans, as well as strategic
a life free from the limitations of their disease. Digital health
For more information, see our Corporate Governance
risks that could reduce our ability to achieve our corporate
solutions bring new risks particularly around data regulation
report available at www.novonordisk.com/about/corporate-
strategy over the long-term.
and privacy, as well as potential quality risks. We strive to
governance.html
monitor and mitigate these risks in close collaboration with
Addressing risks in our strategic planning:
Scenario and risk-thinking exercises are part of our strategic
relevant partners.
Key operational risks
An aggregated illustration of our key operational risks is
planning. They include analyses of market dynamics as well
Production capacity and supply chain risks
outlined below with associated descriptions on the next page.
as socioeconomic and political developments that present
Demand fluctuations, resource shortages, trade disputes,
risks or opportunities for our business. Annually, Executive
quality assurance and local manufacturing requirements are
Management and the Board of Directors review a strategic risk
all factors that can pressure global supply chains. Furthermore,
profile.
expanding production capacity is complex and associated with
a long lead time. Therefore, planning and management of our
1
2
3
Clinical Pipeline Risks
Product Supply, Quality
and Safety Risk
Commercialisation Risks
4
5
6
IT Security Risks
Financial Risks
Legal, Patents and
Compliance Risks
Access and affordability
supply chain and production is key to mitigate this risk.
Access to affordable care is a global issue as healthcare systems
struggle to provide quality care at a sustainable cost, while the
burden of chronic diseases keeps rising. Ensuring access and
Operational risk management process:
In the short to medium-term we are also exposed to risks
High
affordability is a risk and responsibility Novo Nordisk shares
throughout our value chain. Some risks are inherent in the
with all involved in healthcare. We recognize that we cannot
pharmaceutical industry, such as delays or failures of potential
defeat chronic diseases alone, but to mitigate the risk we can
late-stage medicines in the R&D pipeline. Other risks, such as
Impact
accelerate our actions to find solutions in collaboration with
supply disruptions and competitive threats, are well-known
relevant stakeholders.
to any manufacturing company with global production. We
will never compromise on product quality, patient safety and
business ethics: these are front and centre of our enterprise-
ILLUSTRATIVE
3
2
4
6
1
5
Low
Likelihood
High
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
42
Risk area
Description
Impact
Mitigating actions
1
Clinical Pipeline
Risks
Findings in clinical activities, regulatory processes or
misunderstanding of commercial potential leading to delays or
failure of products in the pipeline
– Patients would not benefit from innovative treatments
– Could have an adverse impact on sales, profits and market position
– Pre-clinical and clinical activities to demonstrate safety and
efficacy
– Consultations with regulators to review pre-clinical and clinical
findings and obtain guidance on development path
2
Product Supply,
Quality and Safety
Disruption of product supply or quality failures may compromise
the availability of products, ultimately impacting the health of
patients and a lost commercial opportunity
Risks
– Product shortages could have potential implications for patients
– Could put patients' health and lives at risk and jeopardise
reputation and license to operate if regulatory compliance is not
ensured
– Establishing global production with multiple facilities and safety
stock to reduce supply risk
– Regular quality audits of internal units and suppliers and annual
inspections by authorities document GMP compliance
– Could have an adverse impact on sales, profits and market position
– Identification and correction of root causes when issues are
identified. If necessary, products are recalled
3
Commercialisation
Risks
Market dynamics and geopolitical, macroeconomic or healthcare
crises (e.g., pandemics) leading to reduced payer ability and
willingness to pay
– Market dynamics could impact price levels and patient access
– Could have an adverse impact on sales, profits and market position
– Innovation of novel products, clinical trial data and real-world
evidence demonstrate added value of new products
– Payer negotiations to ensure improved patients' access
– Increased and new access and affordability initiatives
4
IT Security Risks
Disruption to IT systems, such as cyber-attacks or infrastructure
failure resulting in business disruption or breach of data
confidentiality
– Could limit our ability to produce and safeguard product quality
– Could compromise patients' or other individuals' privacy
– Could limit our ability to maintain operations or limit future
business opportunities if proprietary information is lost
– Company-wide information security awareness activities
– Continuity plans for non-availability of IT systems
– Company-wide internal audit of IT security controls
– Detection and protection mechanisms in IT systems and business
– Could have an adverse impact on sales, profits and market position
processes
5
Financial Risks
Exchange rate fluctuations (mainly in USD, CNY and JPY),
disputes with tax authorities and changes to tax legislation and
interpretation
– Could lead to significant tax adjustments, fines and higher-than-
expected tax level
– Could have an adverse impact on sales, profits and market position
– Hedging for selected currencies
– Integrated treasury management
– Applicable taxes paid in jurisdictions where business activity
generates profits and multi-year Advance Pricing Agreements
with tax authorities
6
Legal, Patents and
Compliance Risks
Breach of legislation, industry codes or company policies.
Competitors asserting patents against Novo Nordisk or challenging
patents critical for protection of commercial product and pipeline
candidates
– Potential exposure to investigations, criminal and civil sanctions
and other penalties
– Could compromise our reputation and the rights and integrity of
individuals involved
– Legal review of key activities
– Business Ethics Code of Conduct integrated in our business,
Compliance hotline in place and Internal Audit of compliance with
business ethics standards
– Unexpected loss of exclusivity for or injunctions against existing
– Internal controls to minimise vulnerability to patent infringement
and pipeline products could have an adverse impact on future sales
– Could have an adverse impact on sales, profits and market position
and invalidity actions
Novo Nordisk Annual Report 2021 Management
44 Board of Directors
47 Executive Management
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
4 4
Board of Directors
Helge Lund
Chair
Jeppe Christiansen
Vice chair
Laurence Debroux
Andreas Fibig
Sylvie Grégoire
Henrik Poulsen
Norwegian. Born October 1962. Male.
First elected 20171. Term 2022.
Danish. Born November 1959. Male.
First elected 2013. Term 2022.
French. Born July 1969. Female.
First elected 2019. Term 2022.
German. Born February 1962. Male.
First elected 2018. Term 2022.
Canadian and American. Born
November 1961. Female. First
elected 2015. Term 2022.
Danish. Born September 1967. Male.
First elected 2021. Term 2022.
Chair of the Nomination Committee
and Chair of the Chair Committee.
Chair of the Remuneration
Committee and member of the Chair
Committee.
Chair of the Audit Committee and
member of the Remuneration
Committee.
Member of the Audit Committee.
Positions and management duties:
Chair of the board of directors and
chair of the people & governance
committee of BP p.l.c. Chair of the
board of directors of Inkerman
Holding AS. Member of the board
of directors and member of the
remuneration committee of Belron
SA and of the board of directors of
P/F Tjaldur. Operating advisor to
Clayton Dubilier & Rice. Member
of the board of trustees of the
International Crisis Group.
Competences:
Global corporate leadership;
healthcare and pharma industry;
finance & accounting; business
development, M&A and external
innovation sourcing; human capital
management; environmental, social
& governance (ESG).
1. In addition, Helge Lund was a member
of the Board for one year in 2014-2015
Positions and management duties:
Chief executive officer of Maj Invest
Holding A/S and executive director
of two wholly owned subsidiaries.
Chair of the board of directors
of Haldor Topsøe A/S, Emlika
Holding ApS, and two wholly owned
subsidiaries of the latter company,
and chair of the board of directors
of JEKC Holding ApS. Member of the
board of directors of Novo Holdings
A/S, KIRKBI A/S, BellaBeat Inc., Pluto
Naturfonden and Randers Regnskov.
Member of the board of governors
of Det Kgl. Vajsenhus. Adjunct
Professor, department of finance,
Copenhagen Business School.
Competences:
Healthcare and pharma industry;
finance & accounting; business
development, M&A and external
innovation sourcing; human capital
management; environmental, social
& governance (ESG).
Positions and management duties:
Member of the board of directors,
chair of the audit committee and
member of the ESG committee of
Exor N.V. Member of the board of
directors, control & risk committee
and of the ESG committee of
Juventus Football Club S.p.A.
Member of the board of HEC Paris
Business School and of Kite Insights
(The Climate School).
Positions and management duties:
Chair, chief executive officer
and member of the innovation
and sustainability committee of
International Flavors & Fragrances
Inc. Chair of the board of directors of
the German American Chamber of
Commerce and executive committee
member of the World Business
Council for Sustainable Development
(WBCSD).
Competences:
Global corporate leadership;
healthcare and pharma industry;
finance & accounting; business
development, M&A and external
innovation sourcing; human capital
management; environmental, social
& governance (ESG).
Competences:
Global corporate leadership;
healthcare and pharma industry;
technology; finance & accounting;
business development, M&A and
external innovation sourcing; human
capital management; environmental,
social & governance (ESG).
Member of the Audit Committee, the
Research & Development Committee
and the Nomination Committee.
Positions and management duties:
Executive chair of the board of
directors of EIP Pharma, Inc.
Member of the board of directors
and member of the nominating and
corporate governance committee
of Perkin Elmer Inc. Member of the
board of directors of F2G Ltd.
Competences:
Global corporate leadership;
healthcare and pharma industry;
medicine & science; finance &
accounting; business development,
M&A and external innovation
sourcing; human capital
management.
Member of the Audit Committee.
Positions and management duties:
Deputy chair of the board of directors
and member of the transaction
committee of ISS A/S. Deputy
chair of the supervisory board and
member of the audit, remuneration
and nomination committees of
Carlsberg A/S. Member of the board
of directors of Novo Holdings A/S
and Ørsted A/S. Senior advisor to
A.P. Møller Holding A/S and chair of
the board of directors of Færch A/S.
Member of the supervisory board of
Bertelsmann SE & Co. KGaA.
Competences:
Global corporate leadership;
finance & accounting; business
development, M&A and external
innovation sourcing; human capital
management; environmental, social
& governance (ESG).
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
45
Mette Bøjer Jensen
Kasim Kutay
Anne Marie Kverneland
Martin Mackay
Thomas Rantzau
Stig Strøbæk
Danish. Born December 1975. Female.
First elected 2018. Term 2022.
British. Born May 1965. Male.
First elected 2017. Term 2022.
Danish. Born July 1956. Female.
First elected 2000. Term 2022.
American and British. Born April 1956.
Male. First elected 2018. Term 2022.
Danish. Born March 1972. Male.
First elected 2018. Term 2022.
Danish. Born January 1964. Male.
First elected 1998. Term 2022.
Employee representative. Member of
the Nomination Committee.
Member of the Nomination
Committee and the Research &
Development Committee.
Employee representative. Member
of the Remuneration Committee.
Chair of the Research &
Development Committee. Member
of the Remuneration Committee.
Employee representative. Member
of the Research & Development
Committee.
Employee representative. Member
of the Audit Committee.
Positions and management duties:
Wash & Sterilisation specialist
in Product Supply, Novo Nordisk A/S.
Competences:
Not mapped for employee
representatives.
Positions and management duties:
Chief executive officer of Novo
Holdings A/S. Member of the board
of directors and member of the
nomination and remuneration
committee of Novozymes A/S.
Member of the board of directors
and member of the nomination
and remuneration committee of
Evotec SE. Member of the board
of directors of the Life Sciences
Advisory board of Gimv NV.
Competences:
Global corporate leadership;
healthcare and pharma industry;
finance & accounting; business
development, M&A and external
innovation sourcing; human capital
management.
Positions and management duties:
Laboratory technician and full-time
union representative in Novo
Nordisk A/S. Member of the board
of directors of the Novo Nordisk
Foundation.
Competences:
Not mapped for employee
representatives.
Positions and management duties:
Co-founder, chair and CEO of
Rallybio LLC. Member of the board
of directors of 5:01 Acquisition
Corporation. Senior advisor to New
Leaf Venture Partners, LLC. Member
of the board of directors and chair of
the science & technology committee
of Charles River Laboratories
International, Inc.
Competences:
Global corporate leadership;
healthcare and pharma industry;
medicine & science; technology;
business development, M&A and
external innovation sourcing; human
capital management.
Positions and management duties:
Area specialist in Product Supply,
Novo Nordisk A/S.
Positions and management duties:
Electrician and a full-time union
representative in Novo Nordisk A/S.
Competences:
Not mapped for employee
representatives.
Competences:
Not mapped for employee
representatives.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
46
Independence and meeting attendance overview
Meeting attendance in 20211
Board of
Directors
Chair
Committee
Audit
Committee7
Nomination
Committee
Remuneration
Committee
R&D
Committee
Name
Helge Lund
Jeppe Christiansen
Laurence Debroux
Andreas Fibig
Sylvie Grégoire
Mette Bøjer Jensen
Kasim Kutay
Independence2
Independent
Not independent 3
Independent 4,5,8
Independent 4
Independent 4
Not independent 6
Not independent 3
Anne Marie Kverneland
Not independent 6
Martin Mackay
Henrik Poulsen
Thomas Rantzau
Stig Strøbæk
Independent
Not independent 3,4,5,8
Not independent 6
Not independent 4,6
Board members who stepped down at the annual general meeting in March 2021
Brian Daniels
Liz Hewitt
Independent
Independent
1. Number of meetings attended by each Board member out of the total number of meetings within the member's term 2. In accordance with recommendation 3.2.1 of the Danish Corporate Governance Recommendations as designated by Nasdaq Copenhagen 3. Member of
the board of directors or executive management of Novo Holdings A/S 4. Pursuant to the US Securities Exchange Act, Ms Debroux, Mr Fibig and Ms Grégoire qualify as independent Audit Committee members, while Mr Poulsen and Mr Strøbæk rely on an exemption from the
independence requirements 5. Ms Debroux and Mr Poulsen possess the qualifications within accounting and auditing required under part 8 of the Danish Act on Approved Auditors and Audit Firms 6. Elected by employees of Novo Nordisk 7. Collectively the members have relevant
industry expertise 8. Designated as financial experts as defined by the US Securities and Exchange Commission (SEC)
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
47
Executive Management
Lars Fruergaard Jørgensen
President and chief executive officer
(CEO)
Monique Carter
Executive vice president
People & Organisation
Maziar Mike Doustdar1
Executive vice president
International Operations
Ludovic Helfgott1
Executive vice president
Biopharm
Karsten Munk Knudsen
Executive vice president
Chief financial officer (CFO)
Doug Langa1
Executive vice president,
North America Operations
Born November 1966. Male.
Born December 1973. Female.
Born August 1970. Male.
Born July 1974. Male.
Born December 1971. Male.
Born October 1966. Male.
Other positions and
management duties:
Member of the supervisory board
and member of the nomination
committee of Carlsberg A/S.
First vice president of the European
Federation of Pharmaceutical
Industries and Associations (EFPIA).
Other positions and
management duties:
No other management positions.
Other positions and
management duties:
No other management positions.
Other positions and
management duties:
President of the Novo Nordisk
Haemophilia Foundation Council.
Other positions and
management duties:
Chair of the board of directors of
NNE A/S. Member of the board
of directors and chair of the audit
committee of Hempel A/S.
Other positions and
management duties:
No other management positions.
Martin Holst Lange
Executive vice president
Development
Marcus Schindler
Executive vice president
Research & Early Development and
chief scientific officer (CSO)
Camilla Sylvest
Executive vice president
Commercial Strategy & Corporate
Affairs
Henrik Wulff
Executive vice president
Product Supply, Quality & IT
Born October 1970. Male.
Born September 1966. Male.
Born November 1972. Female.
Born November 1970. Male.
Other positions and
management duties:
No other management positions.
Other positions and
management duties:
Adjunct Professor of Pharmacology
at the University of Gothenburg.
Other positions and
management duties:
Vice chair of the board of directors
of the World Diabetes Foundation.
Member of the board of directors of
Danish Crown A/S.
Other positions and
management duties:
Member of the board of directors
and the remuneration committee of
Ambu A/S. Member of the board of
directors of Grundfos Holding A/S.
1. Not registered as executive with the Danish Business Authority
Novo Nordisk Annual Report 2021 Consolidated
statements
and additional
information
49 Consolidated financial statements
85 Consolidated ESG statement
92 Management statement and Auditor's Reports
96 Additional information
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
49
Consolidated financial, environmental, social and
governance statements 2021
Consolidated statements
Income statement
Cash flow statement
Balance sheet
Equity statement
Notes to the consolidated financial statements
Section 1
Basis of preparation
1.1 Principal accounting policies and key accounting estimates
1.2 Changes in accounting policies and disclosures
Section 2
Results for the year
2.1 Net sales and rebates
2.2 Segment information
2.3 Research and development costs
2.4 Employee costs
2.5 Other operating income and expenses
2.6 Income taxes and deferred income taxes
2.7 Earnings per share
Section 3
Operating assets and liabilities
3.1 Intangible assets and property, plant and equipment
3.2 Inventories
3.3 Trade receivables
3.4 Provisions and contingent liabilities
3.5 Other liabilities
p. 50
p. 51
p. 52
p. 53
p. 54
p. 54
p. 55
p. 56
p. 58
p. 58
p. 59
p. 59
p. 60
p. 61
p. 64
p. 65
p. 66
p. 67
Section 4
Consolidated ESG statement
p. 85
Distribution to shareholders
Share capital, Treasury shares and Other reserves
Financial risks
Derivative financial instruments
Borrowings
Cash and cash equivalents
Capital structure and financial items
4.1
4.2
4.3
4.4
4.5
4.6
4.7 Other non-cash items
4.8
4.9
4.10 Financial income and expenses
Change in working capital
Financial assets and liabilities
Section 5
Other disclosures
5.1
5.2
5.3
5.4
5.5
5.6
5.7
Share-based payment schemes
Commitments
Acquisition of businesses
Related party transactions
Fee to statutory auditors
General accounting policies
Companies in the Novo Nordisk Group
Financial definitions
(part of Management's review – not audited)
Non-IFRS financial measures
(part of Management's review – not audited)
p. 68
p. 68
p. 69
p. 71
p. 72
p. 73
p. 73
p. 73
p. 74
p. 75
p. 76
p. 78
p. 78
p. 79
p. 80
p. 80
p. 81
p. 82
p. 83
Notes to the consolidated ESG statement
Section 6
Basis of preparation
Section 7
Environmental performance
7.1 Energy consumption for operations and share of
renewable power
7.2 Water consumption for production sites
7.3 Breaches of environmental regulatory limit values
7.4 CO2 emissions from operations and transportation
7.5 Waste from production sites
Section 8
Social performance
8.1 Patients reached with Novo Nordisk's Diabetes care products
8.2 Employees
8.3 Sustainable employer score
8.4 Frequency of occupational accidents
8.5 Gender diversity
8.6 Total tax contribution
8.7 Supplier audits
Section 9
Governance performance
9.1 Business ethics reviews and training
9.2 Supplier audits
9.3 Product recalls
9.4 Failed inspections
9.5 Facilitations of the Novo Nordisk Way
9.6 Company reputation
9.7 Animals purchased for research
p. 86
p. 87
p. 87
p. 87
p. 87
p. 88
p. 88
p. 89
p. 89
p. 89
p. 89
p. 90
p. 90
p. 90
p. 90
p. 91
p. 91
p. 91
p. 91
p. 91
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
50
Income statement
and statement of comprehensive income for the year ended 31 December
DKK million
Income statement
Net sales
Cost of goods sold
Gross profit
Note
2021
2020
2019
DKK million
Note
2021
2020
2019
2.1, 2.2
140,800
126,946
122,021
Net profit
47,757
42,138
38,951
Statement of comprehensive income
2.2
(23,658)
(20,932)
(20,088)
Other comprehensive income:
117,142
106,014
101,933
Items that will not be reclassified subsequently to the income statement:
Sales and distribution costs
2.2
(37,008)
(32,928)
(31,823)
Research and development costs
2.2, 2.3
(17,772)
(15,462)
(14,220)
Administrative costs
2.2
(4,050)
(3,958)
(4,007)
Other operating income and expenses
2.2, 2.5
332
460
600
Operating profit
Financial income
Financial expenses
Profit before income taxes
Income taxes
Net profit
Earnings per share
Basic earnings per share (DKK)
Diluted earnings per share (DKK)
4.10
4.10
58,644
54,126
52,483
2,887
1,628
65
(2,451)
(2,624)
(3,995)
59,080
53,130
48,553
2.6
(11,323)
(10,992)
(9,602)
47,757
42,138
38,951
2.7
2.7
20.79
20.74
18.05
18.01
16.41
16.38
Remeasurements of retirement benefit obligations
146
(67)
(187)
Items that will be reclassified subsequently to the income statement:
Exchange rate adjustments of investments in subsidiaries
1,624
(1,689)
226
Cash flow hedges:
Realisation of previously deferred (gains)/losses
4.2, 4.4
(1,802)
329
1,677
Deferred gains/(losses) incurred during the period
4.2, 4.4
(1,755)
1,384
(329)
Other items
Tax on other comprehensive income, income/(expense)
2.6
Other comprehensive income, net of tax
Total comprehensive income
112
1,005
(670)
10
(577)
(610)
9
(231)
1,165
47,087
41,528
40,116
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
51
Cash flow statement
for the year ended 31 December
DKK million
Cash flow statement
Net profit
Adjustment of non-cash items:
Income taxes in the income statement
Depreciation, amortisation and impairment losses
Other non-cash items
Change in working capital
Interest received
Interest paid
Income taxes paid
Note
2021
2020
2019
DKK million
Note
2021
2020
2019
2.6
3.1
4.7
4.8
Purchase of treasury shares
47,757
42,138
38,951
Dividends paid
11,323
10,992
9,602
Repayment of borrowings
Proceeds from borrowings
4.2
4.1
4.5
4.5
(19,447)
(16,855)
(15,334)
(21,517)
(20,121)
(19,409)
22,160
(6,689)
5,682
(950)
81
(822)
6,025
13,009
5,753
7,849
5,661
7,032
(8,656)
(4,353)
(3,388)
241
(261)
100
(422)
64
(204)
Net cash used in financing activities
(25,493)
(32,244)
(35,484)
Net cash generated from activities
(2,098)
(2,729)
(211)
Cash and cash equivalents at the beginning of the year
12,226
15,411
15,629
Exchange gains/(losses) on cash and cash equivalents
591
(456)
(7)
Cash and cash equivalents at the end of the year
4.6
10,719
12,226
15,411
2.6
(14,438)
(10,106)
(10,936)
Net cash generated from operating activities
55,000
51,951
46,782
Purchase of intangible assets
3.1
(1,050)
(16,256)
(2,299)
Proceeds from sale of property, plant and equipment
—
7
4
Purchase of property, plant and equipment
Cash used for acquisition of businesses
Proceeds from other financial assets
Purchase of other financial assets
Purchase of marketable securities
Sale of marketable securities
Investment in associated companies
Proceeds from the divestment of Group and
associated companies
Dividend received from associated companies
3.1
5.3
5.4
5.4
(6,335)
(5,825)
(8,932)
(18,283)
—
(4)
(7,109)
1,172
—
—
4
—
12
—
—
—
—
148
(350)
—
—
(392)
(97)
—
18
(3)
20
Net cash used in investing activities
(31,605)
(22,436)
(11,509)
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
52
Balance sheet
at 31 December
DKK million
Assets
Intangible assets
Property, plant and equipment
Investments in associated companies
Deferred income tax assets
Other receivables and prepayments
Other financial assets
Total non-current assets
Inventories
Trade receivables
Tax receivables
Other receivables and prepayments
Marketable securities
Derivative financial instruments
Cash at bank
Total current assets
Total assets
Note
2021
2020
DKK million
Note
2021
2020
3.1
3.1
2.6
3.2
3.3
4.3
4.4
4.6
43,171
55,362
525
8,672
267
916
Equity and liabilities
20,657
Share capital
50,269
Treasury shares
582
Retained earnings
5,865
Other reserves
674
Total equity
1,066
Borrowings
108,913
79,113
Deferred income tax liabilities
18,536
Retirement benefit obligations
27,734
Other liabilities
289
Provisions
19,621
40,643
1,119
5,037
6,765
1,690
10,720
85,595
4,161
—
2,332
12,757
65,809
Borrowings
Trade payables
Tax payables
Other liabilities
194,508
144,922
Derivative financial instruments
Provisions
Total current liabilities
Total liabilities
Total equity and liabilities
4.2
4.2
4.2
4.5
2.6
3.5
3.4
462
(6)
72,004
(1,714)
70,746
12,961
5,271
1,280
360
4,374
470
(8)
63,774
(911)
63,325
2,897
2,502
1,399
—
4,526
4.5
13,684
8,870
3,658
19,600
2,184
51,520
99,516
3.5
4.4
3.4
7,459
5,717
3,913
17,005
1,365
34,814
70,273
123,762
81,597
194,508
144,922
Total non-current liabilities
24,246
11,324
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
53
Equity statement
at 31 December
DKK million
Share
capital
Treasury
shares
Retained
earnings
Other
reserves
Balance at the beginning of the year
470
(8)
63,774
(911)
2021
Total
63,325
47,757
(670)
47,087
Share
capital
Treasury
shares
Retained
earnings
Other
reserves
2020
Total
Share
capital
Treasury
shares
Retained
earnings
Other
reserves
2019
Total
480
(10)
57,817
(694)
57,593
490
(11)
53,406
(2,046)
51,839
42,138
(67)
42,071
42,138
(610)
41,528
(543)
(543)
38,951
(187)
38,764
1,352
1,352
38,951
1,165
40,116
47,757
146
47,903
(816)
(816)
13
13
326
326
(21,517)
1,040
245
(19,441)
(21,517)
1,040
245
(19,447)
—
72,004
(1,714)
70,746
(20,121)
(20,121)
(19,409)
(19,409)
823
31
(16,847)
823
31
(16,855)
—
63,774
(911)
63,325
363
18
(15,325)
(9)
10
363
18
(15,334)
—
(10)
57,817
(694)
57,593
(10)
480
(10)
470
(8)
10
(8)
(6)
8
(6)
(8)
462
Net profit
Other comprehensive income
Total comprehensive income
Transfer of cash flow hedge reserve to
intangible assets (note 4.2)
Transactions with owners:
Dividends (note 4.1)
Share-based payments (note 5.1)
Tax related to restricted stock units
Purchase of treasury shares (note 4.2)
Reduction of the B share capital (note 4.2)
Balance at the end of the year
Refer to note 4.2 for details of movements in Other reserves.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
54
Section 1
Basis of preparation
Key accounting estimates and judgements
The use of reasonable estimates and judgements is an essential part
of the preparation of the consolidated financial statements. Given the
uncertainties inherent in Novo Nordisk’s business activities, Management
must make certain estimates regarding valuation and make judgements
on the reported amounts of assets, liabilities, net sales, expenses and
related disclosures.
Applying materiality
The consolidated financial statements are a result of processing large
numbers of transactions and aggregating those transactions into classes
according to their nature or function. The transactions are presented in
classes of similar items in the consolidated financial statements. If a line
item is not individually material, it is aggregated with other items of a
similar nature in the consolidated financial statements or in the notes.
1.1 Principal accounting policies and
key accounting estimates
The key accounting estimates identified are those that have a significant
risk of resulting in a material adjustment to the measurement of assets and
liabilities in the following reporting period. An example being the estimation
of US sales deductions and provisions for sales rebates.
Management provides specific disclosures required by IFRS unless the
information is not applicable or is considered immaterial to the decision-
making of the primary users of these financial statements.
The consolidated financial 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) and in accordance with IFRS as endorsed by the EU and further
requirements in the Danish Financial Statements Act.
Measurement basis
The consolidated financial statements have been prepared on the historical
cost basis except for derivative financial instruments, equity investments,
marketable securities and trade receivables in a factoring portfolio, which
are measured at fair value. Except for the changes described in note 1.2, the
principal accounting policies set out below have been applied consistently
in the preparation of the consolidated financial statements for all the years
presented. The general accounting policies are described in note 5.6.
Principal accounting policies
Novo Nordisk’s accounting policies are described in each of the individual
notes to the consolidated financial statements. Accounting policies listed in
the table below are regarded as the principal accounting policies applied
by Management.
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.
If necessary, changes are recognised in the period in which the estimate
is revised. Management considers the key accounting estimates to be
reasonable and appropriate based on currently available information. The
actual amounts may differ from the amounts estimated as more detailed
information becomes available.
