Novo Resources
Annual Report 2022

Plain-text annual report

Annual Report 2022 Erik Hageman (far right) is one of Denmark's longest-living people with type 1 diabetes, pictured here with his son Lars, who also has type 1 diabetes, and his grandchildren (from the left) Clara, Emilie and Holger Novo Nordisk A/S – Novo Alle 1, 2880 Bagsværd, Denmark – CVR no. 24256790 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 2 PAGE 03-51 Management review 03 Introducing Novo Nordisk 04 Letter from the Chair and the CEO 06 Novo Nordisk at a glance 07 Our value creation 08 Performance highlights 10 Strategic Aspirations 11 Purpose and sustainability (ESG) 27 Innovation and therapeutic focus 33 Commercial execution 36 Financials 44 Key risks 45 Risk management 47 Management 48 Board of Directors 51 Executive Management PAGE 52-103 Consolidated statements and additional information 54 Consolidated financial statements 54 Income statement and Statement of comprehensive income 55 Cash flow statement 56 Balance sheet 57 Equity statement 58 Notes to the consolidated financial statements 89 Consolidated ESG statement 89 Statement of Environmental, Social and Governance (ESG) performance 90 Notes to the consolidated ESG statement 98 Statements and Auditor's Reports 98 Statement by the Board of Directors and Executive Management 99 Independent Auditor's Report on the Financial Statement 101 Independent Assurance Report on the ESG statement 102 Additional information 102 More information 103 Product overview In 2022, we reduced CO2 emissions from operations and transportation by 29% compared to 2019 In 2022, close to 5.5 million patients were reached through our access and affordability initiatives Read more on page 13 Read more on page 15 Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 3 Introducing Novo Nordisk Letter from the Chair and the CEO 04 06 Novo Nordisk at a glance 07 Our value creation 08 Performance highlights Erik Hageman was diagnosed with type 1 diabetes at the age of two and is still going strong at the age of 83. Erik was treated at the Steno Memorial Hospital (later named Steno Diabetes Center), visible in the background Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 4 President and CEO, Lars Fruergaard Jørgensen (left) and Chair of the Board of Directors, Helge Lund (right) LETTER FROM THE CHAIR AND THE CEO Building on 100 years of purpose-driven growth Novo Nordisk’s centenary is a major milestone in the evolution of our company and underlines the longevity and value of our distinct purpose. For the last century, our company has been consistent in its overall mission to drive change to defeat diabetes and other serious chronic diseases. Today, the tools at our disposal are broader and more powerful than they were 100 years ago, when insulin had just been discovered. Yet the need for further innovation to realise our goal has never been greater, not least given the rise of obesity as one of the world’s Over the past year, we have seen continued strong growth and geopolitical environment, including the impact of war in foremost healthcare challenges. across both North America and International Operations and Ukraine, rising tensions in global trade and the continuing therapy areas. This was driven by exceptional demand for fallout from COVID-19. At a time of societal debate about purpose versus profit, our market-leading GLP-1 therapies. In turn, this increase Novo Nordisk shows how the two can go hand-in-hand. in demand led to further market share expansion for key Combined with higher than expected demand, temporary The development of our life-changing treatments creates products in both diabetes and obesity. financial rewards that are reinvested in further research and development, a model that we will continue to apply as we At the same time, however, we have experienced pressures build a sustainable business for the decades to come. and challenges from an increasingly difficult macroeconomic capacity limitations at some of our manufacturing sites have resulted in shortages of certain products, including Wegovy® for obesity and Ozempic® for type 2 diabetes. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 5 LETTER FROM THE CHAIR AND THE CEO Meeting patient demand is a top priority and we have is significant since Novo Nordisk has an unusually high Innovation itself depends on the creativity of our colleagues, invested around DKK 12.7 billion in 2022 alone to expand growth rate for a company of its size, necessitating increased which we will continue to nurture by making Novo Nordisk capacity while operating our global manufacturing facilities manufacturing and higher product shipments. a truly inclusive and diverse workplace. This will empower 24 hours a day, seven days a week. Like many other large employees to use all their capabilities while attracting the companies, we are restructuring our supply chains to However, in 2020, we were able to switch our global best talent to come and work with us. increase resilience in a volatile world. production network to sourcing 100% renewable power and we will continue to challenge ourselves in order to achieve Diversity is just as important in the boardroom as in our It is clear that economic challenges and the growing burden net-zero emissions across our entire value chain by 2045. We wider organisation, so we will continue to focus on having a of chronic, non-communicable diseases will place increasing will also continue to innovate to minimise the use of plastic Board of Directors with the right expertise and perspective to pressure on healthcare systems in the years ahead, requiring derived from fossil fuels in our pen devices, whether through guide us through a period of rapid change. We are delighted us to remain laser-focused on our purpose and strategy. recycling or the use of novel materials. by the election of Christina Law, whose deep experience in Progress on pipeline projects such as our once-weekly insulin icodec and the novel combination drug candidate CagriSema, for both obesity and diabetes, reflects our determination to break new ground. We are also addressing broader areas of unmet medical need by expanding our commitment to rare blood and endocrine disease and researching novel “Globally, we are serving a record of almost 40 million patients.” leadership positions in consumer-driven companies across Asia and beyond is and will be invaluable. The collaboration between the Board of Directors and Executive Management continues to be both trusting and transparent. The relationship grew further during a