In addition, Management makes judgements in the process of applying the
entity’s accounting policies, for example the classification of a transaction as
an asset acquisition or a business combination.
Management regards those listed below as the key accounting
estimates and judgements used in the preparation of the consolidated
financial statements.
Please refer to the specific notes for further information on the key
accounting estimates and judgements as well as assumptions applied.
1.2 Changes in accounting policies and disclosures
Adoption of new or amended IFRSs
Management has assessed the impact of new or amended and revised
accounting standards and interpretations (IFRSs) issued by the IASB and
IFRSs endorsed by the European Union effective on or after 1 January 2021.
It is assessed that application of amendments effective from 1 January 2021
has not had a material impact on the consolidated financial statements for
2021. Furthermore, Management does not anticipate any significant impact
on future periods from the adoption of these amendments.
Principal accounting policies
Key accounting estimates and judgements
Estimation risk
Note
US net sales and rebates
Estimate of US sales deductions and provisions for sales rebates
Intangible assets from acquisition of businesses
Estimate in determining the fair value of intangible assets when acquiring assets in a business combination
Income taxes and deferred income taxes
Estimate regarding deferred income tax assets and provision for uncertain tax positions
Provisions and contingent liabilities
Estimate of ongoing legal disputes, litigation and investigations
Intangible assets
Inventories
Estimate regarding impairment of assets and judgement of whether a transaction is an asset acquisition or a business combination
Estimate of indirect production costs capitalised and inventory write-down
High
High
Medium
Medium
Low
Low
2.1
5.3
2.6
3.4
3.1
3.2
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
55
Section 2
Results for the year
2.1 Net sales and rebates
Gross-to-net sales reconciliation
DKK million
Gross sales
2021
2020
2019
340,180
298,187
270,431
US Managed Care and Medicare
(112,929)
(96,716)
(84,202)
US wholesaler charge-backs
(40,354)
(37,036)
(33,772)
US Medicaid rebates
(19,810)
(17,307)
(14,365)
Other US discounts and sales
returns
Non-US rebates, discounts and
sales returns
Total gross-to-net sales
adjustments
(14,119)
(10,867)
(8,280)
(12,168)
(9,315)
(7,791)
(199,380)
(171,241)
(148,410)
Net sales
140,800
126,946
122,021
Provisions for sales rebates
DKK million
2021
2020
2019
At the beginning of the year
34,052
30,878
25,760
Additional provisions, including
increases to existing provisions
155,602
111,921
102,782
Amount paid during the year
(141,370)
(106,116)
(98,655)
Adjustments, including unused
amounts reversed during the year
Effect of exchange rate adjustment
(284)
2,822
166
(2,797)
381
610
At the end of the year
50,822
34,052
30,878
Sales discounts and sales rebates are predominantly issued in the US. As
such, rebates amount to 75% of gross sales in the US (74% in 2020 and 71%
in 2019).
Provisions for sales rebates include US Managed Care, Medicare, Medicaid,
and other US rebate types, as well as rebates in a number of European
countries and Canada.
subject to changes in interpretative guidance from government authorities.
Novo Nordisk adjusts the provision periodically to reflect actual sales
performance. Medicaid rebates are generally settled around 150 days from
the transaction date.
Pricing mechanisms in the US market
In the US, sales rebates are paid in connection with public healthcare
insurance programmes, including Medicare and Medicaid, as well as rebates
to pharmacy benefit managers (PBMs) and managed healthcare plans.
Key customers in the US include private payers, PBMs and government
payers. PBMs and managed healthcare plans play a role in negotiating
price concessions with drug manufacturers for both the commercial and
government channels, and determine which drugs are covered on their
formularies (or 'preferred drug lists').
US Managed Care and Medicare
For Managed Care and Medicare, rebates are offered to a number of
PBMs and managed healthcare plans. These rebate programmes allow
the customer to receive a rebate after attaining certain performance
parameters relating to formulary status or pre-established market share
thresholds. Rebates are estimated according to the specific terms in each
agreement, historical experience, anticipated channel mix, growth rates and
market share information. Novo Nordisk adjusts the provision periodically to
reflect actual sales performance. Managed Care and Medicare rebates are
generally settled around 100 days from the transaction date.
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.
Since January 2021, Novo Nordisk has changed its policy in the US related
to the 340B Drug Pricing Program, whereby Novo Nordisk no longer
provides 340B statutory discounts to certain pharmacies that contract
with covered entities participating in the 340B Drug Pricing Program.
Chargebacks are estimated 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 30 days after receipt of claim. Please refer to note
3.4 Provisions and contingent liabilities for a more elaborate description of
the ongoing litigation on the 340B Drug Pricing Program.
US Medicaid rebates
Medicaid is a government insurance programme. Medicaid rebates have
been estimated using a combination of historical experience, product and
population growth, price changes, and the impact of contracting strategies.
The calculation also involves interpretation of relevant regulations that are
Other US and non-US discounts and sales returns
Other discounts are provided to distributors, wholesalers, hospitals,
pharmacies, etc. They are usually linked to sales volume or provided as cash
discounts. Discounts are calculated based on historical data and recorded
as a reduction in gross sales at the time the related sales are recorded. Sales
returns relate to damaged or expired products.
Other net sales disclosures
In 2021, Novo Nordisk had three major wholesalers distributing products in
the US, representing 18%, 13% and 13% respectively of total net sales (19%,
13% and 12% in 2020 and 19%, 14% and 12% in 2019). Sales to these three
wholesalers are within both Diabetes and Obesity care and Biopharm.
Net sales to be recognised from fulfilling existing customer contracts
containing fixed or minimum sales volumes, with an original term greater
than 12 months, are expected to be DKK 1,012 million within 12 months
(DKK 431 million in 2020) and DKK 962 million thereafter (DKK 216 million
in 2020).
Novo Nordisk's sales are impacted by exchange rate changes. Refer to
note 4.3 for development in key exchange rates.
Accounting policies
Revenue from sale of goods is recognised when Novo Nordisk has
transferred control of products sold to the buyer and it is probable that
Novo Nordisk will collect the consideration to which it is entitled for
transferring the products. Control of the products is transferred at a single
point in time, typically on delivery. The amount of sales to be recognised is
based on the consideration Novo Nordisk expects to receive in exchange for
its goods. When sales are recognised, Novo Nordisk also records estimates
for a variety of sales deductions, including product returns as well as rebates
and discounts to government agencies, wholesalers, health insurance
companies, managed healthcare organisations and retail customers. Sales
deductions are recognised as a reduction of gross sales to arrive at net
sales, by assessing the expected value of the sales deductions (variable
consideration). Where contracts contain customer acceptance criteria,
Novo Nordisk recognises sales when the acceptance criteria are satisfied.
In some markets, Novo Nordisk sells products on a sale-or-return basis.
Where there is historical experience or a reasonably accurate estimate of
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
56
future returns, estimated product returns are recorded as a reduction in
sales. Where shipments of new products are made on a sale-or-return basis,
without sufficient historical experience for estimating sales returns, revenue
is recorded based on estimated demand and acceptance rates for well-
established products with similar market characteristics. If similar market
characteristics do not exist, revenue is recorded when there is evidence
of consumption or when the right of return has expired.
Unsettled rebates are recognised as provisions when the timing or
amount is uncertain (note 3.4).
Where absolute amounts are known, the rebates are recognised as
other liabilities. Wholesaler charge-backs that are absolute are netted
against trade receivable balances.
The impact of foreign currency hedging is recognised in the income
statement in financial items. Please refer to notes 4.3, 4.4 and 4.10 for
more details on hedging.
Key accounting estimates of sales deductions and provisions
for sales rebates
Sales deductions are estimated and provided for at the time the related
sales are recorded. These estimates of unsettled rebate, discount and
product return obligations require use of significant judgement, as not all
conditions are known at the time of sale, for example total sales volume
to a given customer. The estimates are based on analyses of existing
contractual obligations and historical experience. Provisions are calculated
on the basis of a percentage of sales for each product as defined by the
contracts with the various customer groups. Provisions for sales rebates are
adjusted to actual amounts as rebates, discounts and returns are processed.
Revenue can only be recognised to the extent that it is highly probable that a
significant reversal of the recognised revenue will not occur. In determining
the amount of revenue to recognise, Management has considered, among
other factors, whether the consideration is highly susceptible to factors
outside Novo Nordisk's influence, as well as the extent of predictability and
historical experience with similar transactions.
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.
2.2 Segment information
Business segments – Key figures
DKK million
Total net sales
Diabetes and Obesity care
Biopharm
Total
2021
2020
2019
2021
2020
2019
2021
2020
2019
121,597
108,020
102,840
19,203
18,926
19,181
140,800
126,946
122,021
Cost of goods sold
(19,363)
(17,715)
(16,309)
(4,295)
(3,217)
(3,779)
(23,658)
(20,932)
(20,088)
Sales and distribution costs
(33,791)
(29,903)
(28,729)
(3,217)
(3,025)
(3,094)
(37,008)
(32,928)
(31,823)
Research and development costs
(15,600)
(13,535)
(12,128)
(2,172)
(1,927)
(2,092)
(17,772)
(15,462)
(14,220)
Administrative costs
(3,504)
(3,387)
(3,346)
(546)
(571)
(661)
(4,050)
(3,958)
(4,007)
Other operating income and
expenses
Operating profit
Operating margin
Depreciation, amortisation and
impairment losses expensed
199
49,538
40.7%
264
309
43,744
42,637
40.5%
41.5%
133
9,106
47.4%
196
291
332
460
600
10,382
9,846
58,644
54,126
52,483
54.9%
51.3%
41.7%
42.6%
43.0%
(4,895)
(4,624)
(3,916)
(1,130)
(1,129)
(1,745)
(6,025)
(5,753)
(5,661)
Novo Nordisk operates in two business segments based on therapies:
Diabetes and Obesity care and Biopharm, representing the entirety of the
Group's operations.
We consider Executive Management to be the operating decision-making
body, as all significant decisions regarding business development and
direction are taken in this forum.
The segments include research, development, manufacturing and marketing
of products within the following areas:
– Diabetes and Obesity care: insulin, GLP-1 and related delivery
systems, oral antidiabetic products (OAD), obesity and other
serious chronic diseases
Geographical areas
Sales to external customers attributed to the US are collectively the most
material to the Group. The US and Mainland China are the only territories
where sales contribute 10% or more of total net sales.
– Biopharm: Rare blood disorders, rare endocrine disorders and
In 2021, Novo Nordisk operated in two main commercial units:
hormone replacement therapy.
Segment performance is evaluated on the basis of operating profit,
consistent with the consolidated financial statements. Financial income
and expenses and income taxes are managed 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 specific allocation. In addition, a small number
of corporate overhead costs are allocated systematically between the
segments. Other operating income and expenses have been allocated to the
two segments based on the same principle.
Accounting policies
Operating segments are reported in a manner consistent with the internal
reporting provided to Executive Management and the Board of Directors.
– International Operations
– EMEA: Europe, the Middle East and Africa.
– China: Mainland China, Hong Kong and Taiwan.
– Rest of World: All other countries except for North America.
– North America Operations (the US and Canada).
Refer to note 5.7 for an overview of companies in the Novo Nordisk Group
based on geographical areas.
The country of domicile is Denmark, which is part of EMEA. Denmark is
immaterial to Novo Nordisk's activities in terms of sales as 99.8% of total
sales are realised outside Denmark. Sales are attributed to geographical
areas according to the location of the customer.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
57
Net sales – Business segments and geographical areas
DKK million
2021
2020
2019
2021
2020
2019
2021
2020
2019
2021
2020
2019
2021
2020
2019
2021
2020
2019
2021
2020
2019
Total IO
EMEA
China
Rest of World
Total NAO
Of which the US
Total International Operations
Total North America Operations
Total Novo Nordisk
net sales
Diabetes and Obesity care segment:
Rybelsus®
Ozempic®
Victoza®
Total GLP-1
Long-acting insulin
– of which Tresiba®
– of which Xultophy®
– of which Levemir®
Premix insulin
– of which Ryzodeg®
– of which NovoMix®
Fast-acting insulin
– of which Fiasp®
524
36
—
289
36
8,856
3,634
1,143
6,393
3,112
—
969
—
303
6,726
7,095
7,249
3,527
4,251
4,713
1,544
16,106
10,765
8,392
10,209
7,399
5,682
1,847
11,074
9,959
9,035
6,729
6,451
5,955
2,080
5,486
4,407
3,477
2,979
2,574
1,983
1,095
2,135
1,789
1,493
1,693
1,605
1,407
3,453
3,763
4,065
2,057
2,272
2,565
3
982
10,512
10,246
9,707
2,879
2,959
3,160
5,224
1,711
1,291
993
392
321
237
283
8,801
8,955
8,714
2,487
2,638
2,923
4,941
10,903
10,808
10,304
6,454
6,584
6,422
2,288
1,106
832
617
965
764
585
—
– of which NovoRapid®
9,797
9,976
9,687
5,489
5,820
5,837
2,288
7,453
7,339
7,361
2,152
2,370
2,438
2,692
—
10
1,033
1,043
1,471
418
1
1,052
4,852
39
4,813
2,075
—
2,075
2,655
—
235
— 2,160
—
512
— 4,314
1,837
50
4,243
1,826
50
4,838
1,873
50
174
24,849
17,577
10,094
23,168
16,650
9,599
33,705
21,211
11,237
898
898
1,655
1,811
1,638
8,328
11,652
14,685
8,031
11,292
14,217
15,054
18,747
21,934
4,050
2,323
1,812
37,491
31,066
24,829
35,442
29,768
23,866
53,597
41,831
33,221
1,059
2,265
2,037
2,021
6,990
8,480
11,741
6,412
7,962
11,271
18,064
18,439
20,776
87
—
972
1,412
1,415
1,407
4,243
4,561
5,782
3,793
4,191
5,500
439
414
183
439
86
522
655
717
512
642
708
528
2,225
3,264
5,242
2,107
3,129
5,063
9,729
2,657
5,678
8,968
2,444
7,027
9,259
2,210
9,307
4,306
2,409
2,435
2,241
4
1,036
931
752
4,302
1,373
1,504
1,489
691
—
691
679
—
679
871
—
871
665
—
665
652
—
652
839
11,203
10,925
10,578
— 1,711
839
9,492
1,291
9,634
993
9,585
1,753
2,161
2,149
2,129
6,784
7,505
8,999
6,357
7,101
8,592
17,687
18,313
19,303
—
141
68
32
642
553
626
605
519
597
1,748
1,385
1,243
1,753
2,020
2,081
2,097
6,142
6,952
8,373
5,752
6,582
7,995
15,939
16,928
18,060
2,847
2,609
2,314
2,076
1,599
1,534
1,675
1,515
1,431
1,552
9,052
8,873
9,036
Human insulin
Total insulin
Other Diabetes care
Total Diabetes care
39,942
38,352
36,407
18,214
18,364
17,975
12,284
11,053
9,965
9,444
8,935
8,467
16,064
18,198
23,286
14,949
17,146
22,254
56,006
56,550
59,693
2,644
2,946
3,389
713
725
1,052
1,432
1,546
1,647
499
675
690
950
1,085
858
806
943
705
3,594
4,031
4,247
58,692
52,063
48,188
29,136
26,488
24,709
15,563
13,642
12,510
13,993 11,933 10,969
54,505
50,349
48,973
51,197
47,857
46,825 113,197 102,412
97,161
Obesity care (Saxenda® and Wegovy®)
3,117
2,118
2,083
1,809
1,124
981
61
10
9
1,247
984
1,093
5,283
3,490
3,596
4,912
3,230
3,348
8,400
5,608
5,679
Diabetes and Obesity care total
61,809
54,181
50,271
30,945
27,612
25,690
15,624
13,652
12,519
15,240 12,917 12,062
59,788
53,839
52,569
56,109
51,087
50,173 121,597 108,020
102,840
Biopharm segment:
Rare blood disorders
5,784
5,708
5,946
3,712
3,579
3,646
222
361
284
1,850
1,768
2,016
4,433
3,954
4,335
4,170
3,675
4,031
10,217
9,662
10,281
– of which Haemophilia A
1,625
1,332
1,176
1,162
– of which Haemophilia B
400
306
197
268
983
199
877
149
– of which NovoSeven®
3,673
3,996
4,502
2,225
2,352
2,577
Rare endocrine disorders
4,880
4,832
4,225
2,212
2,220
1,960
Other Biopharm
Biopharm total
1,064
1,108
1,122
837
886
912
11,728
11,648
11,293
6,761
6,685
6,518
24
4
194
167
6
395
16
—
15
—
439
128
333
107
284
48
487
237
381
212
382
185
460
102
358
86
358
77
345
269
1,254
1,299
1,656
3,548
3,207
3,617
3,461
3,089
3,454
66
5
36
5
2,501
2,546
2,229
2,423
2,875
3,052
2,400
2,857
3,037
221
217
205
619
449
501
330
205
245
2,112
1,713
1,558
637
7,221
7,303
1,683
518
7,203
7,707
1,557
382
8,119
7,277
1,623
432
325
4,572
4,531
4,450
7,475
7,278
7,888
6,900
6,737
7,313
19,203
18,926
19,181
Total sales by geographical area
73,537
65,829
61,564 37,706
34,297
32,208 16,019
14,084
12,844 19,812 17,448 16,512 67,263
61,117
60,457 63,009
57,824
57,486 140,800 126,946
122,021
Total sales growth as reported
11.7%
6.9% 12.1%
9.9%
6.5% 10.2% 13.7%
9.7%
13.8% 13.5%
5.7% 14.6% 10.1%
1.1%
6.2%
9.0%
0.6%
5.5%
10.9%
4.0%
9.1%
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
58
Novo Nordisk's research and development is mainly focused on:
Certain research and development activities are recognised outside research
and development costs:
Change in employee costs
capitalised as inventories
2.3 Research and development costs
DKK million
Employee costs (note 2.4)
Amortisation and impairment
losses, intangible assets
(note 3.1)
Depreciation and impairment
losses, property, plant and
equipment (note 3.1)
Other research and
development costs
Total research and
development costs
As percentage of net sales
2021
7,328
2020
6,269
2019
5,968
744
1,025
522
Accounting policies
Novo Nordisk expenses all research costs. In line with industry practice,
internal and subcontracted development costs are also expensed as
they are incurred, due to significant regulatory uncertainties and other
uncertainties inherent in the development of new products. This means
that they do not qualify for capitalisation as intangible assets until marketing
approval by a regulatory authority is obtained or considered highly probable.
Costs for post-approval activities that are required by authorities as a
condition for obtaining regulatory approval are recognised as research and
development costs.
736
724
783
8,964
7,444
6,947
17,772
12.6%
15,462
14,220
12.2%
11.7%
Research and development costs primarily comprise employee costs,
and internal and external costs related to execution of studies, including
manufacturing costs and facility costs of the research centres. The costs
also comprise amortisation, depreciation and impairment losses related
to software and property, plant and equipment used in the research and
development activities. Impairment losses recognised on intangible assets
related to research and development projects are presented in research and
development costs.
– insulins, GLP-1s and other therapeutic compounds for diabetes treatment
– GLP-1s, combinations and new modes of action for Obesity care
– blood-clotting factors and new modes of action for treatment of
– Royalty expenses paid to partners after regulatory approval are expensed
as cost of goods sold.
haemophilia and other rare blood disorders
– Royalty income received from partners is recognised as part of other
– human growth hormone and new modes of action for treatment of growth
operating income and expenses.
disorders and other rare endocrine disorders
– Contractual research and development obligations to be paid in the future
– new indications with existing assets within NASH, Alzheimer’s, and chronic
are disclosed separately as commitments in note 5.2.
kidney disease
– new research platforms including cell therapy and RNAi for treatment
of NASH, cardiovascular disease, chronic kidney disease and Parkinson's
disease, among others
The research activities mainly utilise biotechnological methods based on
advanced protein chemistry and protein engineering. These methods have
played a key role in the development of the production technology used to
manufacture insulin, GLP-1, recombinant blood-clotting factors and human
growth hormone. Research activities further focus on new technology
platforms including stem cells, gene therapy and developing RNAi therapies.
Research and development activities are carried out by Novo Nordisk's
research and development centres, mainly in Denmark, the US, the UK and
China. Clinical trials are carried out all over the world. Novo Nordisk also
enters into partnerships and licence agreements.
2.4 Employee costs
DKK million
2021
2020
2019
Wages and salaries
28,939
26,778
25,335
Share-based payment costs
(note 5.1)
Pensions – defined contribution
plans
Pensions – defined benefit plans
(note N/A)
Other social security contributions
Other employee costs
1,040
823
363
2,022
1,961
1,910
139
2,203
2,189
138
1,862
2,044
151
1,963
2,203
Total employee costs for the year
36,532
33,606
31,925
Employee costs capitalised as
intangible assets and property,
plant and equipment
Total employee costs
in the income statement
Included in the income statement:
Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative costs
Other operating income and
expenses
Total employee costs in the
income statement
(1,240)
(1,279)
(1,314)
(56)
(60)
(139)
35,236
32,267
30,472
9,611
15,003
7,328
3,098
8,896
8,134
14,146
13,463
6,269
2,848
5,968
2,679
196
108
228
35,236
32,267
30,472
Number of employees
2021
2020
2019
Average number of
full-time employees
Year-end number of
full-time employees
Employees (total)
46,171
43,759
42,218
47,792
48,478
44,723
45,323
42,703
43,258
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
59
Remuneration to Executive Management and Board of Directors
2.6 Income taxes and deferred income taxes
DKK million
Salary and short-term incentive
Pension
Benefits
Long-term incentive1
Severance payments
Executive Management in total2
Fee to Board of Directors2
Total
2021
126
12
10
100
29
277
17
294
2020
119
26
10
52
—
207
17
224
2019
120
26
14
40
—
200
19
219
1. Please refer to note 5.1 for further information.
2. Total remuneration for registered members of Executive Management amounts to
DKK 0 million (DKK 141 million in 2020 and DKK 135 million in 2019). All members of
the Board of Directors are registered.
Wages, salaries, social security contributions, annual leave and sick leave,
bonuses and non-monetary benefits are recognised in the year in which
the associated services are rendered by employees of Novo Nordisk. Where
Novo Nordisk provides long-term employee benefits, the costs are accrued
to match the rendering of the services by the employees concerned.
2.5 Other operating income and expenses
Accounting policies
Other operating income and expenses, comprises licence income and
income of a secondary nature in relation to the main activities of Novo
Nordisk. Licence income from royalties on net sales is recognised as the
underlying customers' sale occurs and from sales milestones once the
contingent sale milestone is achieved in accordance with the terms of the
relevant agreement.
Operating profit from the wholly owned subsidiary NNE A/S, not related
to Novo Nordisk's main activities, is recognised as other operating income
and expenses. Other operating income and expenses, also includes income
from the sale of intellectual property rights as well as transaction costs
incurred in connection with acquisition of businesses.
Income taxes expensed
DKK million
2021
2020
2019
Current tax on profit for the year
Deferred tax on profit for the year
13,871
(1,528)
11,557
1,105
11,275
(1,559)
Tax on profit for the year
12,343
12,662
9,716
Current tax adjustments recognised
for prior years
(603)
(563)
(191)
Deferred tax adjustments
recognised for prior years
Income taxes in the
income statement
Tax on other comprehensive
income for the year,
(income)/expense
(417)
(1,107)
77
11,323
10,992
9,602
(1,005)
577
231
Computation of effective tax rate
DKK million
2021
2020
2019
22.0%
22.0%
22.0%
(1.5%)
(2.5%)
(2.1%)
(0.3%)
(1.0%)
19.2%
(0.2%)
1.4%
20.7%
0.1%
(0.2%)
19.8%
2021
2020
2019
Statutory corporate income tax
rate in Denmark
Deviation in foreign subsidiaries'
tax rates compared to the Danish
tax rate (net)
Non-taxable income less non-tax-
deductible expenses (net)
Other adjustments (net)
Effective tax rate
Income taxes paid
DKK million
Income taxes paid in Denmark for
current year
Income taxes paid outside
Denmark for current year
Income taxes paid/repayments
relating to prior years
The deviation in foreign subsidiaries' tax rates from the Danish tax rate is
mainly driven by Swiss business activities as well as adjustments to deferred
tax assets due to changes in local corporate tax rates. Other adjustments
consist of tax related to acquisitions and subsequent transfers of intellectual
property rights and adjustments to prior years.
In 2020, income taxes paid in Denmark and paid outside Denmark were
impacted by transfers of intellectual property rights related to acquisitions.
In 2021, the impact from acquisitions and transfer of intellectual property
rights was less significant.
Accounting policies
The tax expense for the period comprises current and deferred tax. It
also includes adjustments to previous years and changes in provisions
for uncertain tax positions. Tax is recognised in the income statement
except to the extent that it relates to items recognised in equity or other
comprehensive income. Provisions for ongoing tax disputes are included as
part of deferred tax assets, tax receivables and tax payables.
Deferred income taxes arise from temporary differences between the
accounting and tax values of the individual consolidated companies and
from realisable tax loss carry-forwards. However, deferred tax liabilities are
not recognised if they arise from the initial recognition of goodwill. Deferred
income tax is also not accounted for if it arises from initial recognition of
an asset or liability in a transaction other than a business combination that,
at the time of the transaction, affects neither accounting nor taxable profit
or loss and does not give rise to equal taxable and deductible temporary
differences. The tax value of tax loss carry-forwards is included in deferred
tax assets to the extent that these 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 assumed in the year in which the
assets are expected to be utilised.
In general, the Danish tax rules related to dividends from group companies
provide exemption from tax for most repatriated profits. A provision for
withholding tax is only recognised if a concrete distribution of dividends
is planned. The unrecognised potential withholding tax amounts to
DKK 444 million (DKK 337 million in 2020).
9,703
4,262
7,774
3,439
4,508
2,258
The value of future tax deductions in relation to share programmes is
recognised as a deferred tax asset until the shares are paid out to the
employees. Any estimated excess tax deduction compared to the costs
realised in the income statement is charged to equity.
1,296
1,336
904
Income taxes paid
14,438
10,106
10,936
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
60
Key accounting estimate regarding deferred income tax assets and
provisions for uncertain tax positions
Management has considered future taxable income and has estimated
the amount of deferred income tax assets that should be recognised. The
estimate is based on an assessment of whether sufficient taxable income
will be available in the future, against which the temporary differences and
unused tax losses can be utilised. The total tax value of unrecognised tax
loss carry-forwards amounts to DKK 166 million in 2021 (DKK 628 million
in 2020).
Development in deferred income tax assets and liabilities
In the course of conducting business globally, tax and transfer pricing
disputes with tax authorities may occur. Management has estimated
the expected outcome of the disputes by using the ‘most probable
outcome’-method to determine the provisions for uncertain tax positions.
Management considers the provisions made to be adequate. However,
the actual obligation may deviate and depends on the result of litigation
and settlements with the relevant tax authorities.
DKK million
2021
Property,
plant and
equipment
Intangible
assets Inventories
Liabilities
Other
Net deferred tax asset/(liability) at 1 January
(1,614)
(3,600)
2,556
Income/(charge) to the income statement
Income/(charge) to other comprehensive income
Income/(charge) to equity
Additions from acquisitions
(330)
—
—
—
632
2
(2)
(4,456)
Effect of exchange rate adjustment
(36)
49
387
251
—
—
1
Net deferred tax asset/(liability) at 31 December
(1,980)
(7,375)
3,195
Classified as follows:
Deferred tax asset at 31 December
Deferred tax liability at 31 December
2020
Net deferred tax asset/(liability) at 1 January
Income/(charge) to the income statement
Income/(charge) to other comprehensive income
Income/(charge) to equity
Additions from acquisitions
Effect of exchange rate adjustment
719
109
(2,699)
(7,484)
(1,591)
(718)
(47)
(2,883)
—
—
—
24
92
(92)
—
1
3,210
(15)
1,811
963
(216)
—
—
(2)
Net deferred tax asset/(liability) at 31 December
(1,614)
(3,600)
2,556
Classified as follows:
Deferred tax asset at 31 December
Deferred tax liability at 31 December
755
46
(2,369)
(3,646)
2,568
(12)
4,617
2,037
(41)
—
—
319
6,932
7,223
(291)
3,452
1,449
16
—
—
(300)
4,617
4,895
(278)
Offset
within
countries
—
Total
3,363
1,945
1,005
192
(3,480)
376
2,629
—
3,401
3,541
(6,130)
8,672
(912)
6,130
(5,271)
—
4,041
1,404
(781)
793
194
976
43
1,087
520
(469)
20
276
(30)
2
(577)
(72)
276
(307)
3,363
1,404
—
2,903
(5,302)
5,865
(1,499)
5,302
(2,502)
2.7 Earnings per share
2021
2020
2019
Net profit
47,757
42,138
38,951
Average number of
shares outstanding
in million
shares
2,296.6
2,333.9
2,374.3
Dilutive effect of
average outstanding
share pool1,2
Average number of
shares outstanding,
including dilutive
effect of outstanding
share pool
Basic earnings
per share
Diluted earnings
per share
in million
shares
in million
shares
6.5
6.1
4.4
2,303.1
2,340.0
2,378.7
DKK
20.79
18.05
16.41
DKK
20.74
18.01
16.38
1. For further information on the development in treasury shares, please refer to note 4.2
2. For further information on the outstanding share pool, please refer to note 5.1.
Accounting policies
Earnings per share is presented as both basic and diluted earnings per
share. Basic earnings per share is calculated as net profit divided by the
monthly average number of shares outstanding. Diluted earnings per share
is calculated as net profit divided by the sum of monthly average number
of shares outstanding, including the dilutive effect of the outstanding share
pool. Please refer to 'Financial definitions' for a description of calculation of
the dilutive effect.
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
61
Section 3
Operating assets
and liabilities
3.1 Intangible assets and property, plant and
equipment
Out of total property, plant and equipment and intangible assets,
DKK 46,705 million is located in Denmark (DKK 44,431 million in 2020) and
DKK 41,035 million is located in the US (DKK 18,750 million in 2020) where
the Group's main production, filling, packaging, moulding, assembly facilities
and intangible assets are located.
DKK million
2021
Intellec-tual
property
rights
Software
and other
intangibles
Total
intangible
assets
Goodwill
Land and
buildings
Plant and
machinery
Other
equipment
Assets
under
construction
Property,
plant and
equipment
Cost at the beginning of the year
— 22,404
2,936
25,340
37,509
31,503
6,876
10,798
86,686
Additions from acquisition of businesses (note 5.3)
4,346
18,687
24
23,057
Additions during the year
Disposals during the year
Transfer and reclassifications
Effect of exchange rate adjustment
—
—
—
—
583
—
—
128
492
(45)
—
27
522
827
—
890
57
516
3
582
4,858
7,091
1,075
(45)
(359)
(148)
(305)
(41)
(853)
—
1,529
3,078
155
1,048
621
468
164
(5,075)
—
548
2,381
Cost at the end of the year
4,346
41,802
3,434
49,582
41,076
35,944
7,776
11,091
95,887
Amortisation/depreciation and impairment losses at
the beginning of the year
Amortisation/depreciation for the year
Impairment losses for the year
Amortisation/depreciation and impairment losses
reversed on disposals during the year
Effect of exchange rate adjustment
Amortisation/depreciation and impairment losses at
the end of the year
—
—
—
—
—
—
3,135
1,548
4,683
12,936
19,444
4,037
1,066
1,892
1,529
573
14
32
824
54
866
573
—
78
200
—
(1)
12
(1)
90
(365)
(140)
(305)
(41)
192
273
108
—
—
41
—
—
36,417
4,245
141
(851)
573
40,525
Carrying amount at the end of the year
4,346
37,150
1,675
43,171
26,407
14,806
2020
4,652
1,759
6,411
14,669
21,138
4,718
3,058
11,091
55,362
Cost at the beginning of the year
—
7,270
2,560
9,830
30,260
27,594
6,215
20,351
84,420
Additions during the year
Disposals during the year
Transfer and reclassifications
Effect of exchange rate adjustment
— 15,906
396
16,302
741
506
490
4,560
6,297
—
—
—
(698)
—
(74)
—
—
(698)
(119)
(583)
(122)
(16)
(840)
—
7,440
4,586
515
(12,541)
—
(20)
(94)
(813)
(600)
(222)
(1,556)
(3,191)
Cost at the end of the year
— 22,404
2,936
25,340
37,509
31,503
6,876
10,798
86,686
Amortisation/depreciation and impairment losses at
the beginning of the year
Amortisation/depreciation for the year
Impairment losses for the year
Amortisation/depreciation and impairment losses
reversed on disposals during the year
Effect of exchange rate adjustment
Amortisation/depreciation and impairment losses at
the end of the year
—
—
—
—
—
—
2,643
1,352
3,995
11,528
18,888
3,453
889
350
(698)
(49)
207
1,096
1,859
1,500
—
—
(11)
350
14
69
(698)
(60)
(119)
(346)
(581)
(432)
3,135
1,548
4,683
12,936
19,444
—
—
16
(16)
—
—
33,869
4,180
127
(831)
(928)
36,417
10,798
50,269
821
28
(115)
(150)
4,037
2,839
Carrying amount at the end of the year
— 19,269
1,388
20,657
24,573
12,059
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
62
Intangible assets
Amortisation and impairment losses
DKK million
Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative costs
Other operating income and
expenses
Total amortisation and
impairment loss
Total amortisation
Total impairment losses
2021
2020
2019
844
39
744
11
1
1,639
1,066
573
369
40
1,025
10
2
1,446
1,096
350
916
24
522
3
4
1,469
487
982
Of the total addition of intangible assets in 2021 DKK 492 million is internally
developed (DKK 396 million in 2020).
Intangible assets with an indefinite useful life and intangible assets not yet
available for use amount to DKK 22,690 million (DKK 9,607 million in 2020),
primarily intellectual property rights in relation to research and development
projects and goodwill.
2021 additions
Additions from acquisition of businesses relates to Novo Nordisk’s
acquisition of Dicerna Pharmaceuticals, Inc., which primarily includes
the RNAi research technology platform and pipeline assets, which are
recognised within intellectual property rights and goodwill; please refer
to note 5.3.
In 2021, Novo Nordisk acquired Prothena’s wholly-owned subsidiary
Neotope Neuroscience Ltd. and thereby gained full worldwide rights to
the intellectual property rights of Prothena’s ATTR amyloidosis business
and pipeline cover. The acquisition included the clinical stage antibody
PRX004. PRX004 is an antibody that uses a depleter mechanism that has
the potential to improve heart failure symptoms and reverse the disease
progression within the ATTR-CM diseases. The transaction has been
accounted for as an asset acquisition recognised in intellectual property
rights, all related to PRX004.
2020 additions
In 2020, Novo Nordisk acquired Corvidia Therapeutics Inc., in a transaction
accounted for as an asset acquisition. An addition of DKK 4,580 million was
recognised in intellectual property rights for the acquisition of Ziltivekimab, a
fully human monoclonal antibody directed against Interleukin-6 related to
chronic kidney disease, which is under development.
Novo Nordisk acquired Emisphere Technologies Inc. and obtained
ownership of the Eligen® SNAC oral delivery technology. Under the terms
of the agreement, Novo Nordisk acquired all outstanding shares of
Emisphere for USD 1,335 million. As part of the transaction, Novo Nordisk
also acquired related Eligen® SNAC royalty stream obligations owed to
MHR Fund Management LLC (MHR), the largest shareholder of Emisphere,
for USD 450 million. The transaction has been accounted for as an asset
acquisition, with DKK 11,060 million recognised in intellectual property
rights, of which DKK 2,467 million was related to assets under development.
At 31 December 2021, the carrying amount of acquired intangible assets
related to Rybelsus is DKK 7,150 million (DKK 7,716 million in 2020), which
has a remaining amortisation period of 13 years.
Impairment of intangible assets
In 2021, an impairment loss of DKK 573 million (DKK 350 million in 2020)
was recognised, all related to intellectual property rights. DKK 436 million
(DKK 350 million in 2020) of the impairment was related to the Diabetes
and Obesity care segment and DKK 137 million (none in 2020) related to
Biopharm. The entire impairment loss in 2021 was recognised in research
and development costs (DKK 350 million in research and development
costs in 2020). The impairment was a result of Management’s review of
expectations related to intellectual property rights not yet in use.
No impairment related to marketable products was identified in 2021 or
in 2020.
It is assessed that the carrying amount of goodwill which arose from the
acquisition of Dicerna Pharmaceuticals, Inc. on 28 December 2021 still
reflected the fair value as of 31 December 2021. An impairment test has not
been performed on goodwill due to the timing of the acquisition three days
before year-end, and no impairment indicators have been identified in the
period from the acquisition to 31 December 2021.
The allocation of goodwill of DKK 4,346 million to cash-generating units is
considered provisional due to the fact that the transaction was closed on 28
December 2021, leaving limited time for determining the cash-generating units.
The allocation will be finalised within 12 months from the acquisition date.
Accounting policies
Goodwill on acquisition of businesses is initially measured at cost, and is
subsequently measured at cost less any accumulated impairment losses.
Intellectual property rights acquired for research and development
projects, are carried at historical cost less accumulated amortisation and
any impairment loss. Upfront fees and acquisition costs are capitalised and
subsequent milestone payments payable on achievement of a contingent
event will be capitalised on the contingent event being probable of being
achieved. Intangible assets acquired in a business combination are
recognised at fair value at the acquisition date.
Amortisation is based on the straight-line method over the estimated
useful life. This corresponds to the legal duration or the economic useful
life depending on which is shorter, and not exceeding 25 years in either
case. The amortisation of intellectual property rights begins after regulatory
approval has been obtained or when assets are put in use.
Goodwill and intangible assets with an indefinite useful life and intangible
assets not yet available for use are not subject to amortisation. They
are tested annually for impairment, irrespective of whether there is any
indication that they may be impaired. The carrying amount of goodwill will
within 12 months from acquisition date be allocated to cash-generating
units for impairment testing purposes. The allocation is made to those cash-
generating units that are expected to benefit from the business combination
in which the goodwill arose. The units are identified at the lowest level at
which goodwill is monitored for internal management purposes.
Internal development of software for internal use is recognised as intangible
assets if the recognition criteria are met, for example a significant 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 3-15 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.
Research and development projects
Internal and subcontracted research costs are charged in full to the
consolidated income statement in the period in which they are incurred.
Consistent with industry practice, development costs are also expensed until
regulatory approval is obtained or is probable; please refer to note 2.3.
Payments to third parties under collaboration and licence agreements
are assessed for the substance of their nature. Payments which represent
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
63
subcontracted research and development work are expensed as the services
are received. Payments which represent rights to the transfer of intellectual
property, developed at risk by the third party, are capitalised.
Key accounting estimates and judgements on intangible assets
Impairment tests of intellectual property rights not yet available for use are
based on Management’s projections and anticipated net present value of
estimated future cash flows from marketable products.
Management makes judgements related to intangible assets when
assessing whether a transaction is a business combination or an asset
acquisition. The assessment of whether a transaction is a business
combination or an asset acquisition involves the optional concentration test,
which is met if substantially all of the fair value of the gross assets acquired
is concentrated in a single identifiable asset or group of similar identifiable
assets. If met the transaction is accounted for as an asset acquisition. If not
met, an assessment of any acquired processes is made to determine if they
are substantive. Management makes judgements when assessing whether
a process is substantive. A process is considered substantive if it is critical to
the ability to producing outputs from the transaction.
Judgements are also made in evaluating whether payments under
collaboration arrangements are acquisition of assets or prepayment of R&D
services.
For acquired research and development projects, intellectual property rights,
the likelihood of obtaining future commercial sales is reflected in the cost of
the asset, and thus the probability recognition criteria is always considered
to be satisfied. As the cost of acquired research and development projects
can often be measured reliably, these projects fulfil the capitalisation criteria
as intangible assets on acquisition. Subsequent milestone payments payable
on achievement of a contingent event (e.g. commencement of phase 3
trials) are accrued and capitalised into the cost of the intangible asset when
the achievement of the event is probable. Development costs incurred
subsequent to acquisition are treated consistently with internal project
development costs.
Assets that are subject to amortisation are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable.
Factors considered material that could trigger an impairment test include
the following:
– Development of a competing drug.
– Changes in the legal framework covering patents, rights and licences.
– Advances in medicine and/or technology that affect the medical
treatments.
– Lower-than-predicted sales.
– Adverse impact on reputation and/or brand names.
– Changes in the economic lives of similar assets.
– Relationship to other intangible assets or property, plant and equipment.
– Changes or anticipated changes in participation rates or
reimbursement policies.
If the carrying amount of intangible assets exceeds the recoverable amount
based on the existence of one or more of the above indicators of an
impairment, any impairment is measured based on discounted projected
cash flows. Impairments on intangible assets, other than goodwill, are
reviewed at each reporting date for possible reversal.
Property, plant and equipment
Depreciation and impairment losses
DKK million
Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative costs
Other operating income and
expenses
Total depreciation and
impairment losses
Of which related to leased assets
2021
2,836
409
736
386
19
4,386
899
2020
2,729
403
724
433
18
4,307
964
2019
2,656
354
783
376
23
4,192
852
Capital expenditure in the reporting period was primarily related to
investments in facility upgrades and new production facilities for active
pharmaceutical ingredients for diabetes, mainly the facility in Clayton, US.
The facility in Clayton is intended to strengthen the Novo Nordisk supply
chain. Capital expenditure also related to investments in facility upgrades
of the purification plant and establishing additional API capacity, both in
Kalundborg.
Leased property, plant and equipment
DKK million
Land and buildings
Other equipment
Total
2021
3,340
499
3,839
2020
2,901
479
3,380
Novo Nordisk mainly leases office buildings, warehouses, laboratories
and vehicles. The right-of-use asset is presented in property, plant and
equipment and the lease liability in borrowings. In 2021, the total amount
recognised in the income statement related to leases was DKK 1,303 million
(DKK 1,373 million in 2020). The total cash outflow for leases amounted to
DKK 1,275 million (DKK 1,367 million in 2020).
As of 31 December 2021, the lease liability excludes potential lease
payments of DKK 2,209 million (undiscounted) related to lease term
extension rights on properties that were not considered reasonably certain
to be exercised (DKK 2,363 million in 2020). Please refer to note 4.5 for a
maturity analysis of lease payments.
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
64
Key accounting estimate of indirect production costs capitalised
The production of both Diabetes and Obesity care and Biopharm products
is highly complex from fermentation to purification and formulation,
including quality control of all production processes. Furthermore, the
process is very sensitive to manufacturing conditions. These factors all
influence the parameters for capitalisation of indirect production costs at
Novo Nordisk and the full cost of the products. Indirect production costs are
initially measured using a standard cost method. This is reviewed regularly
to ensure relevant measures of capacity utilisation, production lead time,
cost base and other relevant factors, hence inventory is valued at actual cost.
When calculating total inventory, Management must estimate cost of
production, standard cost variances and idle capacity in determining
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. Indirect production costs
account for 46% of the net inventory value, reflecting a complex production
process and low direct raw material costs.
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. Any subsequent cost is included in the asset’s
carrying amount or recognised as a separate asset only when it is probable
that future economic benefits associated with the item will flow to Novo
Nordisk, and the cost of the item can be measured reliably. Depreciation
is based on the straight-line method over the estimated useful lives of the
assets (buildings: 12-50 years, plant and machinery: 5-25 years and other
equipment: 3-10 years. Land is not depreciated).
The depreciation commences when the asset is available for use, i.e. 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. If an asset’s carrying amount is higher than its estimated
recoverable amount, it is written down to the recoverable amount. Plant
and equipment with no alternative use developed as part of a research and
development project are expensed. However, plant and equipment with
an alternative use or used for general research and development purposes
are capitalised and depreciated over the estimated useful life as research
and development costs.
For contracts which are, or contain, a lease, the Group recognises a right-
of-use asset and a lease liability. The right-of-use asset is initially measured
at cost, being the initial amount of the lease liability. The right-of-use
asset is subsequently depreciated using the straight-line method over
the lease term. The right-of-use asset is periodically adjusted for certain
remeasurements of the lease liability and reduced by any impairment losses.
The lease term determined by the Group is the non-cancellable period of a
lease, together with extension/termination option if these are reasonably
certain to be exercised. For contracts with a rolling term (evergreen leases),
the Group estimates the leasing period to be equal to the termination
period if no probable scenario exists for estimating the leasing period.
If the lease liability is remeasured due to a change in future lease payments
a corresponding adjustment is made to the right-of-use asset, or in the
income statement when the right-of-use asset has been fully depreciated.
For a description of accounting policies for lease liabilities, please refer to
note 4.9.
3.2 Inventories
DKK million
Raw materials
Work in progress
Finished goods
Total inventories (gross)
Write-downs at year-end
Total inventories (net)
Indirect production costs included in work in
progress and finished goods
Share of total inventories (net)
Movements in inventory write-downs:
Write-downs at the beginning of the year
Write-downs during the year
Utilisation of write-downs
Reversal of write-downs
Write-downs at the end of the year
2021
4,310
12,285
5,282
21,877
(2,256)
19,621
8,929
46%
2,153
883
(661)
(119)
2,256
2020
3,326
12,252
5,111
20,689
(2,153)
18,536
9,703
52%
1,426
1,628
(528)
(373)
2,153
All write-downs in both 2021 and 2020 relate to fully impaired inventory.
Accounting policies
Inventories are stated at cost or net realisable value, whichever is lower.
Cost is determined using the first-in, first-out method. Cost comprises direct
production costs such as raw materials, consumables and labour. Production
costs for work in progress and finished 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 (prelaunch inventory)
is capitalised but immediately written down, until there is a high probability
of regulatory approval for the product. The cost is recognised in the
income statement as research and development costs. Once there is a
high probability of regulatory approval being obtained, the write-down is
reversed, up to no more than the original cost.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
65
3.3 Trade receivables
Movements in allowance for doubtful trade receivables
Carrying amount at the beginning of the year
Reversal of allowance on realised losses
Net movement recognised in income statement
Effect of exchange rate adjustment
Allowance at the end of the year
2021
1,380
(62)
102
10
1,430
2020
1,484
(108)
139
(135)
1,380
Novo Nordisk’s customer base is comprised of government agencies,
wholesalers, retail pharmacies and other customers.
Novo Nordisk closely monitors the current economic conditions of countries
impacted by currency fluctuations, high inflation and an unstable political
climate. These indicators as well as payment history are taken into account
in the valuation of trade receivables.
The country risk ratings in 2021 have overall remained unchanged from
2020. However, despite the continued COVID-19 pandemic Novo Nordisk
has not experienced significant increases in collectability issues on individual
customers nor has it experienced significant deterioration in the ageing of
receivables.
Please refer to note 4.3 for the trade receivable programmes.
Accounting policies
Trade receivables are initially recognised at transaction price and
subsequently measured at amortised cost using the effective interest
method, less allowance for doubtful trade receivables. The split of trade
receivables and allowance for trade receivables is based on the location of
the customer.
Before being sold, trade receivables in factoring portfolios are measured
at fair value with changes recognised in other comprehensive income.
The allowance for doubtful receivables 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.
Management makes allowance for doubtful trade receivables based on the
simplified approach to provide for expected credit losses, which permits
the use of the lifetime expected loss provision for all trade receivables. The
allowance is an estimate based on shared credit risk characteristics and the
days past due. Generally, invoices are due for payment within 90 days from
shipment of goods. Loss allowance is calculated using an ageing factor,
geographical risk and specific customer knowledge. The allowance is based
on a provision matrix on days past due and a forward looking-element
relating mainly to incorporation of the Dun & Bradstreet country risk
rating and an individual assessment. Please refer to note 4.3 for a general
description of credit risk.
DKK million
2021
Not yet due
1-90 days
91-180 days
181-270 days
271-360 days
Gross
carrying
amount
Loss
allowance
Net
carrying
amount
DKK million
40,274
(844)
39,430
1,132
212
87
63
(93)
(74)
(51)
(63)
1,039
138
36
—
—
More than 360 days past due
305
(305)
Trade receivables
42,073
(1,430)
40,643
EMEA
China
Rest of World
North America Operations
7,827
2,564
4,227
27,455
(852)
—
(558)
(20)
6,975
2,564
3,669
27,435
Trade receivables
42,073
(1,430)
40,643
2020
Not yet due
1-90 days
91-180 days
181-270 days
271-360 days
27,511
1,000
188
44
51
(805)
(112)
(63)
(29)
(51)
More than 360 days past due
320
(320)
26,706
888
125
15
—
—
Trade receivables
29,114
(1,380)
27,734
EMEA
China
Rest of World
North America Operations
6,306
2,137
3,003
17,668
(781)
—
(580)
(19)
5,525
2,137
2,423
17,649
Trade receivables
29,114
(1,380)
27,734
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
66
3.4 Provisions and contingent liabilities
DKK million
At the beginning of the year
Additional provisions, including increases to existing provisions
Amount used during the year
Adjustments, including unused amounts reversed during the year
Effect of exchange rate adjustment
At the end of the year
Non-current liabilities3
Current liabilities
Provisions
for sales
rebates1
Provisions
for legal
disputes
Provisions
for product
returns
Other
provi-
sions2 2021 Total
2020 Total
34,052
2,451
155,602
(141,370)
(284)
2,822
50,822
255
50,567
608
(657)
(419)
174
2,157
1,895
262
795
493
2,042
39,340
35,733
461
157,164
113,810
(450)
(214)
(142,691)
(107,220)
13
7
858
316
542
(280)
48
2,057
1,908
(970)
3,051
55,894
4,374
149
51,520
78
(3,061)
39,340
4,526
34,814
1. Provisions for sales rebates are related to US Managed Care, Medicare, Medicaid and other US rebate types, as well as rebates in a number of European countries and Canada.
2. Other provisions consists of various types of provision, including obligations in relation to employee benefits such as jubilee benefits, company-owned life insurance, etc.
3. For non-current liabilities, provision for sales rebates is expected to be settled after one year, provisions for product returns will be utilised in 2023 and 2024. In the case of provisions
for legal disputes, the timing of settlement cannot be determined.
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.
Pending litigation against Novo Nordisk
Numerous claims alleging pancreatic cancer, pancreatitis, and thyroid cancer
have been filed in US courts against various incretin class manufacturers,
including Victoza® and Novo Nordisk. As of 31 January 2022, 369 plaintiffs
have filed product liability cases against Novo Nordisk, the vast majority
alleging pancreatic cancer. In March and April 2021, the Federal MDL and
State JCCP courts granted defendants’ motions for summary judgment on
federal pre-emption and general causation grounds thereby dismissing all
the pending cases against Novo Nordisk relating to Victoza®. Plaintiffs have
filed a notice of appeal of the Federal Court ruling, and they have the right
to file a similar notice of appeal of the State Court ruling. Final decisions on
both appeals are not expected before the end of 2022. Novo Nordisk does
not expect the lawsuit to have a material impact on Novo Nordisk’s financial
position, operating profit or cash flow.
In September 2021, Novo Nordisk announced that it has reached an
agreement in principle to settle the previously disclosed securities class
action litigation pending in the Federal District Court of New Jersey, US. The
settlement was reached after a voluntary mediation process and resolves
claims brought by plaintiffs for alleged violations of US securities laws. The
settlement contains no admission of liability, wrongdoing, or responsibility
by any of the defendants and will include a full release of all defendants in
connection with the allegations made in the lawsuit. Under the terms of the
settlement agreement, Novo Nordisk has agreed to pay USD 100 million
(inclusive of all plaintiffs’ attorneys fees and expenses and settlement costs).
The payment is covered by insurance.. The settlement is subject to a court
approval process, which could take several months.
In January 2022, Novo Nordisk announced that it has settled the previously
disclosed securities lawsuit filed against Novo Nordisk in Denmark by a
number of institutional shareholders, which included a claim for a total
amount of DKK 11,800 million. The lawsuit alleged that Novo Nordisk made
misleading statements and did not make appropriate disclosures regarding
its sales of insulin products in the US. The settlement contains no admission
of liability, wrongdoing or responsibility by Novo Nordisk and no payment
will be made by Novo Nordisk to the plaintiffs.
Novo Nordisk is currently defending eight lawsuits, including two plead as
putative class actions, relating to the pricing of diabetes medicines. Four
of these cases are pending in New Jersey federal court; three are pending
in federal courts in Texas, Florida, and Mississippi and the remaining one
is pending in state court in Kentucky. All pending matters also name as
defendants Eli Lilly and Company and Sanofi, while certain matters also
name Pharmacy Benefit Managers (PBMs) and related entities. Plaintiffs
generally allege that the manufacturers and PBMs colluded to artificially
inflate list prices paid by consumers for diabetes products, while offering
reduced prices to PBMs through rebates used to secure formulary access.
Novo Nordisk does not expect the lawsuits to have a material impact on
Novo Nordisk’s financial position, operating profit, or cash flow.
In 2016, Novo Nordisk US received a Civil Investigative Demand from the U.S.
Department of Justice (“DOJ CID”) relating to potential off-label marketing of
NovoSeven® (including high dose and for prophylactic use) and interactions
with physicians and patients. The DOJ investigation was likely prompted by
a lawsuit filed by a former Novo Nordisk US employee (the “Relator”) under
seal in the Western District of Oklahoma. Relator alleges Novo Nordisk
US caused the submission of false claims to Medicare, Medicaid, Federal
Employees Health Benefits Program and private insurers in California as a
result of the same conduct that was the subject of the DOJ CID. As a result
of these allegations, Relator (on behalf of the federal and certain state
governments) seeks injunctive and monetary relief. A consolidated complaint
was jointly filed by Relator and the State of Washington on 9 March 2020.
The consolidated complaint was unsealed (made public) by the court on
28 May 2020. Novo Nordisk has filed two motions seeking dismissal of the
complaint, both of which are currently pending and awaiting ruling from the
Court. Novo Nordisk does not expect the lawsuit to have a material impact
on Novo Nordisk’s financial position, operating profit or, cash flow.
Since January 2021, Novo Nordisk has changed its policy in the US related to
the 340B Drug Pricing Program, whereby Novo Nordisk no longer provides
340B statutory discounts to certain pharmacies that contract with covered
entities participating in the 340B Drug Pricing Program. Novo Nordisk’s
contract pharmacy policy has been challenged by the US Department of
Health and Human Services. On 17 May 2021, the US government issued
a letter to Novo Nordisk asserting that Novo Nordisk’s policy violates the
340B statute. Novo Nordisk believes its policy does not violate the 340B
Drug Pricing Program requirements and has commenced litigation against
the government seeking a declaration that its 340B policy is consistent with
relevant US laws. On 5 November 2021, the US District Court for the District
of New Jersey issued a decision on Novo Nordisk’s motion for summary
judgment holding that the use of contract pharmacies is consistent with
the 340B statute and that manufacturers have no statutory right to impose
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
67
Key accounting estimates regarding ongoing legal disputes, litigation
and investigations
Provisions for legal disputes consist of various types of provisions linked to
Provisions for legal disputes consist of various types of provisions linked to
ongoing legal disputes. Management makes estimates regarding provisions
and contingencies, including the probability of pending and potential
future litigation outcomes. These are by nature dependent on inherently
uncertain future events. When determining likely outcomes of litigation, 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
proceedings are adequate based on 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.
3.5 Other liabilities
Other liabilities primarily comprises employee cost payables, payables
related to non-current assets, sales rebates as well as deferred revenue.
restrictions on the sale or distribution of 340B drugs. Novo Nordisk has
appealed the decision to the US Court of Appeals for the Third Circuit. A
decision on this appeal is not expected before the end of 2022. Depending
on the outcome of these matters, there may be a significant impact on Novo
Nordisk’s financial position, net sales and cash flow.