year in which we were able to increasingly meet each other in technology platforms. Globally, we are serving a record of almost 40 million patients. person and engage with Novo Nordisk colleagues applying However, there are still many people who struggle to access themselves tirelessly to delivering tomorrow’s healthcare This will involve continued investment in our company’s our life-changing products, even though more than 5 million innovation. deep in-house expertise, coupled with sourcing the best are reached through our access and affordability initiatives. science from outside, through partnerships and business Innovation has a role to play here as well. Our heat-stable We would like to thank all our colleagues around the world development. The acquisition of Forma Therapeutics in 2022, insulins, for example, will help to improve access in low- and for their dedication and hard work during a challenging year, a specialist in rare blood disorders, is a good example of this middle-income countries since they can be kept outside as well as our shareholders for their continued support. targeted approach. refrigeration for up to four weeks. Our teams are also increasingly applying novel technologies Our priority for the next 10 years is to advance scientific to improve the delivery of products, including the use of understanding and treatment options in our core therapy smart devices and digital tools to guide and optimise therapy. areas, while diversifying our pipeline into adjacent fields such as cardiovascular disease, non-alcoholic steatohepatitis Innovation is equally central in addressing the environmental (NASH) and rare blood disorders. This means looking beyond Helge Lund Lars Fruergaard Jørgensen and social challenges that rightly feature so highly in modern the success of products based on our leading GLP-1 molecule Chair of the Board President and CEO society’s expectations of businesses. The challenge we face semaglutide and adopting new technologies. of Directors Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 6 Novo Nordisk at a glance Novo Nordisk is a global healthcare company, headquartered in Denmark. Our key contribution is to discover and develop innovative biological medicines and make them accessible to patients throughout the world. Our corporate strategy Our business is built around our clear purpose: position within Rare Disease, and establish a driving change to defeat diabetes and other serious strong presence in other serious chronic diseases, chronic diseases. Our key contribution is to discover such as cardiovascular disease (CVD), non-alcoholic and develop innovative medicines and make them steatohepatitis (NASH), chronic kidney disease accessible to patients throughout the world. We (CKD) and Alzheimer’s disease (AD), and provide aim to strengthen our leadership and treatment curative therapies based on our cell therapy options in diabetes and obesity, secure a leading platform. 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 176,954 DKK million in net sales 55,185 employees worldwide 74,809 80 DKK million in operating profit countries with affiliates 57,362 5 DKK million in free cash flow countries with R&D facilities Rare Disease Secure a leading position by leveraging full portfolio and expanding into adjacent areas Our purpose Driving change to defeat diabetes and other serious chronic diseases S u stainable b u s i n e ss Other serious chronic diseases Establish presence by building competitive pipeline and scientific leadership Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 7 Our value creation Sustainable business We strive to be a sustainable business, creating value for society and for our future business. We do business in a financially, environmentally and socially responsible manner and we do this the Novo Nordisk Way. By succeeding, we will create long- term value for patients, employees, partners, shareholders and society. Resources Insights from patients, healthcare experts and partners g n i r u t c a f u n a M Financial resources Diverse talent Raw materials D i stribution Social How we create value Our purpose Driving change to defeat diabetes and other serious chronic diseases P a t i e n t s Research and devel o p m e n t 36.3 million patients reached with our diabetes care products 5.5 million patients reached via access and affordability initiatives 6,700 additional employees compared to 2021 DKK 36 billion total corporate tax contribution Environmental 29% reduction of CO2 emissions from operations and transportation compared to 2019 pre-pandemic levels Four countries have launched take-back initiatives to prevent pen devices from going into landfills Governance DKK 49.4 billion via dividends and share buy-backs were paid out to shareholders Reputation score of 82.3 points out of 100 measured across key stakeholders Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 8 PERFORMANCE HIGHLIGHTS Our strategic progress 2022 Highlights Purpose and sustainability (ESG) – Diabetes and haemophilia medications donated to the Ukrainian Ministry of Healthy – Positive scientific opinion from EMA on human insulin with more flexible storage Progress towards zero environmental impact: – Carbon emissions from operations and transportation decreased without refrigeration Strategic Aspirations 20251 1. Progress towards zero environmental impact 2. Being respected for adding value to society 3. Being recognised as a sustainable employer by 29% compared to 2019 Adding value to society: – Progress on Defeat Diabetes strategy – Medical treatment provided to 36.3 million people living with diabetes – Reaching more than 41,000 children in Changing Diabetes® in Children programme Innovation and therapeutic focus Further raise innovation bar for diabetes treatment: – Approval of Ozempic® 2.0 mg in the US – Successful completion of phase 3a trials with once-weekly insulin icodec – Successful completion of phase 2 trial with CagriSema in people with type 2 diabetes – Phase 1 trials with Ideal Pump insulin successfully completed – Phase 1 trial initiated with a once-daily oral GLP-1/GIP agonist and once-weekly oral semaglutide Develop superior treatment solutions for obesity: – STEP TEENs phase 3 trial successfully completed – Phase 3a initiation with CagriSema in people with obesity – Phase 1 initiation of oral amycretin Commercial execution Strengthen diabetes leadership to more than one-third: – Diabetes value market share increased by 1.8 percentage points to 31.9% (MAT) Financials Deliver solid sales and operating profit growth: – Sales