Mosaic Health Inc. and Central Virginia Health Services, Inc. (both 340B
covered entities) filed a putative class action lawsuit in NY Federal Court
against Novo Nordisk US, Eli Lilly, Sanofi and AstraZeneca alleging a
conspiracy among the manufacturers to artificially fix prices of diabetes
medications through changes to their policies relating to the distribution of
340B drugs through contract pharmacy arrangements. A motion to dismiss
the lawsuit has been filed and is currently pending before the Court.
Novo Nordisk does not expect the lawsuits to have a material impact on
Novo Nordisk’s financial position, operating profit, or cash flow.
Pending claims against Novo Nordisk and Investigations involving
Novo Nordisk
Several authorities in the US have served Novo Nordisk with Civil Investigative
Demands (CIDs) or subpoenas calling for the production
of documents and information. Below is a list of ongoing matters:
– Washington Attorney General’s Office CID (March 2017), relating to, among
other things, pricing, and trade practices for insulin products, including
Levemir®, NovoLog®, and Novolin®, from 1 January 2005 through the
present date.
– New Mexico Attorney General’s Office CID (April 2017), relating to, among
other things, trade practice and pricing of insulin products, namely
NovoLog® and Novolin® from 1 January 2012 through the present date.
– New York State Attorney General’s Office Subpoena (July 2019), relating to,
among other things, pricing, and trade practices for insulin products, from
1 July 2013 through the present.
– Colorado Attorney General’s Office CID (December2019), relating to, among
other things, pricing, and trade practices for insulin products, for the period
from 1 January 2010 to present.
– Vermont Attorney General’s Office Subpoena (December 2020), related to,
among other things, pricing and trade practices for insulin products sold by
Novo Nordisk during the period 1 January 2011 through the present date.
– US Department of Justice (December 2021), relating to the financial
relationships with healthcare professional and prescriptions for Ozempic®
and Rybelsus® during the period of 1 January 2016 to present.
In all matters Novo Nordisk is cooperating with the authorities in question.
Novo Nordisk does not expect the above investigations to have a material
impact on Novo Nordisk’s financial position, operating profit, or cash flow.
Novo Nordisk is one of several pharmaceutical companies that received
requests for information involving pricing practices for its diabetes products
from several committees of the Unites States House of Representatives
and/or United States Senate. Novo Nordisk has responded to the various
committees in response to their requests. Novo Nordisk does not expect
the inquiries to have a material impact on Novo Nordisk’s financial position,
operating profit, or cash flow.
Other contingent liabilities
In addition to the above, the Novo Nordisk Group is engaged in certain
litigation proceedings and various ongoing audits and investigations. In
the opinion of Management, neither settlement or continuation of such
proceedings, nor such pending audits and investigations, are expected to
have a material effect on Novo Nordisk’s financial position, operating profit,
or cash flow.
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 historical
experience and the specific terms in the individual agreements. Unsettled
rebates are recognised as provisions when the timing or amount is
uncertain. Where absolute amounts are known, the rebates are recognised
as other liabilities. Please refer to note 2.1 for further information on sales
rebates and provisions.
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 outflow of resources that can be reliably estimated. In
this case, Novo Nordisk arrives at an estimate based on an evaluation of the
most likely outcome. Disputes for which no reliable estimate can be made
are disclosed as contingent liabilities.
Provisions are measured at the present value of the anticipated expenditure
for settlement. This is calculated using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks
specific to the obligation. The increase in the provision for interest is
recognised as a financial expense.
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.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
68
Section 4
Capital structure
and financial items
4.1 Distribution to shareholders
4.2 Share capital, Treasury shares and Other reserves
Development in number of shares
Million shares
A shares
B shares
Shares beginning of 2020
Shares cancelled in 2020
Outstanding shares end of 2020
Shares cancelled in 2021
Outstanding shares end of 2021
537
—
537
—
537
Total
2,400
(50)
1,863
(50)
1,813
2,350
(40)
(40)
1,773
2,310
DKK million
Interim dividend for the year
Dividend for prior year
Share repurchases for the year
Total
2021
8,021
13,496
19,447
40,964
2020
7,570
2019
7,100
12,551
12,309
16,855
15,334
36,976
34,743
Each A share of DKK 0.2 per share carries 200 votes and each B share of
DKK 0.2 per share carries 20 votes. At the end of 2021, the share capital
amounted to DKK 107 million in A share capital (DKK 107 million in 2020 and
2019) and DKK 355 million in B share capital (DKK 363 million in 2020 and
DKK 373 million in 2019).
received for disposing of treasury shares are deducted directly in equity.
The purchase of treasury shares during the year relates to the remaining
part of the 2020 share repurchase programme, totalling DKK 1 billion and
the DKK 20 billion Novo Nordisk B share repurchase programme for 2021, of
which DKK 1.6 billion was outstanding at year-end. The programme ended
on 1 February 2022. Transfer of treasury shares relates to the long-term
share-based incentive programme and restricted stock units to employees.
Specification of Other reserves
DKK million
2019
Reserve at the
beginning of the year
Other comprehensive
income, net
Reserve at the end
of the year
Exchange
rate ad-
justments
Cash flow
hedges
Tax and
other items
Total
(1,065)
(1,677)
696
(2,046)
226
1,348
(222)
1,352
(839)
(329)
474
(694)
Novo Nordisk's guiding principle is that any excess capital after the funding
of organic growth opportunities and potential acquisitions should be
returned to investors.
The net cash distribution to shareholders in the form of dividends and share
repurchases amounts to DKK 40,964 million, compared with a free cash flow
of DKK 29,319 million.
The total dividend for 2021 amounts to DKK 23,711 million (DKK 10.40 per
share). The 2021 final dividend of DKK 15,690 million (DKK 6.90 per share) is
expected to be distributed pending approval at the Annual General Meeting.
The interim dividend of DKK 8,021 million (DKK 3.50 per share) was paid in
August 2021. The total dividend for 2020 was DKK 21,066 million (DKK 9.10
per share), of which the final dividend of DKK 13,496 million (DKK 5.85 per
share) was paid in March 2021. No dividend is declared on treasury shares.
Novo Nordisk's dividend pay-outs are complemented by share repurchase
programmes.
Holding at the be-
ginning of the year
Cancellation of
treasury shares
Transfer regarding
restricted stock units
Purchase during the
year
Value adjustment
Holding at the end
of the year
(17,066)
(486)
19,447
4,947
Treasury shares
2021
2020
2020
Market
value,
DKK million
Treasury
shares in %
Number of
B shares
(million)
Number of
B shares
(million)
16,016
1.6%
37.5
48.1
Other comprehensive
income, net
Transferred to
intangible assets1
Reserve at the end
of the year
(1,689)
1,713
(567)
(543)
—
418
(92)
326
(2,528)
1,802
(185)
(911)
(40.0)
(50.0)
2021
(1.1)
34.7
—
(0.4)
39.8
—
37.5
Other comprehensive
income, net
Transferred to
intangible assets1
Reserve at the end
of the year
1,624
(3,557)
1,117
(816)
—
15
(2)
13
(904)
(1,740)
930
(1,714)
For information on transfer of cash flow hedge reserve to intangible assets refer
to note 4.4.
22,858
1.3%
31.1
Treasury shares are primarily acquired to reduce the company's share
capital. In addition, a limited part is used to finance Novo Nordisk's
long-term share-based incentive programme (restricted stock units) and
restricted stock units to employees. Treasury shares are deducted from
the share capital on cancellation at their nominal value of DKK 0.2 per
share. Differences between this amount and the amount paid to acquire or
According to Danish corporate law, reserves available for distribution as
dividends are based on the financial statements of the parent company,
Novo Nordisk A/S. Dividends are paid from distributable reserves. As
of 31 December 2021 distributable reserves total DKK 51,114 million
(DKK 51,858 million in 2020), corresponding to the parent company's retained
earnings and reserve for cash flow hedges and exchange rate adjustments.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
69
4.3 Financial risks
Management has assessed the following key financial risks:
Type
Financial risk
Foreign exchange risk
Credit risk
Liquidity risk
Interest rate risk
High
Low
Low
Low
Novo Nordisk has centralised management of the Group's financial risks. The
overall objectives and policies for the company's financial risk management
are outlined in an internal Treasury Policy, which is approved by the Board
of Directors. The Treasury Policy consists of the Foreign Exchange Policy, the
Investment Policy, the Financing Policy and the Policy regarding Credit Risk
on Financial Counterparts, and includes a description of permitted use of
financial instruments and risk limits.
Novo Nordisk only hedges commercial exposures and consequently does
not enter into derivative transactions for trading or speculative purposes.
Novo Nordisk uses a fully integrated treasury management system to
manage all financial positions, and all positions are marked-to-market.
Foreign exchange risk
Foreign exchange risk is the most important financial risk for Novo Nordisk
and can have a significant impact on the income statement, statement
of comprehensive income, balance sheet and cash flow statement. The
majority of Novo Nordisk's sales are in USD, EUR, CNY, JPY, CAD and GBP. The
foreign exchange risk is most significant in USD, CNY and JPY, while the EUR
exchange rate risk is regarded as low because of Denmark's fixed exchange
rate policy towards EUR.
The overall objective of foreign exchange risk management is to reduce the
short-term negative impact of exchange rate fluctuations on earnings and
cash flow, thereby contributing to the predictability of the financial results.
Novo Nordisk hedges existing assets and liabilities in key currencies as well
as future expected cash flows up to a maximum of 24 months forward.
Hedge accounting is applied to match the impact of the hedged item and
the hedging instrument in the consolidated income statement. The currency
hedging strategy balances risk reduction and cost of hedging by use of
foreign exchange forwards and foreign exchange options matching the due
dates of the hedged items. Expected cash flows are continually assessed
using historical inflows, budgets and monthly sales forecasts.
Hedge effectiveness is assessed on a regular basis. Management has
chosen to classify the result of hedging activities as part of financial items.
Key currencies figures
USD
CNY
JPY
CAD
GBP
Average exchange rate applied (DKK per 100)
2021
2020
2019
629
654
667
97
95
97
5.73
6.13
6.12
Year-end exchange rate applied (DKK per 100)
2021
2020
2019
657
606
668
103
93
96
5.70
5.88
6.11
502
488
503
517
474
511
865
839
852
885
824
877
Foreign exchange rate sensitivity analysis
At year-end, an immediate 5% increase/decrease in the disclosed currencies
versus DKK and EUR is estimated by Management to have the following
impact on Novo Nordisk's operating profit for the next 12 months.
Sensitivity on operating profit of an immediate 5% increase in key
currencies1
DKK million
2022
2021
USD
2,350
1,900
CNY
360
460
JPY
230
200
CAD
200
140
GBP
120
110
1. An immediate 5% decrease would have the opposite impact of the above.
Sensitivity of an immediate 5% increase in all other currencies rates on
31 December versus DKK and EUR1
DKK million
2021
2020
Sensitivity of all currencies
Income statement
Other comprehensive income
Total
Sensitivity of USD
Income statement
Other comprehensive income
Total
113
(2,677)
(2,564)
(87)
(2,218)
(2,305)
299
(1,893)
(1,594)
2
(1,380)
(1,378)
1. An immediate 5% decrease would have the opposite impact of the above.
The foreign exchange sensitivity analysis comprises effects from the Group's
cash, trade receivables and trade payables, current loans, current and non-
current financial investments, lease liabilities and foreign exchange forwards.
Anticipated currency transactions, investments in foreign subsidiaries and
non-current assets are not included.
Financial contracts coverage at year end
Months
USD
CNY1
2021
2020
12
10
0
6
JPY
12
12
CAD
GBP
9
9
11
11
1. Chinese yuan traded offshore (CNH) is used to hedge Novo Nordisk's CNY currency
exposure.
The table above shows financial contracts existing at year-end to cover the
expected future cash flow for the disclosed number of months. During 2021,
the hedging horizon varied between 9 months and 12 months for USD, JPY,
CAD and GBP. Average hedge rate for USD cash flow hedges is 628 at the
end of 2021 (640 at the end of 2020).
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
70
Credit risk
Credit risk arises from the possibility that transactional counterparties
may default on their obligations, causing financial losses for the Group.
Credit risk exposure to financial counterparties
Credit exposure for cash at bank, marketable securities and derivative
financial instruments (fair value)
DKK million
2021
AAA range
AA range
A range
BBB range
Not rated or below
BBB range
Total
2020
AAA range
AA range
A range
BBB range
Not rated or below
BBB range
Total
Cash at
bank
Marketable
securities
Derivative
financial
instruments
477
3,726
5,637
23
857
6,765
—
—
—
—
—
585
1,105
—
—
Total
7,242
4,311
6,742
23
857
10,720
6,765
1,690
19,175
—
7,296
4,443
212
806
12,757
—
—
—
—
—
—
—
989
1,343
—
—
—
8,285
5,786
212
806
2,332
15,089
Novo Nordisk considers its maximum credit exposure to financial
counterparties to be DKK 19,175 million (DKK 15,089 million in 2020). In
addition, Novo Nordisk considers its maximum credit exposure to trade
receivables, other receivables (less prepayments and VAT receivables) and
other financial assets to be DKK 43,425 million (DKK 29,522 million in 2020).
Please refer to note 4.9 for details of the Group's total financial assets.
To manage credit risk regarding financial counterparties, Novo Nordisk only
enters into derivative financial contracts and money market deposits with
financial counterparties possessing a satisfactory long-term credit rating
from at least two out of the three selected ratings agencies: Standard and
Poor's, Moody's and Fitch. Furthermore, maximum credit lines defined for
each counterparty diversify the overall counterparty risk. The credit risk on
marketable securities is low, as investments are made in highly liquid bonds
with AAA credit ratings.
Credit risk exposure to non-financial counterparties
Outside the US, Novo Nordisk has no significant concentration of credit
risk related to trade receivables or other receivables and prepayments, as
the exposure in general is spread over a large number of counterparties
and customers. In the US, the three major wholesalers account for a large
proportion of total net sales, see note 2.1. However, US wholesaler credit
ratings are monitored and part of the trade receivables are sold on full non-
recourse terms; see below for details.
Novo Nordisk closely monitors the current economic conditions of countries
impacted by currency fluctuations, high inflation and an unstable political
climate. These indicators as well as payment history are taken into account
in the valuation of trade receivables. The country risk ratings in 2021
have overall remained unchanged from 2020 to 2021. However, despite
the continued COVID-19 pandemic Novo Nordisk has not experienced
significant increases in collectability issues on individual customers nor has it
experienced significant deterioration in the ageing of receivables.
Trade receivable programmes
At year-end, the Group had derecognised receivables without recourse
having due dates after 31 December 2021 amounting to:
DKK million
US
Japan
2021
1,313
2,453
2020
1,817
2,351
2019
3,672
2,149
Novo Nordisk's subsidiaries in the US and Japan employ trade receivable
programmes in which trade receivables are sold on full non-recourse terms
to optimise working capital.
In addition, full non-recourse off-balance-sheet factoring arrangement
programmes are occasionally applied by Novo Nordisk subsidiaries around
the world, with limited impact on the Group's trade receivables.
Please refer to note 3.3 for the split of allowance for trade receivables by
geographical segment.
Interest rate risk
Novo Nordisk’s exposure to interest rate risk is considered to be low due
to the capital structure. Non-current debt consists of fixed rate instruments
and the sensitivity towards interest rates on current debt of DKK 12,861
million (DKK 6,153 million in 2020) is countered by the interest sensitivity
on cash and cash equivalents of DKK 10,719 million (DKK 12,226 million
in 2020). Interest rate risk on marketable securities of DKK 6,765 million is
considered low due to a low portfolio duration.
Liquidity risk
The liquidity risk is considered to be low. Novo Nordisk ensures the
availability of the required liquidity through a combination of cash
management, highly liquid investment portfolios and both uncommitted and
committed credit facilities. Novo Nordisk uses cash pools for optimisation
and centralisation of cash management.
Financial reserves comprise the sum of cash and cash equivalents at the end
of the year, marketable securities with original term to maturity exceeding
three months and undrawn committed credit and loan facilities, with a
maturity of more than 12 months, less loans and bank overdrafts classified
as liabilities arising from financing activities contractually obliged for
repayment within 12 months of the balance sheet date.
Financial reserves
DKK million
Cash and cash equivalents
(note 4.6)
Marketable securities
Undrawn committed credit facility1
Undrawn bridge facility2
Borrowings (Note 4.5)
Financial reserves3
2021
2020
2019
10,719
6,765
11,526
—
(12,861)
12,226
15,411
—
—
11,531
11,578
5,577
(576)
—
(595)
16,149
28,758
26,394
1. The undrawn committed credit facility comprises a EUR 1,550 million facility
(EUR 1,550 million in 2020 and EUR 1,550 million in 2019) committed by a portfolio of
international banks. The facility matures in 2025.
2. For 2020, the undrawn bridge facility comprises the EUR 750 million (DKK 5,577
million) undrawn portion of EUR 1,500 million bridge facility. The facility was expected
to mature in 2021 but the terms provided that the maturity could be extended,
at the option of Novo Nordisk to June 2022. Financial reserves for 2020 include
amounts undrawn under credit facilities and overdrafts where the repayment is not
contractually required within 12 months. In accordance with IFRS, the DKK 5,577
million (EUR 750 million) drawn loan was classified as current borrowings in 2020 as it
was Management's expectation that it would be repaid in 2021. The loan was repaid
in 2021.
3. Additional non-IFRS financial measure; please refer to 'Non-IFRS financial measures',
which is not part of the audited financial statements.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
71
4.4 Derivative financial instruments
Derivative financial instruments
DKK million
Forward contracts USD1
Forward contracts CNH, JPY, GBP and CAD
Forward contracts, cash flow hedges
Forward contracts USD2
Forward contracts CNH, CAD, EUR, GBP and JPY
Forward contracts, fair value hedges
Total derivative financial instruments
Recognised in the income statement
2021
2020
Contract
amount
at year-end
Positive
fair value
at year-end
Negative
fair value
at year-end
Contract
amount
at year-end
Positive
fair value
at year-end
Negative
fair value
at year-end
42,351
9,032
51,383
30,909
7,361
38,270
89,653
17
32
49
1,607
34
1,641
1,690
1,641
1,667
122
1,789
284
111
395
2,184
395
29,110
10,291
39,401
19,411
4,578
23,989
63,390
1,658
191
1,849
379
104
483
2,332
483
1,849
—
47
47
1,307
11
1,318
1,365
1,318
47
Recognised in other comprehensive income
49
1,789
1. Average hedge rate for USD cash flow hedges is 628 at the end of 2021 and 640 at the end of 2020.
2. Average hedge rate for USD fair value hedges is 628 at the end of 2021 and 634 at the end of 2020.
The fair value of cash flow hedges at year-end 2021, loss of DKK 1,740 million,
has been recognised in other comprehensive income. In addition,
DKK 15 million in cash flow hedge losses on intangible asset purchases has
been incurred for a total 2021 other comprehensive impact of DKK 1,755
million. The DKK 15 million deferred loss was transferred directly from the
cash flow hedge reserve to the initial cost of the intangible assets.
Use of derivative financial instruments
The derivative financial instruments are used to manage the exposure to
foreign exchange risk. None of the derivatives are held for trading. Novo
Nordisk uses forward exchange contracts to hedge forecast transactions,
assets and liabilities.
Net investments in foreign subsidiaries are currently not hedged.
The financial contracts are expected to impact the income statement within
the next 12 months, with deferred gains and losses on cash flow hedges
then being transferred to financial income or financial expenses. There is no
expected ineffectiveness at 31 December 2021, primarily because hedging
instruments match currencies of hedged cash flows.
Accounting policies
On initiation of the contract, Novo Nordisk designates each derivative
financial contract that qualifies for hedge accounting as one of:
– hedges of the fair value of a recognised asset or liability (fair value hedge)
– hedges of the fair value of a forecast financial transaction
(cash flow hedge).
All contracts are initially recognised at fair value and subsequently
remeasured at fair value at the end of the reporting period.
Fair value hedges
Value adjustments of fair value hedges are recognised in the income
statement along with any value adjustments of the hedged asset or liability
that are attributable to the hedged risk.
Cash flow hedges
Value adjustments of the effective part of cash flow hedges are recognised
in other comprehensive income. The cumulative value adjustment of these
contracts is transferred from other comprehensive income to the income
statement when the hedged transaction is recognised in the income
statement.
For cash flow hedges of foreign currency risk on highly probable non-
financial asset purchases, the cumulative value adjustments are transferred
directly from the cash flow hedge reserve to the initial cost of the asset when
recognised.
Discontinuance of cash flow hedging
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.
For additional disclosures on accounting policies for financial instruments
please refer to note 4.9.
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
72
4.5 Borrowings
Contractual undiscounted cash flows
2021
DKK million
Within 1 year
1-3 years
3-5 years
More than 5 years
Total contractual undiscounted cash
flows at the end of the year
Contractual discounted cash flows
included in the balance sheet at the
end of the year
Non-current liabilities
Current liabilities
Leases
946
1,475
942
1,266
Issued
bonds
Bank
overdrafts1
Loans
Total
Leases
—
12,503
359
13,808
4,854
—
4,800
—
—
—
—
—
—
6,329
942
6,066
855
1,247
694
1,241
Bank
overdrafts1
1,107
Loans
5,577
—
—
—
—
—
—
4,629
9,654
12,503
359
27,145
4,037
5,577
1,107
10,721
4,129
3,307
822
9,654
9,654
12,503
—
—
12,503
359
—
359
26,645
12,961
13,684
3,672
2,897
775
5,577
1,107
10,356
—
—
5,577
1,107
2,897
7,459
Reconciliation of liabilities arising from financing activities
Non-cash movements
Beginning of
the year
Re-
payments
Proceeds Additions2
Disposals
Exchange
rates
Other
End of the
year
DKK million
2021
Lease liabilities
Issued bonds
Loans
Bank overdrafts1
Bank overdrafts1
Total borrowings
2020
Lease liabilities
Loans
Bank overdrafts1
Liabilities arising from financing activities
9,825
(6,689)
22,160
1,183
3,672
(874)
—
1,183
—
—
9,657
5,577
(5,577)
12,503
576
(238)
—
—
—
—
531
(527)
—
—
10,356
(7,216)
22,160
1,183
3,824
(950)
—
978
—
595
—
—
5,582
100
—
—
978
—
978
—
—
—
—
—
—
—
—
—
—
—
—
—
146
—
—
17
163
—
163
(171)
(5)
(119)
(295)
—
(295)
2
(3)
—
3
2
(3)
(1)
(9)
—
—
(9)
—
(9)
4,129
9,654
12,503
358
26,644
1
26,645
3,672
5,577
576
9,825
531
10,356
Liabilities arising from financing activities
4,419
(950)
5,682
Bank overdrafts1
Total borrowings
64
—
467
4,483
(950)
6,149
1. Bank overdrafts includes DKK 358 million classified as financing activities (DKK 576 million in 2020) and DKK 1 million classified as cash and cash equivalents (DKK 531 million in 2020).
2. Includes additions from acquisitions of businesses.
Issued bonds
Issue date
Maturity date
Interest type
Coupon interest rate
Carrying amount
Fair value
2020
Total
7,539
1,247
694
1,241
EUR 650
million (2024)
EUR 650
million (2028)
4 June 2021
4 June 2021
4 June 2024
4 June 2028
Fixed
Fixed
0.000%
0.125%
4,854
4,850
4,800
4,794
In 2021 Novo Nordisk launched its first Euro Medium Term Note (EMTN)
programme in two tranches with an aggregate principal amount of EUR
1.3 billion corresponding to DKK 9.7 billion. Net proceeds of the issuances
have been used by Novo Nordisk for general corporate purposes, including
refinancing of the bridge loan facility established in connection with Novo
Nordisk’s acquisition of Emisphere Technologies Inc. in 2020. The bonds
are listed on Euronext Dublin.
Accounting policies
The lease liabilities are related to IFRS 16 leases, primarily for premises and
company cars and include the present value of future lease payments during
the lease term. Lease liabilities are initially measured at the present value
of the lease payments outstanding at the commencement date, discounted
using the incremental borrowing rate. The lease liability is measured using
the effective interest method. The lease liability is subsequently remeasured
to reflect changes in future lease payments, e.g. changes in lease terms.
Issued bonds, loans and bank overdrafts are initially recognised at the
fair value of the proceeds received less transaction costs. In subsequent
periods these are measured at amortised cost using the effective interest
method. The difference between the proceeds received and the nominal
value is recognised in financial income or financial expenses over the term
of the loan.
As part of bridge funding the acquisition of Dicerna Pharmaceuticals, Inc.,
Novo Nordisk entered into a sale and repurchase agreement of marketable
securities (REPO). On 31 December 2021, the carrying amount of the assets
transferred is DKK 5,937 million, and the associated liabilities amounts to
DKK 5,937 million. The repurchase is fixed, and Novo Nordisk has therefore
retained full exposure from fair value changes of the marketable securities.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
73
Therefore, the transaction is treated as a collateralised lending arrangement.
Where substantially all the risks and rewards of ownership are retained in
financial assets that have been transferred, the assets are not derecognised
and the proceeds obtained are recognised as a financial liability.
For fair value determination please refer to note 4.9.
4.6 Cash and cash equivalents
Cash and cash equivalents
DKK million
2021
2020
2019
Cash at bank (note 4.3)
10,720
12,757
15,475
Borrowings1 (note 4.5)
(1)
(531)
(64)
Cash and cash equivalents
10,719
12,226
15,411
1. Bank overdrafts includes DKK 358 million classified as financing activities
(DKK 576 million in 2020) and DKK 1 million classified as cash and cash equivalents
(DKK 531 million in 2020).
Cash and cash equivalents at 31 December 2021 includes DKK 1,123 million
that is restricted (DKK 653 million in 2020). The restricted cash balance
relates to subsidiaries in which availability of currency for remittance of
funds is temporarily scarce.
Accounting policies
Cash and cash equivalents consists of cash offset by short-term bank
overdrafts. Where short-term bank overdrafts are consistently overdrawn,
they are excluded from cash and cash equivalents. The movement in such
facilities is presented under financing activities in the cash flow statement.
4.7 Other non-cash items
4.8 Change in working capital
DKK million
2021
2020
2019
DKK million
Reversals of non-cash income
statement items
Interest income and interest
expenses, net (note 4.10)
Capital gain/(loss) on investments,
net. etc (note 4.10)
Result of associated companies
(note 4.10)
Share-based payment costs
(note 5.1)
Increase/(decrease) in provisions
(note 3.4) and retirement benefit
obligations
Other
Total other non-cash items
58
(340)
53
195
24
(149)
1,040
823
16,581
(4,354)
13,009
3,605
3,322
7,849
Inventories
2021
(1,085)
2020
(895)
2019
(1,305)
Trade receivables
(12,909)
(2,822)
(2,126)
155
145
137
363
6,071
161
7,032
Other receivables and
prepayments
Trade payables
Other liabilities
Adjustment for payables related to
non-current assets
Adjustment related to acquisition
of businesses
Adjustment related to divestment
of Group companies
Change in working capital
including exchange rate
adjustments
(469)
3,153
2,595
(419)
(641)
1,274
(1,190)
(398)
1,202
(15)
879
295
(1,409)
—
—
—
—
(42)
(10,139)
(2,624)
(3,564)
Exchange rate adjustments
1,483
(1,729)
176
Cash flow change in working
capital
(8,656)
(4,353)
(3,388)
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
74
4.9 Financial assets and liabilities
Financial assets by category
DKK million
Other financial assets
Marketable securities
Derivative financial instruments (note 4.4)
Financial assets at fair value through the
income statement
Other financial assets
Trade receivables
Other receivables and prepayments (current
and non-current)
– less prepayments and VAT receivables
Cash at bank (note 4.6)
Financial assets at amortised cost
Trade receivables in a factoring portfolio1
Financial assets at fair value through other
comprehensive income
Total financial assets at the end of the year
by category
Financial liabilities by category
2021
553
6,765
1,690
9,008
363
2020
766
—
2,332
3,098
300
5,304
(3,438)
10,720
27,985
25,607
4,835
(4,113)
12,757
25,422
16,091
25,607
16,091
62,600
44,611
Derivative financial instruments (note 4.4)
2,184
1,365
Financial liabilities measured at
fair value through the income statement
Borrowings (non-current)2 (note 4.5)
Borrowings (current)2 (note 4.5)
Trade payables
Other liabilities (non-current)
Other liabilities (current)
– less VAT and duties payable
2,184
12,961
13,684
8,870
360
19,600
(590)
1,365
2,897
7,459
5,717
—
17,005
(598)
Financial liabilities measured at
amortised cost
Total financial liabilities at the end of the
year by category3
54,885
32,480
57,069
33,845
1. Trade receivables which are measured at fair value through other comprehensive
income, which have no associated loss allowance. Refer to note 3.3.
2. The fair value of loans approximates the booked amount.
3. Please refer to note 4.5 for a maturity analysis for non-current and current borrowings.
Financial assets with the exception of other financial assets and the non-
current part of other receivables and prepayments (DKK 267 million in 2021,
DKK 674 million in 2020) are all due within one year. Other financial assets
at amortised cost include DKK 335 million which are due in more than five
years (DKK 280 million in 2020). Other financial assets measured at fair value
through the income statement are minor shareholdings.
Fair value measurement hierarchy
DKK million
Active market data
Directly or indirectly observable market data
15,036
11,643
Not based on observable market data
Total financial assets at fair value
Active market data
2021
7,169
1,690
25,756
34,615
—
2020
634
2,332
16,223
19,189
—
Directly or indirectly observable market data
2,184
1,365
Not based on observable market data
—
—
Total financial liabilities at fair value
2,184
1,365
Financial assets and liabilities measured at fair value can be categorised
using the fair value measurement hierarchy above. There were no transfers
between the 'Active market data' and 'Directly or indirectly observable
market data' categories during 2021 or 2020. There are no significant
intangible assets or items of property, plant and equipment measured at fair
value. For a description of the credit quality of financial assets such as trade
receivables, cash at bank, current debt and derivative financial instruments,
please refer to notes 4.3 and 4.4.
Accounting policies
Depending on purpose, Novo Nordisk classifies financial instruments into
the following categories:
– Financial assets at fair value through the income statement
– Financial assets at amortised cost
– Financial assets at fair value through other comprehensive income
– Financial liabilities at fair value through the income statement
– Financial liabilities at amortised cost
Management determines the classification of its financial instruments on
initial recognition and re-evaluates this at the end of every reporting period
to the extent that such a classification is permitted or required.
Recognition and measurement
Financial assets at fair value through the income statement consist of equity
investments, marketable securities and derivative financial instruments.
These are initially recognised at fair value. Equity investments are included
in other financial assets. Net gains and losses arising from changes in the
fair value of equity instruments and marketable securities are recognised in
the income statement as financial income or expenses. For a description of
accounting policies on derivative financial instruments designated to hedge
accounting, please refer to note 4.4.
Financial assets at fair value through other comprehensive income are trade
receivables that are held to collect or to sell in factoring agreements.
Financial assets at amortised cost are cash at bank and non-derivative financial
assets solely with payments of principal and interest. Novo Nordisk normally
'holds-to-collect' the financial assets to attain the contractual cash flows. If
collection is expected within one year (or in the normal operating cycle of
the business, if longer), they are classified as current assets. If not, they are
presented as non-current assets. These are initially measured at fair value less
transaction costs, except for trade receivables that are initially measured at the
transaction price. Subsequently, they are measured at amortised cost using
the effective interest method less impairment. For a description of accounting
policies on trade receivables, please refer to note 3.3.
Purchases and sales of financial assets are recognised on the settlement
date. Financial assets are removed from the balance sheet when the rights
to receive cash flows have expired or have been transferred and Novo
Nordisk has substantially transferred all the risks and rewards of ownership.
Financial liabilities at fair value through the income statement consist of
financial derivative instruments.
Financial liabilities at amortised cost consist of borrowings (loans, issued
bonds, bank overdrafts and lease liabilities), trade payables and other
liabilities. These are initially recognised at the fair value of the proceeds
received less transaction costs. The difference between the proceeds
received and the nominal value is recognised in financial expenses over the
term of the loan using the effective interest method. For initial recognition of
lease liabilities refer to note 4.5.
Financial liabilities are derecognised when the obligation is repaid, cancelled
or expires.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
75
Fair value measurement
The fair values of quoted investments 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.
The fair value of derivative financial instruments is measured on the basis of
quoted market prices of financial instruments traded in active markets. If an
active market exists, the fair value is based on the most recently observed
market price at the end of the reporting period. If a financial instrument
is quoted in a market that is not active, Novo Nordisk bases its valuation
on the most recent transaction price. Adjustment is made for subsequent
changes in market conditions, for instance by including transactions in
similar financial instruments assumed to be motivated by normal business
considerations.
If an active market does not exist, the fair value of standard and simple
financial instruments, such as foreign exchange forward contracts, interest
rate swaps, currency swaps and unlisted bonds, is measured according to
generally accepted valuation techniques. Market-based parameters are used
to measure the fair value.
The fair value of trade receivables in a factoring portfolio is calculated based
on the net invoice amount (invoice amount less charge-backs) less the fee
payable to the factoring entity. The factoring fee is insignificant due to the
short period between the time of sale to the factoring entity and the invoice
due date and the rate applicable. Inputs into the estimate of US wholesaler
charge-backs are described in note 2.1.
The marketable securities are initially measured at fair value plus transaction
costs and subsequently changes to the carrying amount are recognised in
the income statement.
4.10 Financial income and expenses
Financial impact from forward contracts, specified
Financial income
DKK million
Financial income
Interest income1
Foreign exchange gain (net)
Financial gain from forward
contracts (net)
Capital gain on investments, etc.
Result of associated companies
Total financial income
Financial expenses
Interest expenses1
Foreign exchange loss (net)
Financial loss from forward
contracts (net)
Capital loss on investments, etc.
Capital loss on marketable
securities
Result of associated companies
Other financial expenses
Total financial expenses
2021
2020
2019
231
—
2,316
340
—
2,887
289
1,972
—
—
44
24
122
2,451
337
1,142
—
—
149
1,628
390
—
1,889
195
—
—
150
2,624
65
—
—
—
—
65
220
539
2,673
145
—
137
281
3,995
1. Total interest income and expenses is measured at amortised cost for financial assets
and liabilities.
DKK million
2021
2020
2019
Income/(loss) transferred from
other comprehensive income
Value adjustment of transferred
contracts
Unrealised fair value adjustments
of forward contracts
Realised foreign exchange gain/
(loss) on forward contracts
Financial income/(expense) from
forward contracts
1,802
(329)
(1,677)
(1,411)
79
(1,609)
1,246
(835)
(217)
679
(804)
830
2,316
(1,889)
(2,673)
Accounting policies
As described in note 4.3, Management has chosen to classify the result of
hedging activities as part of financial items in the income statement except
for foreign currency-risk cash flow hedges on highly probable non-financial
asset purchases, where the cumulative value adjustments are transferred
directly from the cash flow hedge reserve to the initial cost of the asset when
recognised.
Financial items primarily relate to foreign exchange elements and are
mainly impacted by the cumulative value adjustment of cash flow hedges
transferred from other comprehensive income to the income statement
when the hedged transaction is recognised in the income statement.
In addition, value adjustments of fair value hedges are recognised in
financial income and financial expenses along with any value adjustments of
the hedged asset or liability that are attributable to the hedged risk. Finally,
value adjustments of foreign currency assets and liabilities in non-hedged
currencies will impact financial income and financial expenses.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
76
Section 5
Other disclosures
5.1 Share-based payment schemes
Share-based payment expensed in the income statement
DKK million
Restricted stock units to employees
Long-term share-based incentive
programme (Management Board)1
Long-term share-based incentive
programme (management group
below Management Board)
Shares allocated to individual
employees
2021
189
2020
189
234
162
598
436
19
36
Share-based payment expensed in
the income statement
1,040
823
2019
48
86
195
34
363
1. In 2021, Novo Nordisk introduced a new share-based compensation programme with
terms, which amortises the grant date valuation over three years (2018, 2019 and
2020 were amortised over four years). The 2021 expense includes amortisation of the
2018, 2019, 2020 and 2021 programmes.
Restricted stock units to employees
In appreciation of the efforts of employees during recent years, as of 1
August 2019, all employees in the company were offered 75 restricted
stock units. A restricted stock unit gives the holder the right to receive one
Novo Nordisk B share free of charge in February 2023, subject to continued
employment. The cost of the DKK 660 million programme is amortised over
the vesting period.
Long-term share-based incentive programme
Management Board
On 1 February 2022, the Board of Directors approved an interim allocation
of 0.5 million Novo Nordisk B shares to the members of the Management
Board for the 2021 financial year. The number of shares is periodically
estimated based on long-term incentive performance. The final number
of shares allocated for the 2021 programme is decided at the end of
the performance period in 2023. The value at launch of the programme
(adjusted for expected dividends) was DKK 223 million. The cost of the 2021
programme is amortised over the vesting period of 2021-2023 at an annual
amount of DKK 74 million. The maximum share allocation cannot exceed 26
months' base salary for the CEO, 19.5 months' base salary for executive vice
presidents and up to 15.6 months' base salary for senior vice presidents.
Financial targets are set by the Board for a three-year period, while every
year the Board sets the non-financial targets, the first time in February 2021
for the year 2021.
The grant date of the programme was February 2021, and the share
price used for the determining the grant date fair value of the award
was the average share price (DKK 450) for Novo Nordisk B shares on
Nasdaq Copenhagen in the period 3-17 February 2021, adjusted for the
expected dividend. Based on the split of participants when the share
allocation was decided, 45% of the allocated shares will be allocated to
members of Executive Management and 55% to other members of the
Management Board.
The shares allocated for 2018 were released to the individual participants
subsequent to approval of the 2021 Annual Report by the Board of Directors
and after the announcement of the 2021 full-year financial results on 2
February 2022. The shares allocated correspond to a value at launch of the
programme of DKK 115 million, expensed over the vesting period of 2018-2021.
The number of shares to be transferred (0.5 million shares) is higher than the
original number of shares allocated, as the average sales growth in the three-
year vesting period was above the maximum performance target set by the
Board and consequently, the number of shares increased by 30%.
All restricted stock units and shares allocated to Management are hedged by
treasury shares.
Management group below the Management Board
The management group below the Management Board has a share-based
incentive programme with similar performance criteria. For 2021, a total of
1.6 million shares have currently been allocated to this group, corresponding
to a value at launch of the programme (adjusted for expected dividends) of
DKK 649 million. The number of shares is periodically estimated based on
long-term incentive performance. The final number of shares allocated for
the 2021 programme is decided at the end of the performance period in
2023. The cost of the 2021 programme is amortised over the vesting period
of 2021-2023 at an annual amount of DKK 216 million. Financial target are
set by the Board for a three-year period, while every year the Board sets the
non-financial targets, the first time in February 2021 for the year 2021.
The shares allocated for 2018 were released to the individual participants
subsequent to approval of the 2021 Annual Report by the Board of Directors
and after the announcement of the 2021 full-year financial results on 2
February 2022. The shares allocated correspond to a value at launch of
the programme of DKK 312 million amortised over the period 2018-2021.
The number of shares to be transferred (1.2 million shares) is higher than
the original number of shares allocated, as the average sales growth in the
three-year vesting period was above the maximum performance target set
by the Board and consequently the number of shares increased by 30%.
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
shares is recognised as an expense and allocated over the vesting period.
The total amount to be expensed over the performance and vesting
period is determined by reference to the fair value of the shares granted,
excluding the impact of any non-market vesting conditions. The fair value
is fixed at the grant date, and adjusted for expected dividends during the
vesting period. Non-market vesting conditions are included in assumptions
about the number of shares that are expected to vest. At the end of each
reporting period, Novo Nordisk revises its estimates of the number of 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.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
77
General terms and conditions of launched programmes
Number of shares awarded in the year (million)
Value per share at launch (DKK)
Total market value at launch (DKK million)
Performance and vesting period
Allocated to recipients
Amortisation period
Restricted stock units to employees
Shares for Management Board
Shares for management group below
Management Board
Shares allocated to individual
employees
2021
2020
2019
2021
2020
2019
2021
2020
2019
2021
2020
2019
—
—
—
—
—
—
2.1
307
660
0.5
423
223
0.4
411
152
0.5
298
152
1.6
423
649
1.0
411
416
1.3
298
387
0.1
538
71
0.0
391
17
0.2
311
48
2019 to
2023
2021 to
2023
2020 to
2023
2019 to
2022
2021 to
2023
2020 to
2023
2019 to
2022
2021 to
2024
2020 to
2023
2019 to
2022
Feb 2023
Feb 2024
Feb 2024
Feb 2023
Feb 2024
Feb 2024
Feb 2023
2024
2023
2022
—
— 3.5 years
3 years
4 years
4 years
3 years
4 years
4 years
3 years
3 years
3 years
Outstanding restricted stock units
(million)
Restricted stock units to employees
Shares for Management Board
Shares for management group below
Management Board
Shares allocated to individual
employees
Total
2021
2020
2019
2021
2020
2019
2021
2020
2019
2021
2020
2019
2021
2020
2019
Outstanding at the beginning of
the year
Released allocated shares
Cancelled allocated shares
Allocated in the year
Performance adjustment1
Outstanding at the end of the year
2.1
(0.1)
—
—
—
2.0
2.1
(0.0)
—
—
—
2.1
1.5
(1.4)
(0.1)
2.1
—
2.1
1.8
(0.3)
—
0.5
0.2
2.2
1.3
(0.1)
(0.0)
0.4
0.2
1.8
1.2
(0.4)
(0.0)
0.5
—
1.3
4.5
(0.6)
(0.3)
1.6
0.3
5.5
3.2
(0.2)
(0.1)
1.0
0.6
4.5
2.7
(0.7)
(0.1)
1.3
—
3.2
0.2
(0.1)
(0.0)
0.1
0.0
0.2
0.3
(0.1)
(0.0)
0.0
—
0.2
0.2
(0.1)
(0.0)
0.2
—
0.3
8.6
(1.1)
(0.3)
2.2
0.5
9.9
6.9
(0.4)
(0.1)
1.4
0.8
8.6
5.6
(2.6)
(0.2)
4.1
—
6.9
1. The number of shares for Management Board and management group below Management board has been adjusted as the financial and non-financial targets set by the Board are expected to be exceeded for the 2021 programme. The number of shares for Management
Board and management group below Management board has been adjusted as the sales growth target set by the Board for the 2018 programme is exceeded and is expected to be exceeded for the 2019 and 2020 programmes.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
78
Contractual obligations
Research and development obligations include contingent payments related
to achieving development milestones. Such amounts entail uncertainties in
relation to the period in which payments are due because a proportion of
the obligations are dependent on milestone achievements. Exercise fees
and subsequent milestone payments under in-licensing option agreements
are excluded, as Novo Nordisk is not contractually obligated to make such
payments. Commercial product launch milestones include contingent
payments solely related to achievement of a commercial product launch
following regulatory approval.
Commercial milestones, royalties and other payments based on a
percentage of sales generated from sale of goods following marketing
approval are excluded from the contractual commitments analysis because
of their contingent nature, related to future sales.
The purchase obligations primarily relate to purchase agreements regarding
medical equipment and consumer goods. Novo Nordisk expects to fund
these commitments with existing cash and cash flow from operations.
At the Annual General Meeting in 2020, a donation to the World Diabetes
Foundation (WDF) was approved. For the years 2020-2024, the donation is
calculated as 0.085% of Novo Nordisk's total Diabetes care net sales. The
annual donation cannot exceed DKK 93 million in 2022, DKK 94 million in
2023 and DKK 95 million in 2024, or 15% of the taxable income of Novo
Nordisk A/S in the financial year in question, whichever is the lowest.
Other guarantees
Other guarantees amount to DKK 1,251 million (DKK 1,117 million in 2020).
Other guarantees primarily relate to performance guarantees issued by
Novo Nordisk.
5.2 Commitments
Contractual obligations not recognised in the balance sheet
DKK million
2021
Leases1
Research and development
obligations
Research and development –
potential milestone payments2
Commercial product launch –
potential milestone payments2
Purchase obligations relating to
investments in property, plant and
equipment
Current
Non-
current
Total
145
636
781
4,196
6,357
10,553
771
4,220
4,991
—
5,966
5,966
545
—
545
Other purchase obligations
13,407
5,998
19,405
Total obligations not recognised in
the balance sheet
19,064
23,177
42,241
2020
Leases1
Research and development
obligations
Research and development –
potential milestone payments2
Commercial product launch –
potential milestone payments2
Purchase obligations relating to
investments in property, plant and
equipment
152
612
764
2,733
4,502
7,235
205
3,878
—
6,105
339
—
4,083
6,105
339
Other purchase obligations
7,528
4,535
12,063
Total obligations not recognised in
the balance sheet
10,957
19,632
30,589
1. Predominantly relates to estimated variable property taxes, leases committed but not
yet commenced and low value assets.
2. Potential milestone payments are associated with uncertainty as they are linked to
successful achievements in research activities.
5.3 Acquisition of businesses
Business combinations in 2021
On 28 December 2021, Novo Nordisk acquired all outstanding shares of
the publicly held US company Dicerna Pharmaceuticals, Inc. via a cash
tender offer. Before the acquisition, Novo Nordisk held 2.9% of the shares in
Dicerna Pharmaceuticals, Inc. at a fair value of DKK 573 million.
About Dicerna Pharmaceuticals, Inc.
Dicerna Pharmaceuticals, Inc. is a biopharmaceutical company focused on
discovering, developing and commercialising medicines that are designed to
leverage RNAi to silence selectively genes that cause or contribute to diseases.
Dicerna Pharmaceuticals, Inc. has established collaborative relationships with
some of the leading pharmaceutical companies and has together with the
collaborative partners more than 20 active discovery, preclinical or clinical
programmes. Dicerna Pharmaceuticals, Inc. employs around 320 people.
Strategic rationale
The acquisition of Dicerna Pharmaceuticals, Inc.’s RNAi platform is a
strategic addition to Novo Nordisk’s existing research technology platforms
and support the strategy of using a broad range of technology platforms
applicable across all Novo Nordisk’s therapeutic focus areas. In 2019, Novo
Nordisk entered into a research collaboration and license agreement with
Dicerna Pharmaceuticals, Inc. to discover and develop RNAi therapies using
Dicerna Pharmaceuticals, Inc.’s proprietary RNAi platform technology.
Details of the acquisition
The total purchase price amounts to DKK 22,034 million, which has been settled
by the fair value of existing shareholdings of DKK 573 million, settlement of a
pre-existing relationship of DKK 145 million and a cash consideration of DKK
21,316 million. The settlement of a pre-existing relationship relates to the
existing research collaboration and license agreement, according to which Novo
Nordisk has paid upfront for research services that on the date of acquisition
had a value of DKK 145 million.
Furthermore, under the existing research collaboration and license agreement,
Novo Nordisk has prior to the acquisition acquired rights to license from
Dicerna Pharmaceutical Inc. with a carrying value of DKK 863 million. As part
of the acquisition of Dicerna Pharmaceutical Inc., Novo Nordisk has acquired
the underlying intellectual property rights that replace the previously acquired
rights to license. The additional value of the underlying property rights of DKK
2,454 million over the carrying value of previously acquired rights to license, is
included in intellectual property rights acquired in the business combination
and is calculated as the present value of future payment avoided by acquisition
of Dicerna Pharmaceutical Inc. No material gain or loss has been recognised as
part of settling the pre-existing arrangement.
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
79
The purchase price allocation for the acquisition is considered provisional
due to the fact that the transaction was closed on 28 December 2021,
leaving limited time to identify and determine fair value of assets acquired
and liabilities assumed. Adjustments may be applied to the purchase price
allocation for a period of up to 12 months from the acquisition date.
The provisional fair value of recognised assets and liabilities is as follows:
DKK million
Intellectual property rights
Other intangible assets
Financial assets
Cash
Deferred tax assets/liabilities, net
Other net assets
Net identifiable assets acquired
Goodwill
Purchase price
Settlement of pre-existing relationship
Fair value of existing shareholdings
Consideration transferred
Cash acquired
Cash used for acquisition of businesses
2021
18,687
24
31
3,033
(3,480)
(607)
17,688
4,346
22,034
(145)
(573)
21,316
(3,033)
18,283
The goodwill is primarily attributable to the highly-skilled workforce
and expected synergies generated from Novo Nordisk's know-how and
commercialisation abilities within protein and peptide based medicines
and Dicerna Pharmaceuticals, Inc.’s know-how within RNAi technology. The
goodwill is not expected to be deductible for tax purposes.
Transaction costs of DKK 124 million are included in other operating income
and expenses in the income statement.
Business combinations in 2020
No business combinations were completed in 2020.
Accounting policies
The acquisition method of accounting is used to account for all business
combinations.
The purchase price for a business comprises the fair values of the assets
transferred, liabilities incurred to the former owners including warrant
holders of the acquired business and the fair value of any asset or liability
resulting from a contingent consideration arrangement. Any amount of the
purchase price which effectively comprises a settlement of a pre-existing
relationship is not part of the exchange for the acquiree and is therefore not
included in the consideration for the purpose of applying the acquisition
method. Settlements of pre-existing relationships are accounted for as
separate transactions in accordance with the relevant IFRS.
Identifiable assets and liabilities and contingent liabilities assumed are
measured at fair value at the date of acquisition by applying relevant
valuation methods. Acquisition-related costs are expensed as incurred.
Key accounting estimate in determining the fair value of intangible
assets acquired in a business combination
The application of the acquisition method involves the use of significant
estimates as the identifiable net assets of the acquiree are recognised at
their fair value for which observable market prices are typically not available.
This is particularly relevant for intangible assets which require use of
valuation techniques typically based on estimates of present value of future
uncertain cash flows.
The valuation of intellectual property rights identified in the acquisition
of Dicerna Pharmaceuticals, Inc. is mainly based on Relief From Royalty
models, where Management has estimated the net present value of
royalties and milestone payments, if the existing research collaboration
and license agreement had been extended in time and scope to cover all
of the proprietary RNAi technology. Further, Pipeline assets and research
collaboration and license agreements with other parties than Novo Nordisk
are valued based on estimated net present value of future cash flows.
5.4 Related party transactions
Material transactions with related parties
DKK million
Novo Holdings A/S
2021
2020
2019
Purchase of Novo Nordisk B shares
6,695
5,963
4,894
Dividend payment to Novo
Holdings A/S
NNIT Group
Services provided by NNIT
Dividend payment from NNIT
Novozymes Group
Services provided by Novo Nordisk
Services provided by Novozymes
CS Solar Fund XIV
Liability for capital commitment1
Distribution by CS Solar Fund XIV
6,144
5,767
5,580
593
(4)
(116)
78
—
—
—
775
(18)
(113)
72
—
—
—
941
(20)
(132)
103
97
389
(385)
1. The liability disclosed for 2019 related to capital commitment was paid in 2020
(DKK 392 million).
Novo Nordisk A/S is controlled by Novo Holdings A/S (incorporated in
Denmark), which owns 28.1% of the share capital in Novo Nordisk A/S,
representing 76.7% of the total number of votes. 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.
As associated companies of Novo Nordisk A/S, NNIT Group and Churchill
Stateside Solar Fund XIV, LLC (‘CS Solar Fund XIV’) are considered related
parties. As an associated company of Novo Holdings A/S, Unchained Labs,
Inc. and Altascience Company Inc. are considered related parties to Novo
Nordisk A/S. As they share a controlling shareholder, the Novozymes Group,
Sonion Group and Xellia Pharmaceuticals are also considered to be related
parties, as well as the Board of Directors or Executive Management of Novo
Nordisk A/S.
Goodwill is recognised at the excess of purchase price over the fair value
of net identifiable assets acquired and liabilities assumed.
Purchase of shares by Novo
Nordisk
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
80
In 2021, Novo Nordisk A/S acquired 11,220,000 B shares, worth
DKK 6.7 billion, from Novo Holdings A/S as part of the DKK 20.0 billion share
repurchase programme. The transaction price for each transaction was
calculated as the average market price in the open window period following
the announcements of the financial results for the four quarters in 2021.
In Novo Nordisk A/S, there were no transactions with the Board of Directors
or Executive Management besides remuneration. There were no other
transactions with the Board of Directors or Executive Management of NNIT
A/S, Novozymes A/S, Novo Holdings A/S, the Novo Nordisk Foundation, Xellia
Pharmaceuticals ApS, Unchained Labs, Sonion A/S or CS Solar Fund XIV.
5.5 Fee to statutory auditors
5.6 General accounting policies
DKK million
2021
2020
2019
Statutory audit
Audit-related services
Tax advisory services
Other services
Total fee to statutory auditors
26
3
4
4
37
26
3
9
4
42
26
4
11
4
45
Principles of consolidation
The consolidated financial statements incorporate the financial statements
of the parent company Novo Nordisk A/S and entities controlled by Novo
Nordisk A/S. Control exists when Novo Nordisk has effective power over
the entity and has the right to variable returns from the entity. The results
of subsidiaries acquired or disposed of during the year are included in the
consolidated income statement from the effective date of acquisition and
up to the effective date of disposal.
For information on remuneration of the Management of Novo Nordisk,
please refer to note 2.4 Employee costs. There were no loans to the Board
of Directors or Executive Management in 2021, nor were there any in 2020
or 2019.
Fees for services other than statutory audit of the financial statements
amount to DKK 11 million (DKK 16 million in 2020 and DKK 19 million in
2019).
There were no material unsettled balances with related parties at the end of
the year.
In 2021, Deloitte Statsautoriseret Revisionspartnerselskab provided other
services in the amount of DKK 6 million which relate to tax compliance and
transfer pricing, educational training, review of ESG data, due diligence and
other assurance assessments and opinions.
PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab
(PricewaterhouseCoopers Denmark) provided other services in the amount
of DKK 9 million in 2020 and DKK 12 million in 2019 which relate to tax
compliance and transfer pricing, educational training, review of ESG data,
due diligence and other assurance assessments and opinions.
Functional and presentation currency
Items included in the financial statements of Novo Nordisk's entities are
measured using the currency of the primary economic environment in
which the entity operates (functional currency). The consolidated financial
statements are presented in Danish kroner (DKK), which is 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 prevailing exchange rates at the transaction dates. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities are recognised in the income statement.
Foreign currency differences arising from the translation of effective
qualifying cash flow hedges are recognised in other comprehensive income.
Translation of Group companies
Financial statements of foreign subsidiaries are translated into DKK 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 adjustments are recognised in other
comprehensive income.
Cash flow statement
The Cash flow statement is presented in accordance with the indirect
method commencing with net profit for the year.