growth at 16% (CER) – International Operations sales growth of 13% (CER) – US sales growth of 19% (CER) with 73% of sales coming from products launched since 2015 – Operating profit growth of 15% (CER) Being recognised as a sustainable employer – Share of women in senior leadership positions has increased to 39% from 36% in 2021 Strengthen and progress Rare Disease pipeline: – Concizumab phase 3 trials completed in people with haemophilia A and B 1. Further raise the innovation bar for diabetes treatment 2. Develop a leading portfolio of superior treatment with inhibitors and in people without inhibitors solutions for obesity – Dosing initiated in phase 3a trial with Mim8 – Phase 2 trial initiated with NDec in sickle cell disease – Acquisition of Forma Therapeutics to expand pipeline in sickle cell disease Establish presence in other serious chronic diseases: – Phase 2 trial initiated with NNC6019 in cardiomyopathy – Phase 1 trials initiated in NASH utilising the siRNA platform 3. Strengthen and progress the Rare Disease pipeline 4. Establish presence in other serious chronic diseases focusing on cardiovascular disease (CVD), non-alcoholic steatohepatitis (NASH) and chronic kidney disease (CKD) More than DKK 25 billion in Obesity sales by 2025: – Obesity care sales increased by 84% (CER) to DKK 16.9 billion Secure a sustained growth outlook for Rare Disease: – Rare Disease sales increased by 1% (CER) to DKK 20.5 billion Drive operational efficiencies: – Continued productivity gains in Product Supply Enable attractive capital allocation to shareholders: – Free cash flow of DKK 57.4 billion – DKK 49.4 billion returned to shareholders in 2022 1. Strengthen diabetes leadership – aim at global value market share of more than 1/3 2. More than DKK 25 billion in Obesity sales by 2025 3. Secure a sustained growth outlook for Rare Disease 1. 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) 2. Drive operational efficiencies across the value chain to enable investments in future growth assets 3. Deliver free cash flow to enable attractive capital allocation to shareholders 1. The strategic aspirations are objectives that Novo Nordisk intends to work towards and are not a projection of Novo Nordisk's financial outlook or expected growth. Novo Nordisk intends to describe how its activities develop in relation to each of the four dimensions on an ongoing basis. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 9 PERFORMANCE HIGHLIGHTS PERFORMANCE HIGHLIGHTS Financial highlights Financial highlights Sales and growth by geographic area (%) North America EMEA Growth at CER Region China Rest of World +21 52 +24 14 -6 9 25 +15 Sales and growth by therapeutic area (%) Diabetes care Obesity care Rare Disease Growth at CER +14 79 +1 12 +84 9 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 Sales and distribution costs in percentage of sales Research and development costs in percentage of sales Operating margin2 Net profit margin2 Cash to earnings1 ROIC1 Share performance and capital allocation 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 DKK3 Total dividend (DKK million)3 Dividend payout ratio2 Share repurchases (DKK million) Closing share price (DKK) 2018 2019 2020 2021 2022 111,831 122,021 126,946 140,800 176,954 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% 15.96 15.93 2,450 8.15 19,547 50.6% 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% 16.41 16.38 2,400 8.35 19,651 50.5% 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% 18.05 18.01 2,350 9.10 21,066 50.0% 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 25.7% 16.4% 74,809 27.6% 14.6% 7,362 (5,747) 69,062 19.6% 55,525 2,607 12,146 7,075 57,362 194,508 70,746 241,257 83,486 83.2% 26.3% 12.6% 41.7% 33.9% 61.4% 69.0% 20.79 20.74 2,310 10.40 23,711 49.6% 19,447 735 83.9% 26.1% 13.6% 42.3% 31.4% 103.3% 73.6% 24.51 24.44 2,280 12.40 27,950 50.3% 24,086 938 2021-22 Change 26% 28% 17% 16% 148% 92% (61%) 96% 24% 18% 18% 18% (1%) 19% 18% 24% 28% 1. See "Non-IFRS financial measures". 2. See "Financial definitions". 3. Total dividend for the year including interim dividend of DKK 4.25 per share, corresponding to DKK 9,613 million, which was paid in August 2022. The remaining DKK 8.15 per share, corresponding to DKK 18,337 million, will be paid subject to approval at the Annual General Meeting. Novo Nordisk Annual Report 2022 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 10 At the time of his diagnosis in 1942, Erik’s parents were told that he would only have a few weeks left to live, but luckily he received an August Krogh Medical Grant. This meant that he could be treated free of charge and thereby survive and live healthily Strategic Aspirations 11 27 33 36 Purpose and sustainability (ESG) Innovation and therapeutic focus Commercial execution Financials Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 11 Novo Nordisk's headquarter and a section of the Novo Nordisk Nature Park, Bagsværd, Denmark. The park holds a 100% water balance, which means that all rainwater falling in the area is collected and reused for irrigation of the park’s many large trees and diverse vegetation PURPOSE AND SUSTAINABILITY (ESG) PURPOSE AND SUSTAINABILITY (ESG) Delivering on sustainability The definition of what it means to be a sustainable business is constantly evolving and at its core is a commitment to add value to society and to our long-term business. This mission is embedded in our business, with environmental, social and financial responsibility having been anchored in our Articles of Association since 2004. We believe that sustainability is not only the right path to take for the communities we serve and the planet, it is also Strategic Aspirations 2025 Purpose and sustainability (ESG) an essential part of future-proofing our business. We are 1 2 3 Progress towards zero environmental impact Being respected for adding value to society Being recognised as a sustainable employer determined to further accelerate in this area as demands on corporations grow. Our position as a large healthcare company tackling serious chronic diseases places us on the frontline of many of today’s biggest challenges. We recognise the urgent need to both improve access to our medicines and reduce our environmental impact. Our work in areas from the development of heat-stable insulin for use in vulnerable settings to sourcing renewable power and plastic recycling marks significant milestones along these intertwined tracks. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 12 PURPOSE AND SUSTAINABILITY (ESG) Double materiality assessment In 2022, we performed a double materiality assessment aimed at prioritising our key Environmental, Social and Governance (ESG) topics. Double materiality was identified by assessing (1) how our activities impact society and the planet and (2) how society and the planet affect our activities financially. The overview of “Our key ESG topics” is based on the double materiality assessment. It is meant to inform our ESG reporting in the future and will be updated regularly. Overall, we aim to be respected for adding value to society, progressing towards zero environmental impact, being recognised as a sustainable employer and building trust across the E, S and G dimensions. Sustainability Advisory Council In April 2022, we launched our Sustainability Advisory Council, an external group of experts in social and environmental sustainability who provide us with outside-in perspectives on sustainability. The Council challenges us, providing constructive feedback on our current initiatives within sustainability and exploring opportunities for innovation going forward. The composition of the Council is available on our ESG Portal at novonordisk.com. Our key ESG topics Govern a n c e Corporate governance Energy consumption Risk management Culture & values Waste Supply chain management Bioethics Fair competitive practices Drug safety Data privacy F i nancial Affordability & pricing Novo Nordisk Society & planet E n v ir o n m e n t a l Greenhouse gas emissions Water & wastewater Resources & circular economy Health, safety & well being Innovation Access to medicines Impa c t Fair pay & social justice Sustainable tax Prevention of serious chronic diseases Diversity & inclusion Social Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 13 PURPOSE AND SUSTAINABILITY (ESG) / ENVIRONMENTAL Our environmental responsibility: zero environmental impact This year, we are introducing reporting of our full Scope 3 emissions, building on last year’s disclosure that was limited to business flights and product distribution. The calculation of Scope 3 emissions was substantially based on estimations and therefore inherently uncertain. With carbon emissions from fossil fuels continuing to rise, the warnings about global warming are becoming louder. Road towards net-zero emissions The message from the COP27 meeting in Egypt last year was There are inherent challenges in reducing emissions at a time clear: decisive action is needed now – particularly from the when demand for our life-changing medicines is growing private sector – if we are to turn the tide on climate change. rapidly, resulting in increased manufacturing and more product shipments. Nonetheless, by switching our global production We are accelerating the delivery of net zero health systems through collaboration As a sustainable business, it is our responsibility to reduce network to sourcing 100% renewable power and by leveraging our carbon emissions as swiftly as possible, meeting our biogas in two of our production sites, we have managed to target of reaching net-zero emissions by 2045. More near- term, we have pledged to reach zero emissions from our decrease production-related Scope 1 and 2 CO2 emissions by 8% (equal to around 3,000 tonnes) in the past year, and by 58% Decarbonising health systems through public- private partnerships operations and transportation by 2030. As we have reduced (equal to around 50,000 tonnes) compared to the pre-pandemic A promising partnership addressing supply chain Scope 1 and 2 CO2 emissions by 43% since 2019, 96% of our emissions are Scope 3, meaning they are not in our direct levels of 2019. However, CO2 emissions from operations and transportation were higher in 2022 than in 2021, partly challenges and overall decarbonisation of healthcare is the Sustainable Markets Initiative – Health control, but rather include in particular the consequences reflecting the impact of COVID-19 on 2021 activities (in 2022, Systems Taskforce. This public-private partnership of goods and services procured from our 60,000+ suppliers. Emissions from operations and transportation (1,000 tonnes CO2) Target 2030: zero emissions from operations and transportation 306 218 170 174 350 300 250 200 150 100 50 0 Company cars (Scope 1) Business flights (Scope 3) Product distribution (Scope 3) Office buildings and laboratories (Scope 1, 2) CO2 emissions from operations and transportation decreased by 29% compared to 2019), but especially due to increased brings together CEOs from leading organisations in the pharmaceutical sector, such as AstraZeneca, emissions from transportation, as supply chain constraints GSK, Merck KGaA, Roche, Sanofi, as well as the have forced us to increase our use of airfreight to ensure World Health Organization (WHO), UNICEF, NHS timely delivery of our medicines to patients globally. Due to England and leading health research institutions. our extensive supply chain, we have a target for all our 60,000+ While initiated by HRH King Charles III in the UK, the suppliers, to be reached by 2030, to source 100% renewable partnership is global in scope. power when supplying us. Already more than 500 of our key suppliers have committed to source renewable power, which By agreeing on a set of concrete commitments and has resulted in a saving of more than 30,000 tonnes of CO2 since 2019 (equal to 1% of our emissions in 2022). initiatives, launched ahead of COP27, the group seeks to harness its collective influence to urgently address the need to make the healthcare sector Partnerships will be an essential part of addressing the more sustainable. This entails overall efforts towards supply chain challenge. In 2022, we made alliances with decarbonisation, but also for prevention of disease Kuehne+Nagel and SkyNRG for Sustainable Aviation Fuel that onset and efficient delivery of care. 2019 2020 2021 2022 Production (Scope 1, 2) will reduce our emissions from air transport significantly. The Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 14 PURPOSE AND SUSTAINABILITY (ESG) / ENVIRONMENTAL Our Scope 1, 2 and 3 emissions Total emissions (1,000 tonnes CO2) Total of Scope 1, 2 and 3 emissions: 2,133 Target 2045: net-zero emissions Scope 1 Direct emissions from owned or controlled sources Scope 2 Indirect emissions from the generation of energy purchased from an utility provider Scope 31 All indirect emissions – not included in Scope 2 – that occur upstream and downstream in our value chain 76 16 2,041 Scope 1 and 2 emissions (1,000 tonnes CO2) Breakdown of Scope 3 emissions by categories of the GHG Protocol2 (%) 161 75 90 15 93 16 92 16 86 75 77 76 2019 2020 2021 2022 Purchased goods and services: 61.3% Capital goods: 23.4% Upstream transportation and distribution: 6.0% Fuel and energy related activities: 2.7% Business travel: 2.7% Downstream transportation and distribution: 1.8% Employee commuting: 1.7% Waste generated in operations: 0.2% End-of-life treatment of sold products: 0.1% 1. Scope 3 emissions are measured in CO2 equivalents (CO2e), except for Business travel. 2. For more information, please refer to section 6 and to note 7.4 on Scope 1, 2 and 3 emissions. collaboration with SkyNRG, for example, will enable us to cut CO2 emissions from airfreight by around 19,000 tonnes every year (equal to 1% of our emissions in 2022), starting in 2027. At the same time, as part of our target to reach zero emissions from our operations and transportation by 2030, we plan to shift our production sites towards biogas, derived from organic waste. We also aim to transition to 100% electric company cars by 2030. In both cases there are supply challenges. Biogas production is still in a growth phase, although major expansion is expected in the coming years, while the availability of electric vehicles and charging infrastructure remains limited in many countries. Stepping up to the plastic challenge Another priority in creating a business with zero environmental impact is minimising the use of plastic derived from fossil fuels. We produced more than 750 million pre- filled plastic pen devices in 2022, equal to approximately 13,000 tonnes of plastic, a figure that is set to grow as demand for our medicines increases. We are tackling the challenge through a series of parallel programmes, including efforts to reduce the amount of plastic we use by gradually shifting towards durable rather than pre-filled devices. We are also working to shift to non-fossil fuel plastics, for example by harnessing waste carbon and hydrogen from energy supply processes, including the use of carbon capture. Additionally, we have ramped up initiatives to stop our pen devices, classified as medical waste, from going into landfills. A take-back initiative in Denmark that reuses the plastic in these devices has now been expanded to a full-scale national solution, while new recycling pilots have been launched in the UK, France and Brazil. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 15 PURPOSE AND SUSTAINABILITY (ESG) / SOCIAL Our social responsibility: being respected for adding value to society Our purpose to defeat diabetes and other serious chronic diseases relies not only on innovation but also on ensuring that the right treatments reach patients in need. As such, we are committed to playing an active role in alleviating barriers to access, wherever they occur. Our ambition is to provide access to affordable care to vulnerable patients in every country. Through a combination of strategic initiatives and partnerships, we aim to help people access the care they need, no matter where they live. Improving access to life-changing care in low and middle-income countries The number of people with diabetes treated with our products now stands at 36.3 million, an increase of more than 1.7 million from 2021, and close to 5.5 million of these were reached via our access and affordability initiatives. We remain Hnin Eain Thu (left) has type 1 diabetes and is receiving care as part of the Changing Diabetes® in Children programme in Myanmar. Here portrayed with her sister dedicated to our Access to Insulin Commitment, which sets a (SEEMEA) and Latin America (LATAM) regions to benefit an opportunity to support access for vulnerable people living ceiling price of USD 3 per human insulin vial to governments vulnerable groups. in 76 countries, as part of our supply prioritisation. An estimated 1.8 million patients accessed care under this Working together with local health authorities, partners with diabetes. In April 2022, we obtained a positive European Medicines Agency (EMA) scientific opinion supporting the storage of our human insulins, Actrapid® and Insulatard®, commitment in 2022. Please refer to note 8.1 on Patients reached with Novo Nordisk's Diabetes care products. and civil society is a cornerstone of our approach to access, as exemplified by the Changing Diabetes® in Children outside refrigeration for up to four weeks, if kept below 30°C. The products have additionally received the WHO partnership. This programme has now reached 41,033 prequalification, which enables simpler order purchases In 2022, we also continued our efforts to identify vulnerable children with type 1 diabetes in low-resource countries, an by United Nations (UN) procurement agencies and other patients and provide them with access to healthcare and increase of almost 29% compared to last year, putting it on international organisations. Our two products are the first affordable insulin in countries where we operate. We have track to reach its goal of 100,000 children by 2030. human insulin products to ever obtain this prequalification. completed various vulnerability assessments, resulting in The challenge of providing access to affordable insulin is vast 25 plans being implemented across the Asia-Pacific (APAC), We challenge ourselves to pioneer innovative approaches and and rising to it requires long-term, multi-sector collaboration. Southern and Eastern Europe, Middle East and Africa processes, such as exploring the thermostability platform as We will continue to collaborate with partners to address Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 16 PURPOSE AND SUSTAINABILITY (ESG) / SOCIAL the key issues set out by the WHO in 2021. These include In 2022, we provided DKK 261 billion in discounts and rebates, regulatory challenges, device affordability and healthcare amounting to 75% of US gross sales (in line with 2021), to capacity building. secure formulary coverage for insured patients. Investing in formulary coverage leads to reasonable copays for many Access and affordability initiatives in the United States Improving access and affordability in the United States patients. But for some, the benefits fall short and for those Ensuring access to affordable healthcare is not only a that are un-insured or under-insured we continue to provide challenge in low- and middle-income countries. Some a broad suite of affordability offerings, having helped more patients in the US also struggle to pay for treatments, than one million patients afford their medications in 2022. including insulin, and we have a range of initiatives to help them. By limiting list price