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
81
5.7 Companies in the Novo Nordisk Group
Activity:
• Sales and marketing
• Research and development
•
•
Production
Services/investments
Company and country
Percentage of shares owned
Activity
Company and country
Percentage of shares owned
Activity
Company and country
Percentage of shares owned
Activity
•
•
•
•
Novo Nordisk Limited, Ireland
Novo Nordisk Ltd, Israel
Novo Nordisk S.P.A., Italy
Parent company
Novo Nordisk A/S, Denmark
Subsidiaries by geographical area
North America Operations
Novo Nordisk Canada Inc., Canada
Novo Nordisk Inc., United States
Novo Nordisk North America Operations A/S, Denmark
Novo Nordisk Pharmaceutical Industries LP, United States
Novo Nordisk Pharmatech US, Inc., United States
Novo Nordisk Pharma, Inc., United States
Novo Nordisk Research Center Indianapolis, Inc., United States
Novo Nordisk Research Center Seattle, Inc., United States
Novo Nordisk US Bio Production, Inc., United States
Novo Nordisk US Commercial Holdings, Inc., United States
Novo Nordisk US Holdings Inc., United States
Corvidia Therapeutics, Inc., United States
Dicerna Pharmaceuticals, Inc., United States
Emisphere Technologies, Inc., United States
International Operations
Novo Nordisk Pharmaceuticals A/S, Denmark
Novo Nordisk Pharma Operations A/S, Denmark
Novo Nordisk Region AAMEO and LATAM A/S, Denmark
Novo Nordisk Region Europe A/S, Denmark
Novo Nordisk Region Japan & Korea A/S, Denmark
EMEA
Aldaph SpA, Algeria
Novo Nordisk Pharma GmbH, Austria
S.A. Novo Nordisk Pharma N.V., Belgium
Novo Nordisk Pharma d.o.o., Bosnia and Herzegovina
Novo Nordisk Pharma EAD, Bulgaria
Novo Nordisk Hrvatska d.o.o., Croatia
Novo Nordisk s.r.o., Czech Republic
Novo Nordisk Denmark A/S, Denmark
Novo Nordisk Pharmatech A/S, Denmark
Novo Nordisk Egypt LLC, Egypt
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
Neotope Neuroscience Limited, Ireland
•
•
•
•
•
•
•
•
•
•
100 •
100 •
100
100
100 •
100 •
100
100
100
100
100
100
100
100
100
100 •
100
100
100
100 •
•
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
•
100 •
100 •
100 •
100
•
100 •
100 •
100 •
100
•
•
•
•
•
•
Novo Nordisk Kazakhstan LLP, Kazakhstan
Novo Nordisk Kenya Ltd., Kenya
Novo Nordisk Pharma SARL, Lebanon
UAB Novo Nordisk Pharma, Lithuania
Novo Nordisk Farma dooel, North Macedonia
Novo Nordisk Pharma SAS, Morocco
Novo Nordisk B.V., Netherlands
Novo Nordisk Finance (Netherlands) B.V., Netherlands
Novo Nordisk Pharma Limited, Nigeria
Novo Nordisk Norway AS, Norway
Novo Nordisk Pharmaceutical Services Sp. z o.o., Poland
Novo Nordisk Pharma Sp.z.o.o., Poland
Novo Nordisk Comércio Produtos Farmacêuticos Lda., Portugal
Novo Nordisk Farma S.R.L., Romania
Novo Nordisk Limited Liability Company, Russia
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
Novo Nordisk Production Support LLC, Russia
100 •
•
Novo Nordisk Saudi for Trading, Saudi Arabia
Novo Nordisk Pharma d.o.o. Belgrade (Serbia), Serbia
Novo Nordisk Slovakia s.r.o., Slovakia
Novo Nordisk, d.o.o., Slovenia
Novo Nordisk (Pty) Limited, South Africa
Novo Nordisk Pharma S.A., Spain
Novo Nordisk Scandinavia AB, Sweden
Novo Nordisk Health Care AG, Switzerland
Novo Nordisk Pharma AG, Switzerland
Novo Nordisk Tunisie SARL, Tunisia
Novo Nordisk Saglik Ürünleri Tic. Ltd. Sti., Turkey
Novo Nordisk Ukraine, LLC, Ukraine
Novo Nordisk Pharma Gulf FZE, United Arab Emirates
Novo Nordisk Holding Limited, United Kingdom
Novo Nordisk Limited, United Kingdom
Ziylo Limited, United Kingdom
Region China
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100
Novo Nordisk (China) Pharmaceuticals Co., Ltd., China
Novo Nordisk (Shanghai) Pharma Trading 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 •
•
100 •
100
100
100 •
100 •
•
•
•
•
•
Rest of World
Novo Nordisk Pharma Argentina S.A., Argentina
Novo Nordisk Pharmaceuticals Pty. Ltd., Australia
Novo Nordisk Pharma (Private) Limited, Bangladesh
100 •
100 •
100 •
Novo Nordisk Produção Farmacêutica do Brasil Ltda., Brazil
100
•
Novo Nordisk Farmacêutica do Brasil Ltda., Brazil
Novo Nordisk Farmacéutica Limitada, Chile
Novo Nordisk Colombia SAS, Colombia
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 Pharma Ltd., Japan
Novo Nordisk Pharma (Malaysia) Sdn Bhd, Malaysia
Novo Nordisk Pharma Operations (Business Area) Sdn Bhd,
Malaysia
Novo Nordisk Mexico S.A. de C.V., Mexico
Novo Nordisk Pharmaceuticals Ltd., New Zealand
Novo Nordisk Pharma (Private) Limited, Pakistan
Novo Nordisk Panama S.A., Panama
Novo Nordisk Peru S.A.C., Peru
Novo Nordisk Pharmaceuticals (Philippines) Inc., Philippines
Novo Nordisk Pharma (Singapore) Pte Ltd., Singapore
Novo Nordisk India Holding Pte Ltd., Singapore
Novo Nordisk Pharma Korea Ltd., South Korea
Novo Nordisk Lanka (PVT) Ltd, Sri Lanka
Novo Nordisk Pharma (Thailand) Ltd., Thailand
Novo Nordisk Venezuela Casa de Representación C.A., Venezuela 100 •
Other subsidiaries and associated companies
NNE A/S, Denmark
NNIT A/S, Denmark
CS Solar Fund XIV, LLC, United States
100
18
99
Companies without significant activities are not included in the list.
NNE A/S subsidiaries are not included in the list.
•
•
100 •
100 •
100 •
100 •
100
100 •
100 •
100 •
100 •
100
100 •
100 •
100 •
100 •
100 •
100 •
100 •
100
100 •
100 •
100 •
•
•
•
•
•
•
Novo Nordisk Annual Report 2021 82
Financial definitions
(part of Management's review – not audited)
Financial ratios have been calculated in accordance with the guidelines
from the Danish Society of Financial Analysts, and supplemented by certain
key ratios for Novo Nordisk. Financial ratios are described below and in the
section 'Non-IFRS financial measures'.
Purchase of property, plant and equipment
Cash flow statement amount for the purchase of property, plant
and equipment.
The definition of capital expenditure was redefined in 2019. Capital
expenditure is now defined as purchase of property, plant and equipment
from the cash flow statement. Amounts for 2017-2018 have been restated
in 'Financial highlights'.
Working capital
Working capital is defined as current assets less current liabilities and
measures the liquid assets Novo Nordisk has available for the business.
ADR
An American Depository Receipt (or ADR) represents ownership of the
shares of a non-US company and trades in US financial markets.
Basic earnings per share (EPS)
Net profit divided by the average number of shares outstanding.
Diluted earnings per share
Net profit divided by average number of shares outstanding, including the
dilutive effect of the outstanding restricted stock units.
Dividend pay-out ratio
Total dividends for the year as a percentage of net profit.
Effective tax rate
Income taxes as a percentage of profit before income taxes.
Gross margin
Gross profit as a percentage of sales.
Net profit margin
Net profit as a percentage of sales.
Number of shares outstanding
The total number of shares, excluding the holding of treasury shares.
Operating margin
Operating profit as a percentage of sales.
Purchase of intangible assets
Cash flow statement amount for the purchase of intangible assets.
Novo Nordisk Annual Report 2021Part of Management´s review – not audited Non-IFRS financial
measures
Sales in constant exchange rates
DKK million
Net sales IFRS
2021
2020
2019
140,800
126,946
122,021
Effect of exchange rate
3,643
3,254
(3,923)
Sales in constant exchange rates
144,443
130,200
118,098
(part of Management's review – not audited)
Net sales previous year
126,946
122,021
111,831
83
Solely for the purpose of calculating average net operating assets for 2019,
year-end net operating assets for 2018 have been adjusted upwards by
DKK 3,778 million to DKK 40,541 million, reflecting the recognition by Novo
Nordisk of right-of-use assets of DKK 3,778 million as of 1 January 2019 in
accordance with IFRS 16.
The following table shows the reconciliation of operating profit after tax
to net operating assets with operating profit/equity in %, the most directly
comparable IFRS financial measure:
Operating profit/equity in %
DKK million
Operating profit IFRS
/ Equity IFRS
Operating profit/equity in %
2021
58,644
70,746
82.9%
2020
2019
54,126
52,483
63,325
57,593
85.5%
91.1%
Operating profit after tax to net operating assets
DKK million
2021
2020
2019
Operating profit after tax
47,384
42,922
42,091
% increase/(decrease) in reported
currencies
% increase/(decrease) in constant
exchange rates
10.9%
4.0%
9.1%
13.8%
6.7%
5.6%
Operating profit in constant exchange rates
DKK million
Operating profit IFRS
Effect of exchange rate
Operating profit in constant
exchange rates
Operating profit previous year
% increase/(decrease) in reported
currencies
% increase/(decrease) in constant
exchange rates
2021
58,644
2,332
60,976
54,126
2020
2019
54,126
52,483
1,930
(2,607)
56,056
49,876
52,483
47,248
8.3%
3.1%
11.1%
/ Average net operating assets
68,634
51,824
42,940
12.7%
6.8%
5.6%
Operating profit after tax to net
operating assets in %
69.0%
82.8%
98.0%
Operating profit after tax to net operating assets (OPAT/NOA)
'Operating profit after tax to net operating assets' is defined as 'operating
profit after tax' (using the effective tax rate) as a percentage of average
inventories, receivables, property, plant and equipment, intangible assets
and deferred tax assets, less non-interest-bearing liabilities including
provisions and deferred tax liabilities (where the average is the sum of the
above assets and liabilities at the beginning of the year and at year-end
divided by two).
Management believes operating profit after tax to net operating assets is
a useful measure in providing investors and Management with information
regarding the Group's performance. The calculation of this financial target
is a widely accepted measure of earnings efficiency in relation to total
capital employed.
OPAT/NOA numerator
Reconciliation of operating profit to operating profit after tax:
DKK million
2021
2020
2019
Operating profit IFRS
58,644
54,126
52,483
Tax on operating profit (using
effective tax rate)
(11,260)
(11,204)
(10,392)
Operating profit after tax
47,384
42,922
42,091
In the Annual Report, Novo Nordisk discloses certain financial measures of
the Group’s financial performance, financial position and cash flows that
reflect adjustments to the most directly comparable measures calculated
and presented in accordance with IFRS. These non-IFRS financial measures
may not be defined and calculated by other companies in the same manner,
and may therefore not be comparable.
The non-IFRS financial measures presented in the Annual Report are:
– sales and operating profit in constant exchange rates
– operating profit after tax to net operating assets (OPAT/NOA)
– financial reserves
– free cash flow
– cash to earnings
IFRS refers to an IFRS financial measure.
Sales and operating profit growth in constant exchange rates
'Growth in constant exchange rates' means that the effect of changes in
exchange rates is excluded. It is defined as sales/operating profit for the
period measured at the average exchange rates for the same period of the
prior year compared with net sales/operating profit for the same period of
the prior year. Price adjustments within hyperinflation countries as defined
in IAS 29 'Financial reporting in hyperinflation economies' are excluded
from the calculation to avoid growth in constant exchange rates being
artificially inflated. Growth in constant exchange rates is considered to be
relevant information for investors in order to understand the underlying
development in sales and operating profit by adjusting for the impact
of currency fluctuations.
Novo Nordisk Annual Report 2021Part of Management´s review – not audited OPAT/NOA denominator
DKK million
Intangible assets
Property, plant and equipment
Deferred income tax assets
Other receivables and
prepayments (non-current)
Inventories
Trade receivables
Tax receivables
Other receivables and
prepayments (current)
Deferred tax liabilities
Retirement benefit obligations
Other liabilities (non-current)
Provisions (non-current)
Trade payables
Tax payables
Other liabilities (current)
Provisions (current)
Net operating assets
Average net operating assets1
84
Financial reserves
'Financial reserves at the end of the year' is defined as the sum of cash and
cash equivalents at the end of the year, marketable securities with original
term to maturity exceeding three months and undrawn committed credit
and loan facilities with a maturity of more than 12 months, less loans and
bank overdrafts classified as liabilities arising from financing activities with
obliged repayment within 12 months of the balance sheet date.
Management believes that financial reserves at the end of the year are an
important measure of the Group's financial strength from an investor's
perspective, capturing the robustness of the Group's financial position and
its financial preparedness for unforeseen developments.
The following table reconciles total financial reserves with cash and cash
equivalents, the most directly comparable IFRS financial measure:
Free cash flow
DKK million
Net cash generated from
operating activities IFRS
Net cash used in investing
activities IFRS
Net purchase of marketable
securities IFRS
Addition on marketable securities
through acquisition of
business IFRS
Repayment on lease
liabilities IFRS
Free cash flow
2021
2020
2019
55,000
51,951
46,782
(31,605)
(22,436)
(11,509)
5,937
861
—
—
—
—
(874)
(950)
(822)
29,319
28,565
34,451
2021
43,171
55,362
8,672
2020
20,657
50,269
5,865
2019
5,835
50,551
4,121
267
674
841
19,621
40,643
1,119
18,536
27,734
289
17,641
24,912
806
5,037
4,161
3,434
(5,271)
(1,280)
(360)
(4,374)
(8,870)
(3,658)
(19,600)
(51,520)
78,959
68,634
(2,502)
(1,399)
—
(4,526)
(5,717)
(3,913)
(80)
(1,334)
—
(4,613)
(6,358)
(4,212)
Financial reserves
DKK million
Cash and cash equivalents IFRS
(17,005)
(15,085)
Marketable securities IFRS
(34,814)
(31,120)
Undrawn committed credit facility
58,309
51,824
45,339
Undrawn bridge facility1
42,940
Borrowings1
2021
10,719
6,765
11,526
—
(12,861)
16,149
2020
2019
12,226
15,411
—
—
11,531
11,578
5,577
(576)
—
(595)
28,758
26,394
1. Average net operating assets for 2019 was calculated based on an adjusted net
Financial reserves1
operating assets figure for 2018, which was adjusted by the right-of-use assets of
DKK 3,778 million as of 1 January 2019, following the implementation of IFRS 16. As
a consequence, the net operating assets figure for 2018 was adjusted to DKK 40,541
million for the calculation of the average net operating assets for 2019.
Reconciliation of net operating assets to equity: IFRS
DKK million
Equity
Investment in associated
companies
Other financial assets
Marketable securities
Derivative financial instruments
2021
70,746
(525)
(916)
(6,765)
(1,690)
2020
2019
63,325
57,593
(582)
(474)
(1,066)
(1,334)
—
(2,332)
—
(188)
Cash at bank
(10,720)
(12,757)
(15,475)
Borrowings – non-current
Borrowings – current
Derivative financial instruments
Net operating assets
12,961
13,684
2,184
78,959
2,897
7,459
1,365
3,009
1,474
734
58,309
45,339
1. Financial reserves for 2020 include amounts undrawn under credit facilities and
overdrafts where the repayment of such facilities or overdrafts is not contractually
required within 12 months of the balance sheet date. Financial reserves for 2020 include
the DKK 5,577 million (EUR 750 million) undrawn portion of a bridge facility as the
terms of the facility provided that the maturity could be extended, at the option of Novo
Nordisk, through June 2022. In accordance with IFRS, the DKK 5,577 million (EUR 750
million) drawn portion of the bridge facility has nevertheless been classified as current
debt as it was Management’s expectation that the facility would be repaid in 2021. The
loan was repaid in 2021.
Free cash flow
Free cash flow is a measure of the amount of cash generated in the period
which is available for the Board to allocate between Novo Nordisk's capital
providers, through measures such as dividends, share repurchases and
repayment of debt (excluding lease liability repayments) or for retaining in
the business to fund future growth.
The following table shows a reconciliation of free cash flow with net cash
generated from operating activities, the most directly comparable IFRS
financial measure:
Cash to earnings
Cash to earnings is defined as 'free cash flow as a percentage of net profit'.
Management believes that cash to earnings is an important performance
metric because it measures the Group’s ability to turn earnings into cash.
Since Management wants this measure to capture the ability of the Group’s
operations to generate cash, free cash flow is used as the numerator instead
of net cash flow.
The following table shows the reconciliation of cash to earnings to cash flow
from operating activities/net profit in %, the most directly comparable IFRS
financial measure:
Cash flow from operating activities/net profit in %
DKK million
2021
2020
2019
Net cash generated from
operating activities IFRS
/ Net profit IFRS
Cash flow from operating
activities/net profit in %
55,000
47,757
51,951
42,138
46,782
38,951
115.2%
123.3%
120.1%
Cash to earnings
DKK million
Free cash flow
/ Net profit IFRS
Cash to earnings
2021
29,319
47,757
61.4%
2020
28,565
42,138
67.8%
2019
34,451
38,951
88.4%
Novo Nordisk Annual Report 2021Part of Management´s review – not audited Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
85
Statement of
Environmental,
Social and
Governance (ESG)
performance
for the year ended 31 December
Environmental performance
Resources
Energy consumption for operations (1,000 GJ)
Share of renewable power for production sites
Water consumption for production sites (1,000 m3)
Breaches of environmental regulatory limit values
Emissions and waste
CO2 emissions from operations and transportation (1,000 tonnes)
Waste from production sites (1,000 tonnes)
Social performance
Patients
Patients reached with Novo Nordisk's Diabetes care products (estimate in millions)
– Hereof reached via the Novo Nordisk Access to Insulin Commitment (estimate in millions)1
– Hereof children reached through the Changing Diabetes® in Children programme (cumulative)
People & employees
Employees (total)
Employee turnover
Sustainable employer score2
Frequency of occupational accidents (number per million working hours)
Gender in leadership positions (ratio men:women)
Gender in senior leadership positions (ratio men:women)
Gender in the Board of Directors (ratio men:women)
Societies
Total tax contribution (DKK million)
Donations and other contributions (DKK million)
Governance performance
Governing processes
Business ethics reviews
Relevant employees trained in business ethics
Supplier audits
Product recalls
Failed inspections
Values & trust
Facilitations of the Novo Nordisk Way (total)
Company reputation (scale 0-100)3
Animals purchased for research
Note
2021
2020
2019
7.1
7.1
7.2
7.3
7.4
7.5
8.1
8.1
8.1
8.2
8.2
8.3
8.4
8.5
8.5
8.5
8.6
8.7
9.1
9.1
9.2
9.3
9.4
9.5
9.6
9.7
3,387
100%
3,488
12
174
181
3,191
100%
3,368
15
170
141
2,993
76%
3,149
16
306
124
34.6
1.7
32.8
3.2
30.0
2.9
31,846
28,296
25,695
48,478
11.0%
84%
1.3
57:43
64:36
67:33
32,593
92
37
98%
253
1
—
45,323
7.9%
N/A
1.3
59:41
65:35
62:38
43,258
11.4%
N/A
2.2
60:40
67:33
62:38
26,376
27,527
158
105
32
99%
177
—
—
34
99%
236
4
—
34
82.6
47,879
26
N/A
50,036
32
N/A
49,637
1. During 2020, the ceiling price was lowered from USD 4 to USD 3 which affects the comparability of 2021 and prior years.
2. In 2021, the engagement survey was entirely redesigned to support Novo Nordisk’s strategic goals. As a result, comparison to previous surveys is not appropriate.
3. Company reputation replaces Company trust in order to capture more dimensions of how Novo Nordisk is perceived by external stakeholders.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
86
Notes to the consolidated ESG statement
Section 6
Basis of preparation
General reporting standards and principles
Novo Nordisk's annual reporting complies with the Danish Financial Statements
Act. Sections 99a, 99b, 99d and 107d specify the requirements to report on the
management of risks related to the environment, climate, human rights, labour
and social conditions, anti-corruption, gender distribution and data ethics.
These requirements are addressed in the Management Review. Novo Nordisk is
also inspired by the International Integrated Reporting Framework and adheres
to the AA1000AP (2018), which states that reporting must provide a complete,
accurate, relevant and balanced picture of the organisation’s approach to and
impact on stakeholders and society.
As recommended by the Task Force on Climate-related Financial Disclosures
(TCFD), Novo Nordisk is working to integrate two climate change scenarios into
the risk management process to identify short-, medium- and long-term risks
within the production and supply chain:
– 2ºC scenario, consistent with meeting the Paris Agreement Goal
(Representative Concentration Pathway RCP 2.6)
– 4ºC scenario as an alternative high-emission scenario (RCP 8.5)
Novo Nordisk discloses in accordance with the recommendations put forward
by the Carbon Disclosure Project (CDP). For a full breakdown of climate and
water impacts, please refer to the publicly available report on Novo Nordisk
CDP disclosures.
Novo Nordisk applies AA1000AP (2018) as a component in creating a generally
applicable approach to assessing and strengthening the credibility of the
Group's public reporting of ESG information. Novo Nordisk has designed
processes to ensure that the qualitative and quantitative information that
documents the ESG dimensions of performance is assured, as well as the
systems that underpin the data and performance. The principles outlined in
AA1000AP (2018) 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. From the perspective of social responsibility, the key
stakeholder groups are patients who rely on Novo Nordisk products,
employees at Novo Nordisk and throughout the Group's value chain,
business partners and local communities. Novo Nordisk maps its
stakeholders and has processes in place to ensure inclusion of stakeholder
concerns and expectations.
Materiality
When assessing whether a disclosure is material to include in the
consolidated ESG statement, Management considers whether the matter
is of such relevance and importance that it could substantively influence
the assessment by providers of financial capital of Novo Nordisk's ability to
create value over the short-, medium- and long-term. This assessment builds
on ongoing stakeholder engagement and trendspotting supplemented by
data-driven analysis. The identified key issues are addressed by programmes
or action plans with clear and measurable targets. The issues presented
in the Annual Report are thus deemed to have a significant impact on the
Group's Environmental, Social and Governance performance and hereby
the future business performance and may support stakeholders in their
decision-making.
Principles of consolidation
The disclosures of energy consumption and CO2 emissions cover production
sites, laboratories and offices. The disclosures of water consumption,
environmental breaches and waste cover production sites.
The social and governance-related disclosures cover the Novo Nordisk
Group, comprising Novo Nordisk A/S and entities controlled by Novo Nordisk
A/S as applicable.
Accounting policies and changes hereto
The accounting policies set out in the notes have been applied consistently
in the preparation of the consolidated ESG statement for all the years
presented unless stated otherwise below.
The existing categorisation of CO2 emissions from operations and
transportation has been supplemented with the categorisation into scope 1,
2, and 3 emissions to align with the Greenhouse Gas Protocol.
Gender in senior leadership positions (ratio men:women) has been added
to the statement to reflect the aspirational target of 45:45 representation
in senior leadership positions launched during 2021. The target of 45:45
representation leaves 10% flexibility while also allowing for non-binary
gender definitions and those that may not wish to be categorised.
Responsiveness
The Annual Report reflects how the company is managing operations in
ways that consider and respond to stakeholder concerns and interests. The
report reaches out to a wide range of stakeholders but is primarily prepared
with investors in mind. To all Novo Nordisk stakeholders, the Annual Report
is just one element of interaction and communication with the company.
Sustainable employer score is replacing the previous disclosure of employee
engagement in accordance with Novo Nordisk's aspirations of becoming
a sustainable employer. The sustainable employer score is based on the
new employee survey and captures a multitude of dimensions related to
employee well-being.
Impact
Understanding, measuring and communicating the positive and negative
impacts on society and the environment of Novo Nordisk’s activities is
important and remains a priority for Novo Nordisk.
Company reputation is replacing the previous disclosure of company trust.
A new and more comprehensive approach to reputational intelligence has
been launched in 2021 to cover more markets and stakeholders. These
insights are summarised in the company reputation score.
Finally, the categorisation of disclosures into Environment, Social and
Governance as well as the sub-categorisation within each dimension has
been changed for some metrics.
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
87
Section 7
Environmental
performance
7.1 Energy consumption for operations and share of
renewable power
Energy consumption for operations
1,000 GJ
Production
Office buildings and laboratories
Total energy consumption
2021
2,859
528
3,387
2020
2,718
473
3,191
2019
2,458
535
2,993
The share of renewable power used at production sites is reported
according to the Greenhouse Gas (GHG) Protocol Scope 2 Guideline. It is
calculated as the sum of power in each site or office that is derived from
100% renewable sources, either sourced or self-produced.
7.2 Water consumption for production sites
In 2021, production sites consumed 3,488,000 cubic metres of water, an
increase of 4% compared to 2020 due to a new production facility and a
general increase in produced volumes.
Production sites in Brazil, China, Iran and Algeria, are located in areas
subject to water stress or high seasonal variations. They consume 10% of
the total water for global production. Overall, water consumption at these
facilities decreased by 10% compared to 2020 due to significant water-
saving projects implemented despite increased production.
CO2 emissions by Scope 1, 2 and 3
1,000 tonnes
Scope 1
– Production
– Office buildings and laboratories
– Company cars
Scope 2
– Production
– Office buildings and laboratories
Scope 31
– Business flights
– Product distribution
Total CO2 emissions
2021
2020
2019
77
29
2
46
16
10
6
81
10
71
75
28
2
45
15
9
6
80
19
61
174
170
86
21
3
62
75
65
10
145
65
80
306
Accounting policies
Water consumption is measured based on meter readings and invoices. It
includes drinking water, industrial water and steam used at production sites.
1. Scope 3 emissions are restricted to CO2 emissions from business flights and product
distribution. For a full overview of CO2 emissions, please visit cdp.net
Energy consumption for production increased by 5% primarily due to a new
production facility and a general increase in produced volumes.
Energy consumption in office buildings and laboratories increased by 12%
as facilities were utilised more throughout the year compared to 2020.
7.3 Breaches of environmental regulatory limit values
In 2021, there were 12 breaches, a decrease from 15 breaches in 2020.
The breaches were mainly related to wastewater and process waste, and all
had a limited impact on the environment. All breaches were reported to the
authorities.
Energy-saving projects implemented in 2021 within production sites
resulted in annual savings of 67,000 GJ.
Accounting policies
Breaches of regulatory limit values cover all breaches reported to the
environmental authorities.
In 2021, 100% of power sourced for production sites was from renewable
energy.
Accounting policies
Energy consumption for operations is measured as consumption of power,
steam, heat and fuel. The fuel is mainly from natural gas, wood, diesel oil,
gas oil and light fuel oil. Energy consumption is based on meter readings
and invoices.
Energy consumption in production and laboratories covers consumption of
power, steam, heat and fuel. Energy consumption in office buildings outside
Denmark is limited to the consumption of power.
7.4 CO2 emissions from operations and transportation
CO2 emissions from operations and transportation
1,000 tonnes
Production
Office buildings and laboratories
Product distribution
Business flights
Company cars
2021
2020
2019
39
8
71
10
46
37
8
61
19
45
86
13
80
65
62
Total CO2 emissions
174
170
306
Novo Nordisk has long-term targets of zero CO2 emissions from operations
and transportation by 2030 and net-zero emissions by 2045.
In 2021, total CO2 emissions from operations and transportation increased
by 2%. The increase was primarily due to a rise in emissions from product
distribution.
Scope 1 emissions increased by 3% due to a new production facility,
increased natural gas consumption caused by a general increase in
produced volumes and an increase in car fuel consumption.
Scope 2 emissions increased by 7% due to increased electricity and steam
consumption caused by a general increase in produced volumes.
Scope 3 emissions increased by 1% following a 16% increase in product
distribution, partially countered by a 47% decrease in emissions from
business flights due to COVID-19. The increase in emissions from product
distribution is primarily caused by increased use of air freight instead of sea
and road freight. CO2 reductions of 4,000 tonnes were incurred from green
fuel agreements with selected transportation service providers.
Accounting policies
Emissions are limited to CO2 emissions from energy and do not include
other greenhouse gases.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
88
CO2 emissions from operations (production, office buildings and
laboratories)
CO2 emissions from operations cover consumption of power, fuel, heat and
steam at office buildings in Denmark, global production sites and
laboratories, and consumption of power in office buildings outside Denmark.
Emissions are calculated according to the GHG Protocol and based on
emission factors from the previous year.
CO2 emissions from product distribution
CO2 emissions from product distribution are calculated by external
transportation suppliers as the estimated emissions from product
distribution in metric tonnes. CO2 emissions are calculated based on the
worldwide distribution of semi-finished and finished products, raw materials
and components by air, sea and road between production sites and from
production sites to subsidiaries, direct customers and importing
distributors. CO2 emissions from product distribution from subsidiaries to
pharmacies, hospitals and wholesalers are not included. Due to the lack of
reliable emissions data from specific freight forwarders, an estimated 3% of
trucking emissions are not included in the scope.