increases, securing broad As each patient’s affordability needs are different, we have formulary coverage and supporting affordability programs invested in enhancements to Novocare.com making it a for patients, we aspire to make our medicines more accessible and affordable, especially for those that are comprehensive and easy to use resource for patient access and affordability support. NovoCare® helps support one un-insured or under-insured. patient every ten seconds. Mandy Marquardt, a member of Team Novo Nordisk, is living with type 1 diabetes in the US My$99Insulin: 30-day supply of a combination of our insulin products (up to three vials or two packs of pens) for USD 99 for eligible patients. Unbranded Biologics: Unbranded versions of fast-acting (NovoLog®), premix (NovoLog® Mix) and long-acting (Tresiba®) insulins are available from Novo Nordisk Pharma, Inc. (NNPI), at considerable list price discounts versus branded versions. Human insulin: Available for about USD 25 per vial at national pharmacies, including Walmart and CVS. Over 752,000 people in the US continue to obtain our human insulin through these retailers. Patient Assistance Program: Offers free diabetes medication to people in need who meet certain eligibility criteria, including annual household income at or below 400% of the government-defined poverty level. Almost 63,000 people in the US received free insulin from this program in 2022. This was expanded during the pandemic to offer 90-day free insulin to those impacted by job loss due to COVID-19. Immediate Supply Program: A free, one-time, immediate supply of our insulin (up to three vials or two packs of pens) to eligible patients who may be at risk of rationing. Copay Savings Cards: Defray high out-of-pocket costs for commercially insured patients. In 2022, we provided around DKK 640 million in copay assistance for insulin to patients. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 17 PURPOSE AND SUSTAINABILITY (ESG) / SOCIAL Responding to humanitarian needs new funding for disease prevention must be identified. Over In Europe, the war in Ukraine has brought genuine hardship the past two years, the Cities Changing Diabetes partnership to people living with serious chronic conditions and we have has supported efforts to develop investment cases for responded with product donations, while striving to maintain prevention of disease. As an example, a third-party investor broad supply of our medicines. We have donated diabetes could dispose an upfront payment for the expansion of and haemophilia medications to the Ukrainian Ministry services, and if the agreed targets will be met, the city will of Health, and together with humanitarian organisations, save future costs, of which the investor would receive a share. we continue to monitor the situation to be able to provide further support. The first social impact bond in health in Denmark was issued by the city of Aarhus, with the aim of delivering an intensive As part of our humanitarian programme, we have prevention programme to 450 citizens living with type 2 also continued to supply insulins and glucagon kits to diabetes and at high risk of developing severe complications. humanitarian organisations in other parts of the world, This solution is anchored in a partnership between Novo “Driving change for healthy cities” launched at the Tour de France start in Copenhagen, 2022 Cities Changing Diabetes and C40 Cities collaborate on urban development reaching more than 210,000 people. Our partnership with Nordisk, local general practitioners, the Steno Diabetes Center Since 2015, we have been partnering with the the Red Cross, Partnering for Change, has reached its Aarhus and the relevant city administration departments. The climate organisation C40 Cities, with the purpose implementation phase in Lebanon, where our partners are initiative is based on implementing a mix of individual, family of testing and advocating for how cities can achieve integrating models for chronic care into their local activities. and community modules over 12 months, with two years increased climate and health benefits through In addition, we established the Senselet partnership in of follow-up. The reduction of blood sugar (HbA1c) will be urban investments. In 2019, this research-based Ethiopia, facilitating healthcare supply chain management. used as an indicator for the three-year payment and the partnership applied its learnings to the development first measurements will be available later in 2023. of a walking and cycling benefits Excel-based tool Strengthening our prevention efforts A further crucial pillar in our strategy to defeat diabetes A diverse and inclusive workplace that enables users to estimate the health, climate and economic benefits of urban investments aimed and other serious chronic diseases is prevention, which is Being a sustainable employer offering an inclusive and at shifting people’s mode of transport from inactive urgently needed given the growing burden of obesity and diverse working environment is an integrated part of being to active. Since then, more than 20 cities have used it. type 2 diabetes across all continents. Our long-standing Cities a sustainable business. In 2022, we were recognised as the Changing Diabetes programme continues to work with local best place to work at globally by "Best Places to Work". Building on this initiative, we are expanding partners in 45 cities across the globe on ways to prevent and the tool to improve its usability across new city- control diabetes and obesity. But we are also casting the We fundamentally believe that diversity of people and planning methods. These include the 15-minute net wider with new initiatives, such as an ambitious global inclusive leadership drive value for Novo Nordisk by city interventions, a recent concept that cities are partnership with UNICEF to prevent childhood overweight increasing innovation, enabling a diverse line of thought applying to increase proximity and thus decrease and obesity. and providing all employees with equitable opportunities emissions through less transport. We continue In OECD countries, less than 3% of healthcare budgets is dedicated to disease prevention. This provides evidence that to realise their potential. to facilitate the integration of health in cities’ climate work through our Cities Changing Diabetes network and drive change for a healthier and more sustainable society. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 18 PURPOSE AND SUSTAINABILITY (ESG) / SOCIAL Our aspirational targets We define balance as the range between 45%-55% to leave in hiring processes. At the end of 2022, 49% of all new leaders To underline our commitment to diversity and inclusion, up to 10% flexibility for women and men while also allowing were women, and 45% of all new senior leaders were women, accelerate progress and ensure leadership accountability, for non-binary gender, recognising that some employees may compared to 48% and 50%, respectively, at the end of 2021. we launched three global aspirational targets in 2021: not wish to be categorised. In addition, we are ensuring a strong pipeline of diverse – Create an inclusive culture where all employees have a talent and inclusive leaders via succession management and sense of belonging and equitable opportunities to realise Gender is only one dimension of diversity and we fully talent programs. their potential. recognise that diversity is any dimension that differentiates – Achieve a balanced gender representation across all our people and enables a diverse line of thought – for example To mitigate bias in pay processes and decisions, we conduct managerial levels. ethnicity, race, age, nationality, disability status or sexual – Achieve a minimum of 45% women and a minimum of 45% orientation. Due to legal constraints we currently do not have men in senior leadership positions by the end of 2025. consistent global measures on all the aspects of diversity. Women in leadership (%) 2018 2019 2020 2021 2022 EVP/SVP CVP VP Senior leadership Director Manager and team lead All leaders 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 29 40 40 39 44 45 44 yearly equal pay reviews and take actions in case of any identified pay gaps. Out of the more than 43,000 positions3 covered in the pay review in 2022, we identified 0.6% with an equal pay gap4 and we are taking corrective action. We are continuously challenging the customary ways of working and in early 2022, we launched a new global parental leave policy offering 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. Our leaders are held accountable We expect all our leaders to embrace their role as inclusive At the end of 2022, 44% of all leaders were women, and leaders by being committed to building diverse teams of 39% of leaders in senior leadership positions were women complementary strengths, valuing diverse skills, experiences compared to 43% and 36%, respectively, at the end of 2021. and perspectives and creating a psychologically safe space in which all employees feel free to speak up. Our aspirations in action To mitigate bias we are continuously reviewing our processes To measure the state of inclusion at Novo Nordisk, we have and policies throughout the employee life cycle. introduced our global “Inclusion Index” as part of our annual employee engagement survey. Of the more than 39,000 To increase recruitment of diverse profiles, we ensure a employees who completed the survey in 2022, 82% rated the diverse slate of candidates and diverse recruitment panels inclusion statements favourable, compared to 78% in 2021. 3. Excluding some populations and locations due to local regulations such as in the US, where a local process is in place. 4. "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 employees at the Pride parade in Copenhagen, 2022 Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 19 PURPOSE AND SUSTAINABILITY (ESG) / SOCIAL We recognise that there is no one-size-fits-all approach and As of 31 December 2022, the Board of Directors is regarded that diversity and inclusion challenges and opportunities vary depending on the local context and the societies that as having equal gender representation and is therefore not legally required to set a gender target for the Board.9 One of we serve. To ensure that we consider the local context, drive the most significant activities in 2022 to obtain equal gender impact at all levels and hold our leaders accountable for representation was the election of a female Board member at driving progress, all our senior leaders across the company the Annual General Meeting. As diversity remains important have been asked to define local diversity and inclusion for the Board, it has maintained a voluntary 2024 target of aspirations and associated action plans. having at least three shareholder-elected Board members who are men and three who are women. Finally, progress on diversity and inclusion has been anchored in both short-term and long-term incentive programmes and We have adopted a diversity and inclusion policy to increase the we follow up and track developments on a regular basis. share of the underrepresented gender in upper management. Statutory gender reporting under Danish law gender target are described on page 18. In 2022, the share of Listed companies are required to set a target for the share women in upper management at Novo Nordisk A/S was 38%, of the underrepresented gender on the Board of Directors. so we have not yet achieved the target level of 45% women in The policy's most significant activities aimed at reaching the upper management. The target is ambitious, however progress As of 1 January 2023, listed companies are also required has been made in 2022 compared to 2021 and we still believe to set a target as well as a policy for the share of the underrepresented gender in upper management.5 the target will be reached by 2025. Status and targets for the share of the underrepresented gender in Novo Nordisk A/S (2022)6 Sustainable tax approach Our overall guiding principle within taxation is to have a sustainable tax approach, emphasising our business-anchored approach to managing the impact of taxes while remaining true to the Novo Nordisk values of operating our business in a responsible and transparent manner. Our legal structures are based on business-anchored considerations and substance. Total / share of the underrepresented gender in % Target for the share of the underrepresented gender / target date Consequently, we pay tax where value is generated and always Board of Directors7 9 / 33% Not required respect international and domestic tax rules. As a global Upper management8 19 / 38% Min. 45% / 2025 transfer pricing regulations. We apply a "Principal structure" business, we conduct cross-border trading, which is subject to Rania Al Dairi, Associate Global Trial Manager, Novo Nordisk (Denmark) 5. Cf. the Danish Companies Act, section 139 (c). 6. Cf. the Danish Financial Statements Act. section 99(b). 