CO2 emissions from business flights
CO2 emissions from business flights are estimated based on mileage and
emission factors for short-, medium- and long-haul flights along with
passenger class obtained from travel agencies. Currently, 85% of emissions
from flights are calculated based on data provided by travel agencies. The
remaining 15% emissions are extrapolated based on the average CO2
emissions per employee.
CO2 emissions from company cars
CO2 emissions from company cars cover cars leased or owned by Novo
Nordisk. Emissions are calculated by multiplying emission factors by the
volumes of diesel and petrol used.
CO2 emissions by scope 1, 2 and 3
Scope 1 emissions comprise direct CO2 emissions from sources that are
owned or controlled by Novo Nordisk A/S.
Scope 2 emissions comprise CO2 emissions from purchased or acquired
electricity, cooling, heat and steam.
Scope 3 emissions only include CO2 emissions from business flights and
product distribution. Other Scope 3 categories, e.g. purchased goods
and services, capital goods, waste generated in operations and employee
commuting, are not included.
7.5 Waste from production sites
Waste from production sites
1,000 tonnes
Organic residues
Other (paper, cardboard, metals, etc.)
Total recycling
Ethanol waste
Other (various combustible waste)
Total waste with energy recovery
Water waste
Other
Total waste with no energy recovery
Total waste to landfill
Total waste
2021
2020
2019
143
8
151
13
9
22
5
2
7
1
108
8
116
9
6
15
5
4
9
1
89
8
97
13
5
18
5
3
8
1
181
141
124
In 2021, waste from production sites increased by 28% due to increased
production. 96% of the total waste was either recycled, used for biogas
production or incinerated at plants where energy is used for heat and
power production.
The amount of waste recycled increased by 30% from 116,000 to 151,000
tonnes primarily driven by the production in Kalundborg, Denmark.
The amount of waste sent for energy recovery increased by 47% from
15,000 to 22,000 tonnes, primarily due to increased production volumes
and challenges in ethanol regeneration. Less than 1% of total waste was
sent to landfill.
In 2021, as in 2020, 14% of the waste was categorised as hazardous waste.
Accounting policies
Waste is measured as the sum of all the waste disposed of at production
sites based on weight receipts. Organic residues for recycling are waste
from the production of the active pharmaceutical ingredients, where the
energy is recovered in biogas plants and the digested slurry is used on local
farmland as fertiliser. Ethanol is recovered in internal regeneration plants
and re-used. Energy recovery is waste disposed of at waste-to-energy plants
and at a biogas plant. Waste with no energy recovery covers water waste
and other waste not suitable for other disposal methods, such as hazardous
waste for incineration and various other types of waste.
Section 8
Social performance
8.1 Patients reached with Novo Nordisk's Diabetes
care products
The estimated number of full-year patients reached with Novo Nordisk's
Diabetes care products increased from 32.8 million in 2020 to 34.6 million in
2021. This 5% increase was primarily driven by growth in the GLP-1 franchise
which increased by 1.3 million patients followed by the new-generation
insulin franchise which grew by 0.7 million patients.
In 2021, the estimated number of patients reached with Novo Nordisk's
Diabetes care products through the Access to Insulin Commitment was 1.7
million. Novo Nordisk also sold human insulin below the ceiling price of USD
3 in countries outside the commitment, reaching an estimated additional
2.2 million patients in 2021. During 2020, the ceiling price was lowered from
USD 4 to USD 3 which affects the comparability of 2021 and prior years.
Comparing 2021 and 2020 using the current ceiling price of USD 3, the
result is an estimated increase of 40,000 patients reached in 2021. Using
the previous ceiling price of USD 4, an estimated 3.4 million patients were
reached in 2021 compared to 3.2 million in 2020. In addition to offering
insulin at a low price, supply chain improvements and capacity building are
also important levers in ensuring access to affordable care for vulnerable
patients.
Through the Changing Diabetes® in Children programme, 31,846 children
had been reached by the end of 2021, compared with 28,296 in 2020.
More than half of the 3,550 newly enrolled children were reached through
expansion of the programme in Ethiopia, Sudan, Kenya and Uganda.
Accounting policies
The number of full-year patients reached with Novo Nordisk's Diabetes care
products, excluding devices, is estimated by dividing Novo Nordisk's annual
sales volume by the annual usage dose per patient for each product class as
defined by the World Health Organization (WHO).
The number of full-year patients reached with Novo Nordisk's Diabetes care
products (human insulin in vials) via the Access to Insulin Commitment is
estimated by dividing Novo Nordisk's annual sales volume by the annual
usage dose per patient reached via the Access to Insulin Commitment as
defined by WHO.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
89
The WHO-defined daily dosage for these products may not accurately
reflect the recommended or prescribed daily dose. Actual doses are based
on individual characteristics (e.g. age and weight) and pharmacokinetic
considerations. Despite this uncertainty, Novo Nordisk assesses this to be
the most consistent way of reporting.
The rate of turnover is measured as the number of employees, excluding
temporary employees, who left the Group during the financial year divided
by the average number of employees, excluding temporary employees.
Employees working for Group companies that have been disposed of are not
counted as having left the Group.
master thesis students are not included. An occupational accident with
absence is any work-related accident causing at least one day of absence in
addition to the day of the accident.
The number of children reached with diabetes care treatment through
the Changing Diabetes® in Children programme is measured as the
total accumulated number of children enrolled since the initiation of the
partnership in 2009.
8.2 Employees
Employees
Number
North America Operations
2021
2020
2019
6,106
6,213
6,190
International Operations
42,372
39,110 37,068
– EMEA (Europe, the Middle East and Africa)
26,680
24,600 23,540
– of which in Denmark
19,150
17,538 16,747
– China (Mainland China, Hong Kong, Taiwan)
5,833
5,548
5,263
– Rest of World (all other countries)
9,859
8,962
8,265
Total employees
Full-time employees
48,478
45,323 43,258
47,792
44,723 42,703
8.3 Sustainable employer score
In 2021 the global employee survey was entirely redesigned to support
Novo Nordisk’s ambition to be a Sustainable Employer, which underpins
the broader Sustainable Business agenda. The new 21-item survey, Evolve,
is sharply focused on the most vital elements of the Sustainable Employer
ambition, provides greater differentiation of results, and is more actionable
for leaders and their teams.
The inaugural Evolve survey revealed that overall engagement is high at
84% favourable, and that Novo Nordisk scores in the top decile against
external organisations when it comes to providing a Purpose-driven
workplace. Opportunities for improvement include greater equality of career
opportunities, better work-life balance and clearer performance evaluations.
Accounting policies
The Sustainable employer score measures the average percentage of
favourable answers to the 18 engagement items in the survey. Favourable
answers are defined as "Agree" and "Strongly agree" to positively framed
questions. The survey is distributed through an external vendor.
The number of employees increased in most areas, with the highest growth in
Product Supply Quality & IT, partially countered by North America Operations.
8.4 Frequency of occupational accidents
The employee turnover rate increased from 7.9% in 2020 to 11.0% in 2021
which is comparable to turnover rates in years prior to COVID-19.
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.
Employees are attributed to geographical regions according to their
primary workplace across the commercial units, research and development,
production and support functions. Employees in corporate functions are
included in EMEA, and employees in Global Business Services in Bangalore,
India are included in Rest of World.
The average frequency rate of occupational accidents with absence was 1.3
accidents per million working hours in 2021, which is unchanged compared
to 2020. The increase of 6.5% in the number of occupational accidents with
absence (99 in 2021 compared to 93 in 2020) was counter-balanced by an
increase in the number of employees. In 2021, Novo Nordisk had zero (0)
work-related fatalities compared to one (1) in both 2019 and 2020. Novo
Nordisk works with a zero-injury mindset and has a long-term commitment
to continuously improving safety performance.
Accounting policies
The frequency of occupational accidents with absence is measured as the
internally reported number of accidents per million nominal working hours.
Contractors, visitors, employees on unpaid leave, interns, and bachelor and
8.5 Gender diversity
Gender in leadership positions
Ratio men:women
CEO, EVP, SVP
CVP, VP
Director, Manager, Team Leader
2021
72:28
63:37
57:43
2020
2019
76:24
82:18
64:36
66:34
58:42
59:41
Gender in leadership positions (overall)
57:43
59:41
60:40
Gender in senior leadership positions
64:36
65:35
67:33
Gender in the Board of Directors
67:33
62:38
62:38
The gender diversity in leadership positions overall at Novo Nordisk meets
the Danish gender diversity requirements. Gender diversity in leadership
positions overall increased from 41% in 2020 to 43% in 2021. Within senior
leadership positions, there was an increase from 35% in 2020 to 36% in
2021. Among employees as a whole, the gender split was 49% women and
51% men in 2021, the same as in 2020.
All management teams, from entry level upwards, are encouraged to focus
on enhanced diversity, with the aim of ensuring a robust pipeline of talent
for leadership positions. In 2021, a global aspirational target of achieving
a balanced gender representation across all managerial levels with a
minimum of 45% for both women and men in senior leadership positions by
the end of 2025 was introduced. Further information about the new target is
disclosed in 'Launching aspirational targets' on page 17.
As of 31 December 2021, two shareholder-elected Board members
were female and six were male. The 2024 target of having at least three
shareholder-elected Board members of each gender was thus not yet
met as a female Board member stepped down at the 2021 annual general
meeting, leaving the number of female Board members at two. Diversity
in the broadest sense remains a key focus area for the Board of Directors,
including in Board member searches. Further information about the Board
members is disclosed in the Corporate Governance Report.
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
90
Accounting policies
Diversity at Novo Nordisk is reported as the percentage split by gender in
leadership positions. Senior leadership positions are defined as employees
in the global job levels Chief Executive Officer (CEO), Executive Vice President
(EVP), Senior Vice President (SVP), Corporate Vice President (CVP) and
Vice President (VP). Overall leadership positions are defined as Directors,
Managers, Team Leaders and senior leadership positions.
Diversity at the Board of Directors is reported as the percentage split by
gender among all members, including employee-elected members.
8.6 Total tax contribution
Total tax contribution
DKK million
Corporate income taxes
paid
Employment taxes
Indirect taxes
Other taxes
Total
Taxes
borne
Taxes
collected
2021
2020
2019
14,438
3,952
18,390
13,577
14,392
1,893
1,506
751
8,947
10,840
9,588
1,106
2,612
2,497
—
751
714
9,638
2,610
887
18,588
14,005
32,593
26,376
27,527
The total tax contribution in 2021 amounted to DKK 32,593 million split with
57% on taxes borne and 43% on taxes collected. In 2020, the split was 52%
on taxes borne (DKK 13,676 million) and 48% on taxes collected (DKK 12,700
million).
The overall increase in total tax contribution from 2020 to 2021 is primarily
related to Corporate income taxes paid. In 2020 the calculated corporate
tax payable exceeded the prepayment of corporate income taxes in
Denmark. These additional corporate income taxes have been paid in 2021.
Furthermore, the profit before tax has increased for 2021, also resulting in
an increase in Corporate income taxes paid.
Accounting policies
Novo Nordisk's total tax contribution is measured as the taxes borne or
collected by Novo Nordisk, which have been paid in the respective year.
Taxes borne are defined as taxes where Novo Nordisk carries the cost. Taxes
collected are defined as taxes collected by Novo Nordisk on behalf of others,
e.g. employee income taxes deducted from the employee salaries and paid
on to the government.
Corporate income taxes paid
Corporate income taxes paid primarily consist of corporate income taxes
and withholding taxes on company dividends paid during the year.
Employment taxes
Employment taxes primarily consist of taxes collected from the employees
on behalf of the government and social security costs (part of payroll taxes
in some countries).
Indirect taxes
Indirect taxes consist of non-refundable VAT, net VAT collections, customs
duties, environmental taxes and property taxes.
Other taxes
Other taxes consist of country-specific taxes not linked to one of the
categories above, e.g. the US branded prescription drug (BPD) fee.
8.7 Donations and other contributions
Donations and other contributions
DKK million
World Diabetes Foundation (WDF)
Novo Nordisk Haemophilia
Foundation (NNHF)
Total donations and other
contributions
2021
92
—
92
2020
138
20
158
2019
86
19
105
The WDF, an independent trust, supports sustainable partnerships and
acts as a catalyst to help others do more. The amount granted to WDF has
decreased from DKK 138 million in 2020 to DKK 92 million in 2021 as the
donation in 2020 included a special one-off contribution of DKK 50 million.
In 2021, the WDF Board of Directors approved funding to 13 partnership
projects in 16 countries. See note 5.2 in the consolidated financial
statements and worlddiabetesfoundation.org for additional information.
Section 9
Governance
performance
9.1 Business ethics reviews and training
Accounting policies
The number of business ethics reviews is recorded as the number of
business ethics reviews performed by Group Internal Audit in subsidiaries,
production sites, vendors and headquarter areas.
The mandatory business ethics training is based on the Business Ethics
Code of Conduct in the form of globally applicable e-learning and related
tests released annually by the Novo Nordisk Business Ethics Compliance
Office. The percentage of employees completing the training is calculated as
the percentage of completion of training in both the Code of Conduct and
related tests based on internal registrations.
9.2 Supplier audits
Supplier audits
Number
Responsible sourcing audits
Quality audits
Total supplier audits
2021
2020
2019
16
237
253
7
170
177
27
209
236
The NNHF supports programmes in low- and middle-income countries.
Initiatives focus on capacity-building, diagnosis and registry, awareness and
advocacy. Novo Nordisk agreed to a donation of DKK 20 million to NNHF in
2021 but due to financial considerations from NNHF the donation was not
paid out. Since 2005, the NNHF has provided funding for 289 programmes
in 83 countries. See nnhf.org for additional information.
The number of audits concluded in 2021 increased by 43% compared to
2020. The increase represents an improved ability to conduct audits of
suppliers although the effects of COVID-19 continue to limit travel and
access to suppliers' facilities. One critical finding regarding credibility of
certificate of analysis has been issued during a qualification audit in 2021.
Consequently, Novo Nordisk has decided not to use the supplier in question.
Accounting policies
Donations and other contributions by Novo Nordisk to the WDF and the
NNHF are recognised as an expense when the donation or contribution is
paid out or when an unconditional commitment to donate has been made.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
91
Accounting policies
The number of supplier audits concluded by Novo Nordisk's Corporate
Quality function consists of the number of responsible sourcing audits and
quality audits conducted at suppliers.
9.3 Product recalls
Novo Nordisk had one product recall in the US in 2021 due to disbursement
of product samples without proper temperature monitoring.
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.
9.4 Failed inspections
In 2021, as in 2020, Novo Nordisk had no failed inspections among those
resolved at year-end. However, a contract manufacturer filling syringes for
Wegovy® failed an inspection causing disruption in the supply of Wegovy®.
During 2021, 97 inspections of Novo Nordisk were conducted, compared
with 77 in 2020. At year-end, 86 inspections were passed and 11 were
unresolved, as final inspection reports had not been received or the final
authority acceptance was pending, which is normal. Follow-up on unresolved
inspections continues in 2022.
Accounting policies
The number of failed inspections is measured in relation to inspections
by the US Food & Drug Administration (USFDA), the European Medicines
Agency (EMA), the Notified Body (TÜV SUD) and domestic authorities for
strategic manufacturing sites. Failed inspections are defined as inspections
where Warning Letters or EMA non-compliance letters related to GMP
inspections are received, GMP/ISO certificates for strategic sites are lost,
pre-approval inspections result in a Warning Letter, study conclusions
are changed due to GCP/GLP inspection issues, or marketing or import
authorisations are withdrawn due to inspection issues. Strategic sites are
defined as the manufacturing sites in Brazil, China, Denmark, France and
the US.
9.5 Facilitations of the Novo Nordisk Way
In 2021, a total of 34 units were facilitated and more than 1,600 employees
were individually interviewed. In addition, feedback on those units was
collected from approximately 500 stakeholders.
Overall, the 2021 process continues to show a good level of adherence to
the Novo Nordisk Way. 5 units were found to be in breach of one or more of
the Novo Nordisk Essentials. The Essential with the strongest performance
continues to be Essential 1 (We create value by having a patient-centred
business approach) and Essential 10 (We never compromise on quality and
business ethics. In 2021, partly driven by the focus on strengthening the
culture journey, significantly more findings were issued related to Essential 2
(We set ambitious goals and strive for excellence) and Essential 7 (We focus
on personal performance and development).
Accounting policies
Facilitations of the Novo Nordisk Way is measured as the number of
facilitations completed. It is an internal process for assessing adherence
to the Novo Nordisk Way. The assessments are based on review of
documentation and feedback from stakeholders followed by an on-site
visit during which randomly selected employees and management are
interviewed. Identified gaps and improvement opportunities related to the
Novo Nordisk Way are presented to and discussed with management. The
facilitators and management agree on an action plan to address those gaps
and improvement opportunities.
Company reputation is replacing the previous disclosure of company trust.
A new and more comprehensive approach to reputational intelligence was
launched in 2021 to cover more markets and stakeholders.
Accounting policies
The reputation score is based on four factors measuring esteem, admiration,
trust, and feeling of the stakeholders towards Novo Nordisk across ten key
markets: USA, Canada, Brazil, China, Japan, Germany, Italy, UK, France, and
Denmark. The data are collected through online surveys carried out by an
external consultancy firm. Responses are aggregated to produce an overall
score on a Likert scale of 1-7 which is rebased on a 0-100 scale.
9.7 Animals purchased for research
Animals purchased
Number
Mice, rats and other rodents
Pigs
Rabbits
Dogs
Non-human primates
Fish
Other vertebrates
2021
35,675
2020
2019
38,850
48,081
759
184
114
495
783
239
91
264
10,638
9,804
14
5
880
349
157
168
—
2
9.6 Company reputation
Total animals purchased
47,879
50,036
49,637
Company reputation
Scale 0-100
People with diabetes
People with obesity
General practitioners
Diabetes specialists
Informed general public
Total score (average)
2021
2020
2019
77.1
79.4
81.5
84.8
90.3
82.6
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
The number of animals purchased for research in 2021 decreased by 4.3%
compared with 2020 due to reduced usage of mice, rats and other rodents.
The overall development reflects the changes in stages of the different
research projects. The reduction in the number of rodents purchased
reflects Novo Nordisk's continuous focus on reducing the number of animals
per research project. 75% of the animals purchased were rodents and 22%
were fish.
Accounting policies
The record of animals purchased for research comprises the number of
animals purchased for all research undertaken by 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.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
92
Statement by the Board of Directors and
Executive Management on the 2021 Annual Report
The Board of Directors and the Executive Management have today
considered and approved the annual report for Novo Nordisk A/S for the
financial year 1 January 2021 - 31 December 2021.
operations and cash flows for the financial year 1 January 2021 -
31 December 2021.
The consolidated financial statements are presented in accordance with
International Financial Reporting Standards as endorsed by the EU.
The parent financial statements are presented in accordance with the
Danish Financial Statements Act. Further, the annual report is prepared in
accordance with Danish disclosure requirements for listed companies.
In our opinion, the management review contains a fair review of the
development of the Group's and the Parent’s business and financial
matters, the results for the year and of the Parent’s financial position and
the financial position as a whole of the entities included in the consolidated
financial statements, together with a description of the principal risks and
uncertainties that the Group and the Parent face.
Novo Nordisk’s Consolidated Environmental, Social and Governance
Statements have been prepared in accordance with the reporting principles
of materiality, inclusivity, responsiveness and impact of AA1000AP(2018)
and environmental, social and governance accounting policies. They give
a true and fair account and a balanced and reasonable presentation of
the organisation’s environmental, social and governance performance in
accordance with these principles.
We recommend the annual report for adoption at the Annual General
Meeting.
In our opinion, the consolidated financial statements and the parent
financial statements give a true and fair view of the Group’s and the Parent’s
financial position at 31 December 2021 as well as of the results of their
In our opinion, the Annual Report of Novo Nordisk A/S for the financial
year 1 January to 31 December 2021 identified as NOVO-2021-12-31.zip is
prepared, in all material respects, in compliance with the ESEF Regulation.
Bagsværd, 2 February 2022
Registered Executive Management
Board of Directors
Lars Fruergaard Jørgensen
President and CEO
Karsten Munk Knudsen
CFO
Helge Lund
Chair
Jeppe Christiansen
Vice chair
Laurence Debroux
Monique Carter
Martin Holst Lange
Andreas Fibig
Sylvie Grégoire
Mette Bøjer Jensen
Marcus Schindler
Camilla Sylvest
Kasim Kutay
Anne Marie Kverneland
Martin Mackay
Henrik Wulff
Henrik Poulsen
Thomas Rantzau
Stig Strøbæk
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
93
Independent
Auditor’s Reports
To the shareholders of Novo Nordisk A/S
Report on the Financial Statements
Opinion
We have audited the consolidated financial statements and the parent financial
statements of Novo Nordisk A/S for the financial year 1 January 2021 – 31 December
2021, which comprise the income statement, balance sheet, equity statement and notes,
including a summary of significant accounting policies, for the Group as well as the
Parent, and the statement of comprehensive income and the cash flow statement of the
Group (collectively referred to as the "Financial Statements"). The consolidated financial
statements are prepared in accordance with International Financial Reporting Standards
as endorsed by the EU and additional requirements of the Danish Financial Statements
Act, and the parent financial statements are prepared in accordance with the Danish
Financial Statements Act.
In our opinion, the consolidated financial statements give a true and fair view of the
Group’s financial position at 31 December 2021, and of the results of its operations
and cash flows for the financial year 1 January 2021 – 31 December 2021 in accordance
with International Financial Reporting Standards as endorsed by the EU and additional
requirements under the Danish Financial Statements Act.
Further, in our opinion, the parent financial statements give a true and fair view of the
Parent’s financial position at 31 December 2021, and of the results of its operations for
the financial year 1 January 2021 – 31 December 2021 in accordance with the Danish
Financial Statements Act.
Our opinion is consistent with our Long-form Auditor’s report issued to the Audit
Committee and the Board of Directors.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs)
and the additional requirements applicable in Denmark. Our responsibilities under those
standards and requirements are further described in the Auditor’s responsibilities for
the audit of the consolidated financial statements and the parent financial statements
section of this auditor’s report. We are independent of the Group in accordance with the
International Ethics Standards Board for Accountants’ International Code of Ethics for
Professional Accountants (IESBA Code) and the additional ethical requirements applicable
in Denmark, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, we have not provided any prohibited non-audit
services as referred to in Article 5(1) of Regulation (EU) No 537/2014.
We were appointed auditors of Novo Nordisk A/S for the first time on 25 March 2021 for
the financial year 2021.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial statements and the parent financial
statements for the financial year 1 January 2021 - 31 December 2021.
These matters were addressed in the context of our audit of the consolidated financial
statements and the parent financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Key audit matter
US sales rebates
Refer to notes 2.1 and 3.4 in the consolidated financial statements.
In the United States (US), sales rebates are paid in connection with public healthcare
insurance programmes, namely Medicare and Medicaid, as well as rebates to
pharmacy benefit managers (PBMs) and managed healthcare plans. Since January
2021, the Group no longer provides 340B statutory discounts to certain pharmacies
that contract with covered entities participating in the 340B Drug Pricing Program.
Revenue can only be recognized only to the extent that it is highly probable that a
significant reversal in the amount of revenue recognized will not occur, and give rise
to obligations which are provisioned and recorded as sales deduction at the time the
related sales are recorded.
The provision for sales rebates and discounts amounted to DKK 50,822 million as of
31 December 2021, a significant portion of which related to the US business.
The US sales rebates, including provisions related to the 340B Drug Pricing Program,
involved significant measurement uncertainty as the provisions are based on legal
interpretations of applicable laws and regulations, historical claims experience, payer
channel mix, current contract prices, unbilled claims, claims submission time lags, and
inventory levels in the distribution channel. Consequently, we considered this to be a
key audit matter.
Acquisition of Dicerna Pharmaceuticals, Inc.
Refer to notes 3.1 and 5.3 in the consolidated financial statements.
The Group completed the acquisition of Dicerna Pharmaceuticals, Inc. for DKK 22,034
million on 28 December 2021.
The preliminary fair value determination of the intangible assets required
Management to make significant estimates and assumptions related to future cash
flows and the selection of discount rates. Consequently, we considered this to be a key
audit matter.
How our audit addressed the key audit matter
We evaluated the appropriateness of the methodology and assumptions used to
develop sales rebates provisions, including provisions related to the 340B Drug
Pricing Program, by involving audit professionals with industry and quantitative
analytics experience to assist us in performing our auditing procedures.
We tested the effectiveness of controls relating to sales rebates, including controls
over the assumptions used to estimate these rebates.
We tested rebate claims processed, including evaluating those claims for consistency
with the conditions and terms of rebate arrangements.
We tested the overall reasonableness of the accruals recorded at period end by
developing an expectation for comparison to actual recorded balances.
We evaluated Management’s ability to estimate sales rebates accurately by
considering the historical accuracy of the estimates in prior year.
We tested the effectiveness of controls over the valuation of intangible assets,
including Management’s controls over forecasts of future cash flows and the
selection of discount rates.
We considered the impact of reasonably possible changes in key assumptions
affecting future forecasted cash flows and discount rates and performed sensitivity
calculations to quantify the impact of changes to Management’s forecasted future
cash flows and the selection of discount rates.
We evaluated the reasonableness of Management’s key estimates and assumptions
related to the forecasted future cash flows by comparing these assumptions to
historical results, relevant peer companies, and third-party industry reports.
With the assistance of our fair value specialists, we evaluated the reasonableness of
the (1) valuation methodology and (2) valuation assumptions by testing the source
information underlying the determination of the valuation assumptions and testing
the mathematical accuracy of the calculation.
Novo Nordisk Annual Report 2021
Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
94
Statement on management review
Management is responsible for the management review.
Our opinion on the consolidated financial statements and the parent financial statements
does not cover the management review, and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements and the parent
financial statements, our responsibility is to read the management review and, in
doing so, consider whether the management review is materially inconsistent with the
consolidated financial statements and the parent financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
Moreover, it is our responsibility to consider whether the management review provides
the information required under the Danish Financial Statements Act.
Based on the work we have performed, we conclude that the management review
is in accordance with the consolidated financial statements and the parent financial
statements and has been prepared in accordance with the requirements of the
Danish Financial Statements Act. We did not identify any material misstatement of the
management review.
Management's responsibilities for the Financial Statements
Management is responsible for the preparation of consolidated financial statements that
give a true and fair view in accordance with International Financial Reporting Standards
as endorsed by the EU and additional requirements of the Danish Financial Statements
Act as well as the preparation of parent financial statements that give a true and fair view
in accordance with the Danish Financial Statements Act, and for such internal control as
Management determines is necessary to enable the preparation of consolidated financial
statements and parent financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements and the parent financial statements,
Management is responsible for assessing the Group’s and the Parent’s ability to continue
as a going concern, for disclosing, as applicable, matters related to going concern, and
for using the going concern basis of accounting in preparing the consolidated financial
statements and the parent financial statements unless Management either intends to
liquidate the Group or the Entity or to cease operations, or has no realistic alternative but
to do so.
Auditor's responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated
financial statements and the parent financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with ISAs and the additional
requirements applicable in Denmark will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial
statements and these parent financial statements.
As part of an audit conducted in accordance with ISAs and the additional requirements
applicable in Denmark, we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:
– Identify and assess the risks of material misstatement of the consolidated financial
statements and the parent financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
– Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Group’s and the Parent’s internal
control.
– Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by Management.
– Conclude on the appropriateness of Management’s use of the going concern basis
of accounting in preparing the consolidated financial statements and the parent
financial statements, and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Group's and the Parent’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements and the parent
financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group and the Entity to
cease to continue as a going concern.
– Evaluate the overall presentation, structure and content of Financial Statements,
including the disclosures in the notes, and whether the Financial Statements represent
the underlying transactions and events in a manner that gives a true and fair view.
– Obtain sufficient appropriate audit evidence regarding the financial information of
the entities or business activities within the Group to express an opinion on the
consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to bear on our
independence, and, where applicable, safeguards put in place and measures taken to
eliminate threats.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the Financial Statements of
the current period and are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on compliance with the ESEF Regulation
As part of our audit of the Financial Statements of Novo Nordisk A/S, we performed
procedures to express an opinion on whether the annual report of Novo Nordisk A/S
for the financial year 1 January 2021 to 31 December 2021 with the file name NOVO-
2021-12-31.zip is prepared, in all material respects, in compliance with the Commission
Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF
Regulation), which includes requirements related to the preparation of the annual report
in XHTML format and iXBRL tagging of the consolidated financial statements.
Management is responsible for preparing an annual report that complies with the ESEF
Regulation. This responsibility includes:
– The preparing of the annual report in XHTML format;
– The selection and application of appropriate iXBRL tags, including extensions to the
ESEF taxonomy and the anchoring thereof to elements in the taxonomy, for financial
information required to be tagged using judgement where necessary;
– Ensuring consistency between iXBRL tagged data and the consolidated financial
statements presented in human readable format; and
– For such internal control as Management determines necessary to enable the
preparation of an annual report that is compliant with the ESEF Regulation.
Our responsibility is to obtain reasonable assurance on whether the annual report is
prepared, in all material respects, in compliance with the ESEF Regulation based on the
evidence we have obtained and to issue a report that includes our opinion. The nature,
timing and extent of procedures selected depend on the auditor’s judgement, including
the assessment of the risks of material departures from the requirements set out in the
ESEF Regulation, whether due to fraud or error. The procedures include:
– Testing whether the annual report is prepared in XHTML format;
– Obtaining an understanding of the Company’s iXBRL tagging process and of internal
control over the tagging process;
– Evaluating the completeness of the iXBRL tagging of the consolidated financial
statements;
– Evaluating the appropriateness of the Company’s use of iXBRL elements selected from
the ESEF taxonomy and the creation of extension elements where no suitable element
in the ESEF taxonomy has been identified;
– Evaluating the use of anchoring of extension elements to elements in the ESEF
taxonomy; and
– Reconciling the iXBRL tagged data with the audited consolidated financial statements.
In our opinion, the annual report of Novo Nordisk A/S for the financial year 1 January to
31 December 2021 with the file name NOVO-2021-12-31.zip is prepared in all material
respects, in compliance with the ESEF Regulation.
Copenhagen, 2 February 2022
Deloitte
Statsautoriseret Revisionspartnerselskab
Business Registration No 33 96 35 56
Anders Vad Dons
State-Authorised Public Accountant
mne25299
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
95
Independent Auditor's Assurance Report on the ESG statement
To Management and broader stakeholders of Novo
Nordisk A/S
Novo Nordisk A/S engaged us to provide limited assurance on the ESG statement
presented in the Annual Report of Novo Nordisk for the year ended 31 December 2021.
ethical requirements of the International Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants (IESBA Code), which is founded
on fundamental principles of integrity, objectivity, professional competence and due
care, confidentiality and professional behaviour, and ethical requirements applicable in
Denmark.
A limited assurance engagement is substantially less in scope than a reasonable
assurance engagement. Consequently, the level of assurance obtained in a limited
assurance engagement is substantially lower than the assurance that would have been
obtained had we performed a reasonable assurance engagement. Considering the risk
of material error, we planned and performed our work to obtain all information and
explanations necessary to support our conclusion.
Work performed
A. We are required to plan and perform our work in order to consider the risk of material
misstatement in the ESG statement. To do so, we have:
– conducted interviews with internal stakeholders to understand the key processes and
control activities for reporting data;
Our conclusion
Based on our work and the evidence obtained, nothing has come to our attention that
causes us not to believe that in all material respects:
– The performance data regarding Environment, Social and Governance, on pages from
85 to 91 in the report, have been stated in accordance with the reporting criteria;
– The description in the report adheres to the principles of inclusivity, materiality,
responsiveness and impact set out in AccountAbility’s AA1000AP (2018);
– The report has been prepared in accordance with the requirements of sections 99a,
99b, 99d and 107d of the Danish Financial Statements Act (FSA).
Observations and recommendations
According to AA1000AS, we are required to include observations and recommendations
for improvements regarding adherence to AA1000AP. We have no significant
recommendations regarding the principles of Materiality, Inclusivity, Responsiveness and
Impact. We have communicated to Management a number of minor recommendations
for improvement.
Our scope of work was limited to assurance that:
– The performance data regarding Environment, Social and Governance, on pages from
85 to 91 in the report, have been stated in accordance with the reporting criteria;
– Novo Nordisk’s description in the report adheres to the principles of inclusivity,
materiality, responsiveness, and impact set out in AccountAbility’s AA1000AP (2018);
– The report has been prepared in accordance with the requirements of sections 99a,
99b, 99d, and 107d of the Danish Financial Statements Act (FSA).
Management's responsibility
Management of Novo Nordisk is responsible for collecting, analysing, aggregating,
and presenting the information in the ESG statement, ensuring that data are free from
material misstatement, whether due to fraud or error. The Novo Nordisk accounting
policies and internal control documents contain Management’s defined reporting scope
for each data type. The criteria for accounting principles are contained within the ESG
statement.
Auditor's responsibility
Our responsibility is to express a limited assurance conclusion based on our engagement
with Management and in accordance with the agreed scope of work. We have conducted
our work in accordance with ISAE 3000 (Revised) Assurance Engagements Other than
Audits or Reviews of Historical Financial Information, ISAE 3410 Assurance Engagements
on greenhouse gas statements, and AA1000 Assurance Standard, AA1000AS (v3) Type
2 Moderate (which is the equivalent to ISAE 3000 limited assurance), and additional
requirements under Danish audit regulation.
We are responsible for:
– planning and performing the engagement to obtain limited assurance about whether
the consolidated ESG statement is free from material misstatement, whether due to
fraud or error;
– forming an independent conclusion, based on the procedures we performed and the
evidence we obtained; and
– reporting our conclusion to the Management and broader stakeholders of Novo
Nordisk A/S.
Deloitte Statsautoriseret Revisionspartnerselskab is subject to International Standard
on Quality Control (ISQC) 1 and, accordingly, applies a comprehensive quality control
system, including documented policies and procedures regarding compliance with
ethical requirements, professional standards and applicable legal and regulatory
requirements. We have complied with the requirements for independence and other
– obtained an understanding of the key processes and controls for managing, recording
Copenhagen, 2 February 2022
Deloitte
Statsautoriseret Revisionspartnerselskab
Business Registration No 33 96 35 56
Anders Vad Dons
State Authorised Public Accountant
mne25299
Helena Barton
Lead Reviewer
and reporting;
– performed limited substantive testing on a selective basis to check that data had been
appropriately measured, recorded, collated and reported;
– performed analysis of data that have been selected on the basis of risk and materiality;
– made inquiries regarding significant developments in the reported data;
– considered the presentation and disclosure of the ESG statement; and
– assessed that the process for reporting greenhouse gas emissions data follows the
principles of relevance, completeness, consistency, transparency and accuracy outlined
in The Greenhouse Gas Protocol Corporate Standard Revised edition (2004) and The
Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011).
B. Regarding alignment with the AA1000 accounting principles of Inclusivity, Materiality,
Responsiveness, and Impact we performed the following activities:
– interviewed members of Novo Nordisk’s Board of Directors and Executive Management
team, representatives of senior management at global and regional levels, as well
as key employees in Global Public Affairs and Sustainability to determine their
understanding of Novo Nordisk’s stakeholders, the mechanisms used to engage them
and key issues of interest to each stakeholder group;
– interviewed external stakeholder to determine their perception of Novo Nordisk’s
stakeholder engagement capabilities, and responsiveness to material concerns of
stakeholders;
– reviewed evidence on a selective basis to support the assertions made in these
interviews and in the stakeholder engagement description;
– confirmed the systems and procedures to support Novo Nordisk’s governance for
responsible business conduct and stakeholder relationships; and
– assessed the disclosure and presentation of the stakeholder engagement description.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
96
More information
Additional reporting
Novo Nordisk provides additional disclosure to satisfy legal requirements
and stakeholder interests. Supplementary reports can be downloaded from
novonordisk.com/annualreport, while additional information can be found at
novonordisk.com
Materiality
Novo Nordisk relies on the International Integrated Reporting Council’s
definition of materiality. Information deemed material for providers of
financial capital in their decision-making is included in the Annual Report, i.e.
of such relevance and importance that it could substantively influence their
assessments of Novo Nordisk’s ability to create value over the short, medium
and long term. See how Novo Nordisk determines materiality and material
issues at novonordisk.com
Annual Report
This Annual Report is Novo Nordisk’s full statutory Annual Report pursuant
to Section 149(1) of the Danish Financial Statements Act.
The statutory Annual Report will be presented and adopted at the Annual
General Meeting on 24 March 2022 and will subsequently be submitted to
and be available at the Danish Business Authority.
The Annual Report is prepared in accordance with the International Financial
Reporting Standards and the Danish Financial Statements Act. Moreover,
it meets the requirements of an integrated report, as per the International
Integrated Reporting Framework.
The Annual Report also meets the requirements for Communication on
Progress to the UN Global Compact, a voluntary reporting on performance
towards its 10 principles on human rights, labour rights, environment and
anti-corruption and additional progress reporting on corporate sustainability
leadership and UN goals. The Annual Report also adheres to the UN Guiding
Principles Reporting Framework on respect of human rights.
Form 20 F
The Form 20-F is filed using a standardised reporting form so that investors
can evaluate the company alongside US domestic equities.
It is an 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.
Credits
Design and production: Kontrapunkt.
Illustrations: &Robin.
Photography: Ashley Marie, David Brecetty, Gustavo Aranda Hernández, Jesper
Edvardsen, Jesper Westley, Kelly Mailloux, Martin Juul, Matt Pugh, Sala Lewis.
Remuneration Report
The Remuneration Report describes in accordance with section 139b of
the Danish Companies Act the remuneration awarded or due during 2021
to members of the Board and Executive Management registered with the
Danish Business Authority. The Remuneration Report is submitted to the
Annual General Meeting for an advisory vote.
Corporate Governance Report
The Corporate Governance Report discloses Novo Nordisk’s compliance with
Corporate Governance to meet the requirements of the Danish Financial
Statements Act.
References
Throughout the management review section in this report, links are provided
to online sources for additional information. Some of the references are not
mandatory and hence not included in the audit of the management review.
For more news from Novo Nordisk, visit
novonordisk.com/investors.html
novonordisk.com/news-and-media/latest-news.html
Disclaimer
The patients, employees and relatives portrayed in this Annual Report and
ancillary reports have participated of their own accord and solely to express
their own personal opinions on topics referred to, which do not necessarily
reflect the views and opinions of Novo Nordisk. Use of the pictures as
illustrations is in no way intended to associate the patients, employees or
relatives with the promotion of any Novo Nordisk products.
Novo Nordisk Annual Report 2021 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information
97
2022 financial calender
24 March 2022
Annual General meeting
28 March 2022
Record date
5 April 2022
Payment, ADRs
4 August 2022
Financial statement for the
first six months of 2022
15 August 2022
Record date
23 August 2022
Payment, ADRs
1 February 2023
Financial statement for 2022
and Annual Report 2022
25 March 2022
Ex-dividend
29 March 2022
Payment, B shares
4 May 2022
Financial statement for the
first three months of 2022
12 August 2022
Ex-dividend
16 August 2022
Payment, B shares
2 November 2022
Financial statement for the
first nine months of 2022
Product overview
Diabetes care
New-generation insulin and combinations
Tresiba®, insulin degludec
Ryzodeg® 70/30, insulin degludec/insulin
aspart Fiasp®, fast-acting insulin aspart
Xultophy®*, insulin degludec/liraglutide
Modern insulin
Levemir®, insulin detemir
NovoRapid®**, insulin aspart
NovoMix® 30, biphasic insulin aspart
NovoMix® 50, biphasic insulin aspart
NovoMix® 70, biphasic insulin aspart
Human insulin
lnsulatard®, isophane (NPH) insulin
Actrapid®, regular human insulin
Mixtard® 30, biphasic human insulin
Mixtard® 40, biphasic human insulin
Mixtard® 50, biphasic human insulin
Glucagon-like peptide-1
Victoza®, liraglutide
Ozempic®, semaglutide
Rybelsus®, oral semaglutide
Pre-filled delivery system
FlexTouch®, U100, U200
FlexPen®
InnoLet®
Ozempic® pen
Ozempic® Single dose device
Durable delivery systems
NovoPen® 6
NovoPen® 5
NovoPen® 4
NovoPen Echo® Plus
NovoPen Echo®
Other delivery systems
PumpCart®, NovoRapid® & Fiasp®
cartridge to be used in pump
Cartridge Vial
Oral antidiabetic agents
NovoNorm®, repaglinide
Glucagon
GlucaGen®, glucagon for diagnostic use
GlucaGen® Hypokit, glucagon emergency kit for
severe hypoglycaemia
Needles
NovoFine® Plus
NovoFine®
NovoTwist®
NovoFine® AutoCover®
Obesity care
Biopharm
Glucagon-like peptide-1
Saxenda®, liraglutide 3.0 mg
Wegovy®, semaglutide 2.4 mg, FlexTouch®
Obesity delivery systems
Saxenda® pen
Wegovy®, Single dose device, FlexTouch®
Other delivery system
PenMate®, automatic needle inserter
(for NordiPen® and NordiFlex®)
Hormone replacement therapy
Vagifem®, estradiol hemihydrate
Activelle®, estradiol/norethisterone acetate
Kliogest®, estradiol/norethisterone acetate
Novofem®, estradiol/norethisterone acetate
Trisequens®, estradiol/norethisterone acetate
Estrofem®, estradiol
Rare Blood Disorders
NovoSeven®, recombinant factor VIIa,
also available with pre-filled syringe in an
increasing number of countries
NovoEight®***, recombinant factor VIII
NovoThirteen®, recombinant factor XIII
Refixia®****, nonacog beta pegol; N9-GP
Esperoct®, turoctocog alfa pegol, NS-GP
Rare Endocrine Disorders
Norditropin®, somatropin (rDNA origin)
Sogroya®, somapacitan
Macrilen™, macimorelin; growth hormone
secretagogue receptor agonist
Human growth hormone delivery
system Pre-filled delivery system
FlexPro®
NordiFlex®
Nordilet®
NordiPen®
Durable delivery systems
Durable multi-dose delivery system to be
used with Norditropin® SimpleXx®
* In the US approved under the brand name Xultophy® 100/3.6 ** In the US called NovoLog® *** In the US spelt Novoeight® **** In the US approved under the name of REBINYN®
Novo Nordisk Annual Report 2021
98
Financial statements of the parent company 2021
The following pages comprise the financial statements of the parent company, the legal entity Novo Nordisk A/S. Apart from ownership of the subsidiaries in the Novo Nordisk Group, 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
Balance sheet
At 31 December
DKK million
Net sales
Cost of goods sold
Gross profit
Sales and distribution costs
Research and development costs
Administrative costs
Other operating income and
expenses
Operating profit
Profit in subsidiaries, net of tax
Financial income
Financial expenses
Profit before income taxes
Income taxes
Net profit
Note
2021
2020
DKK million
Note
2021
2020
DKK million
Note
2021
2020
2
3
3
3
3
8
4
4
112,553
100,940
Assets
(26,642)
(20,662)
Intangible assets
85,911
80,278
Property, plant and equipment
(30,021)
(26,673)
Financial assets
(15,244)
(14,524)
Deferred income tax assets
(1,976)
(1,913)
Other receivables and prepayments
6
7
8
5
1,032
39,702
16,879
2,415
(2,225)
56,771
(9,248)
47,523
1,976
39,144
10,394
2,144
(2,238)
49,444
(7,285)
42,159
Total non-current assets
Raw materials
Work in progress
Finished goods
Inventories
Trade receivables
Amounts owed by affiliated companies
Tax receivables
Other receivables and prepayments
Receivables
Marketable securities
Derivative financial instruments
9
Cash at bank
Total current assets
Total assets
9,110
27,007
71,564
228
—
107,909
3,754
10,899
2,131
16,784
2,128
13,200
695
2,967
18,990
5,904
1,690
8,870
52,238
Equity and liabilities
7,938
Share capital
462
470
25,322
43,598
—
218
77,076
2,781
10,647
2,246
15,674
1,523
15,893
—
2,353
19,769
Net revaluation reserve according to
the equity method
Development costs reserve
Reserve for cash flow hedge
Retained earnings
Total equity
Borrowings
Deferred income tax liabilities
Other provisions
Total non-current liabilities
Borrowings
Derivative financial instruments
Trade payables
Amounts owed to affiliated
companies
—
Tax payables
2,332
11,509
49,284
Other liabilities
Total current liabilities
Total liabilities
17,675
1,218
(1,600)
52,714
70,469
10,111
—
1,377
11,488
12,648
2,184
3,048
10
5
11
10
9
9,749
959
1,617
50,241
63,036
596
523
1,348
2,467
6,275
1,365
2,910
53,826
40,931
171
6,313
78,190
89,678
3,114
6,262
60,857
63,324
160,147
126,360
Total equity and liabilities
160,147
126,360
Novo Nordisk Annual Report 2021Financial statements of the parent company Equity statement
DKK million
Share
capital
Net
revaluation
reserve
Reserve for cash
flow hedges and
exchange rate
adjustments
Develop-
ment costs
reserve
Retained
earnings
Please refer to note 4.2 in the consolidated financial statements for details
on the average number of shares, treasury shares and total number of A
and B shares in Novo Nordisk A/S.
2021
2020
Development in share capital
Balance at the beginning of the year
470
9,749
1,617
959
50,241
63,036
57,432
99
Appropriated from net profit
Appropriated from net profit to net revaluation reserve
Exchange rate adjustments of investments in subsidiaries
6,312
1,614
Effect of cash flow hedges transferred to the income statement
Fair value adjustments of cash flow hedges for the year
10
(3,227)
17,500
17,500
6,312
1,624
24,995
(3,902)
(1,689)
(3,227)
1,940
—
—
—
—
DKK million
Beginning of 2017
Cancelled in 2017
Cancelled in 2018
Cancelled in 2019
Cancelled in 2020
Cancelled in 2021
259
(259)
1,904
1,904
(179)
Share capital at the end of the year
107
A share
capital
B share
capital
Total
share
capital
107
—
—
—
—
—
403
(10)
(10)
(10)
(10)
(8)
355
510
500
490
480
470
462
462
Development costs
Other adjustments
Transactions with owners:
Total dividend for the year
Interim dividends paid during the year
Dividends paid for prior year
Reduction of the B share capital
Purchase of treasury shares
Share-based payments (note 3)
Tax related to restricted stock units
Balance at the end of the year
Proposed appropriation of net profit:
Interim dividend for the year
Final dividend for the year
Appropriated to net revaluation reserve
Transferred to retained earnings
Distribution of net profit
(8)
23,711
(8,021)
23,711
(8,021)
21,066
(7,570)
(13,496)
(13,496)
(12,551)
8
—
—
(19,447)
(19,447)
(16,855)
383
190
383
190
327
22
462
17,675
(1,600)
1,218
52,714
70,469
63,036
8,021
15,690
6,312
17,500
47,523
7,570
13,496
(3,902)
24,995
42,159
Novo Nordisk Annual Report 2021Financial statements of the parent company 100
2021
2020
12,485
11,503
383
1,116
207
363
14,554
16,851
17,534
327
1,045
176
299
13,350
15,782
16,151
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 Holdings A/S.
2 Sales
DKK million
Sales by business segment
2021
2020
3 Employee costs
DKK million
Wages and salaries
Share-based payment costs
Pensions
Other social security contributions
Other employee costs
Total employee costs in the income
statement
Diabetes and Obesity care
112,347
100,741
Average number of full-time employees
206
199
Year-end number of full-time employees
Biopharm
Total sales
Sales by geographical segment
North America Operations
International Operations:
EMEA
China
Rest of World
Total sales
112,553
100,940
57,654
52,054
27,124
15,608
12,167
25,124
12,554
11,208
112,553
100,940
Sales are attributed to a geographical segment based on location of the
customer. For definitions of segments, please refer to note 2.2 in the
consolidated financial statements. Refer to note 5.7 in the consolidated
financial statements for an overview of companies in the Novo Nordisk
Group based on geographical areas.
For information regarding remuneration to the Board of Directors and
Executive Management, please refer to note 2.4 to the consolidated financial
statements.
4 Financial income and financial expenses
DKK million
Interest income relating to subsidiaries
Result of associated company
Foreign exchange gain (net)
Financial gain from forward contracts (net)
Other financial income
Total financial income
Interest expenses relating to subsidiaries
Result of associated company
Foreign exchange loss (net)
Financial loss from forward contracts (net)
Other financial expenses
Total financial expenses
2021
238
—
—
2,021
156
2,415
13
13
1,978
—
221
2,225
2020
263
21
1,751
—
109
2,144
137
—
—
1,777
324
2,238
Notes
1 Accounting policies
The financial statements of the parent company have been prepared in
accordance with the Danish Financial Statements Act (Class D) and other
accounting regulations for companies listed on Nasdaq Copenhagen.
The accounting policies for the financial statements of the parent company
are unchanged from the previous financial year except for implementation
of accounting policy related to goodwill. The accounting policies are the
same as for the consolidated financial statements with the adjustments
described below. For a description of the accounting policies of the Group,
please refer to the consolidated financial statements.
No separate statement of cash flows has been prepared for the parent
company; please refer to the statement of cash flows for the Group.
Supplementary accounting policies for the parent company
Financial assets
In the financial statements of the parent company, investments in
subsidiaries and associated companies are recorded under the equity
method, using the respective share of the net asset values in subsidiaries
and associated companies. The equity method is used as a measurement
basis rather than a consolidation method. The net profit of subsidiaries and
associated companies less unrealised intra-group profits and amortisation
of goodwill is recorded in the income statement of the parent company.
Goodwill is amortised over no more than 25 years which reflects the useful
life of the underlying assets and activities generating the goodwill.
To the extent that net profit exceeds declared dividends from such
companies, the net revaluation of investments in subsidiaries and associated
companies is transferred to net revaluation reserve under equity according
to the equity method. Profits in subsidiaries and associated companies are
disclosed as profit after tax.
Amounts owed by affiliates, where settlement is neither planned nor likely
within the foreseeable future, are treated as part of net-investments in
subsidiaries, with exchange rate adjustments recognised directly in equity
through reserve for cash flow hedges and exchange rate adjustments.
Novo Nordisk Annual Report 2021Financial statements of the parent company 5 Deferred income tax assets/(liabilities)
7 Property, plant and equipment
DKK million
2021
2020
Net deferred tax asset/(liability) at the beginning
of the year
Income/(charge) to the income statement
Income/(charge) to equity
Net deferred tax asset/(liability) at the end of
the year
(523)
(330)
1,081
95
(18)
(600)
DKK million
Cost at the beginning of the year
Additions during the year
Disposals during the year
228
(523)
Transfer from/(to) other items
Cost at the end of the year
The Danish corporate tax rate was 22% in 2021 (22% in 2020).
Depreciation and impairment losses at the beginning of the year
101
2021
2020
51,983
49,545
Land and
buildings
Plant and
machinery
Other
equipment
22,094
22,347
4,013
328
(108)
630
995
(145)
1,544
22,944
24,741
9,314
1,084
9
(95)
14,954
1,089
18
(145)
10,312
15,916
12,632
8,825
545
—
162
(34)
244
4,385
2,393
347
54
(34)
2,760
1,625
52
Assets
under
con-
struction
3,529
2,823
(9)
(2,418)
4,308
(296)
—
3,925
55,995
—
—
9
(9)
—
26,661
2,520
90
(283)
28,988
3,925
27,007
—
597
3,089
(651)
—
51,983
24,821
2,387
97
(644)
26,661
25,322
763
Depreciation for the year
Impairment losses for the year
Depreciation reversed on disposals during the year
Depreciation and impairment losses at the end of the year
Carrying amount at the end of the year
Of which related to leased property, plant and equipment
Leased property, plant and equipment primarily relates to lease of office buildings, warehouses, laboratories and vehicles.
6 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 and impairment losses reversed
on disposals during the year
Amortisation at the end of the year
Carrying amount at the end of the year
2021
11,077
1,560
(65)
12,572
3,139
289
34
—
3,462
9,110
2020
6,065
5,165
(153)
11,077
2,637
306
349
(153)
3,139
7,938
Intangible assets primarily relate to intellectual property rights, internally
developed software and costs related to major IT projects.
Novo Nordisk Annual Report 2021Financial statements of the parent company 102
The carrying amount of investments in subsidiaries does not include
capitalised goodwill at the end of the year. For a list of companies in the
Novo Nordisk Group, please refer to note 5.7 to the consolidated financial
statements.
Invest-
ments in
subsi-
diaries
Amounts
owed by
affiliated
companies
Invest-
ment in
associated
company
Other
securities
and invest-
ments
2021
2020
4,047
1,255
(989)
4,313
(245)
29,174
19,698
48,872
26,255
19,635
(2,006)
105
1,220
34,546
18,493
105
111
(13)
67
21,020
29,629
(590)
(1,579)
(13,576)
697
53,987
34,546
(452)
25,669
28,803
19,635
18,187
(13)
21
(2,006)
(3,748)
75
75
(171)
(11,050)
(4)
(11,054)
(16,785)
8 Financial assets
DKK million
Cost at the beginning of the year
Investments during the year
Divestments and repayments during the year
Cost at the end of the year
Value adjustments at the beginning of the year
Profit/(loss) before tax
Share of result after tax in associated company
Income taxes on profit for the year
Market value adjustment
Dividends received
Divestments during the year
Effect of exchange rate adjustment charged to the income statement
Effect of exchange rate adjustment charged to equity
Other adjustments
281
10
2,603
500
216
17
216
298
(3)
—
2,613
(3,103)
500
2,468
Value adjustments at the end of the year
35,937
46
94
(144)
35,933
25,669
Unrealised internal profit at the beginning of the year
Unrealised internal profit movements in the year
Effect of exchange rate adjustment charged to equity
Unrealised internal profit at the end of the year
Carrying amount at the end of the year
(16,617)
(750)
(989)
(16,617)
(13,420)
(750)
(989)
(4,045)
848
(18,356)
—
66,453
4,359
—
199
—
(18,356)
(16,617)
553
71,564
43,598
Novo Nordisk Annual Report 2021Financial statements of the parent company 103
9 Derivatives
13 Fee to statutory auditors
For information on derivative financial instruments, please refer to note 4.4
to the consolidated financial statements.
10 Borrowings
DKK million
Within 1 year
1-5 years
More than 5 years
Total borrowings
11 Other provisions
2021
12,648
5,282
4,829
2020
6,275
470
126
22,759
6,871
Provisions for pending litigations are recognised as other provisions.
For information on pending litigations, please refer to note 3.4 to the
consolidated financial statements. 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.
12 Related party transactions
For information on transactions with related parties, please refer to note 5.4
to the consolidated financial statements.
The parent company’s share of services provided by NNIT Group amounts to
DKK 490 million (DKK 638 million in 2020).
Novo Nordisk A/S is included in the consolidated financial statements of the
Novo Nordisk Foundation.
DKK million
Statutory audit
Audit-related services
Tax advisory services
Other services
Total fee to statutory auditors
14 Commitments and contingencies
DKK million
Commitments
Leases1
Potential milestone payments2
Guarantees given for subsidiaries
Other guarantees
2021
2020
8
2
2
2
14
8
3
5
1
17
2021
2020
117
11,978
19,141
112
137
6,794
8,490
101
1. Lease commitments predominantly relate to estimated variable property taxes and low
value assets.
2. Potential milestone payments are associated with uncertainty as they are linked
to successful achievements in research activities; please refer to note 5.2 to the
consolidated financial statements.
Novo Nordisk A/S and its Danish subsidiaries are jointly taxed with the
Danish companies in Novo Holdings A/S. The joint taxation also covers
withholding taxes in the form of dividend tax, royalty tax and interest tax.
The Danish companies are jointly and severally 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 3.4 and 5.2 to the consolidated financial statements.
Novo Nordisk Annual Report 2021Financial statements of the parent company