7. Shareholder-elected Board members of Novo Nordisk A/S. 8. The upper management of Novo Nordisk A/S includes the chief executive officer and executive vice presidents employed by Novo Nordisk A/S as well as their direct reports, also employed by Novo Nordisk A/S, with leadership responsibility. 9. Cf. the Danish Companies Act, section 139(c)(1)(1). Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 20 PURPOSE AND SUSTAINABILITY (ESG) / SOCIAL Corporate income taxes by region – three year average 2020-2022 Share of category Significant activities Minor or no activities Intellectual property Region rights7 Production8 Sales9 Corporate income taxes (DKK billion) Total tax contribution (DKK billion) International Operations Denmark EMEA (ex Denmark) China Rest of World North America Operations The US 11.0 9.6 0.7 0.4 0.3 1.0 0.8 26.0 16.4 4.8 2.2 2.6 5.7 5.6 Total three year average 12.0 31.7 7. Intellectual property rights based on sales from where intellectual property rights are located. 8. Production based on number of production employees in the region. 9. Sales based on location of the customer. Respect for human rights 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 21 and our ESG Portal Jenica Leah is living with sickle cell disease in the UK in line with OECD principles, meaning all legal entities, except Pricing Agreements and similar tax rulings in place for at novonordisk.com). In 2022, the Corporate Human Rights for the principals, perform their functions under contract on geographies representing around 65% of our revenue Benchmark assessed Novo Nordisk. While it rated us number behalf of the principals. As a result, entities contracted by the worldwide. principals are being allocated an activity-based profit according one among the 30 largest companies in Denmark, we recognise our responsibility to continuously improve the quality and to a benchmarked profit margin. The tax outcome of this Our tax policy has been approved by the Board of Directors. effectiveness of our human rights due diligence across our operational model is reflected in the overview on the right, Read more about this at novonordisk.com. operations and business relationships. Our new global parental which shows our corporate income taxes by region. leave policy (page 18) is only one example of how we implement To ensure alignment between tax authorities regarding the taxes. Please refer to note 8.7 on Total tax contribution for regarding employees' rights, as defined in our Human Rights allocation of profit between our entities, we have Advance further information. Report (please refer to our ESG Portal at novonordisk.com). In addition to corporate income taxes, we also pay other our human rights commitment, particularly in this case Novo Nordisk Annual Report 2022 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 21 PURPOSE AND SUSTAINABILITY (ESG) / GOVERNANCE Our governance responsibility: maintaining and building trust Corporate Governance The objective of the Novo Nordisk Foundation is to provide a stable basis for the commercial and research activities of Governance structure Novo Nordisk, Novozymes and other companies, as well as to The shareholders of Novo Nordisk exercise their rights at the support scientific, humanitarian and social purposes. Please Annual General Meeting, which is the supreme governing refer to the illustration on this page, focused on how we At Novo Nordisk, we categorise governance into three body of the company. The general meeting inter alia adopts create value for society in conjunction with the Novo Nordisk dimensions. The first dimension is Corporate Governance the company’s Articles of Association, approves the Annual Foundation. For more information about the ownership which covers our governance and ownership structure. Report and elects the Board of Directors. structure of Novo Nordisk, see page 41. Governing Processes, the second dimension, refers to how we run our business. Sustainability Standards, which is about Any shareholder has the right to raise questions at general Corporate Governance reporting how we oversee and prioritise our sustainability and ESG meetings. Resolutions can generally be passed by a simple Novo Nordisk reports in accordance with the Danish agenda, is the third dimension. majority. However, resolutions to amend the Articles of Corporate Governance Recommendations designated by Extended value created by our ownership structure Extended value created by ownership structure Health Sustainability Life Science Ecosystem Grants awarded in three strategic areas Novo Nordisk Foundation Novo Holdings A/S DKK 49.4 billion paid out via dividends and share buy- backs to Novo Holdings A/S and other shareholders Novo Nordisk A/S Novozymes A/S +149 other companies Association require two-thirds of the votes cast and capital Nasdaq Copenhagen as well as the Corporate Governance represented, unless other adoption requirements are Standards of the New York Stock Exchange applicable to imposed by the Danish Companies Act. foreign private issuers. In 2022, Novo Nordisk complied with the Danish Corporate Governance Recommendations as Novo Nordisk has a two-tier management structure we either complied with or explained our approach to the consisting of the Board of Directors and Executive recommendations. You can find further information about Management. The governance structure and rules of Novo our corporate governance practices in our 2022 Corporate Nordisk are further described in our Articles of Association Governance Report, in accordance with section 107b of the and our Corporate Governance Report, both of which are Danish Financial Statements Act, available at: available at novonordisk.com. www.novonordisk.com/about/corporate-governance.html 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 2022 Novo Nordisk Foundation, holds the majority of votes at to the Board of Directors and Executives registered with general meetings. the Danish Business 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 the Remuneration Report strategies while maintaining short-term transparency on are available at: www.novonordisk.com/about/corporate- performance. Our foundation ownership supports the governance.html overarching imperative to be both commercially successful and responsive to the wider needs of society. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 22 PURPOSE AND SUSTAINABILITY (ESG) / GOVERNANCE Reporting on diversity is included in the social responsibility everyone lives up to the Novo Nordisk Way. In 2022, 36 section on pages 18 and 19, in note 8.5 on Gender diversity, facilitations and nine special assignments were completed. and for the Board of Directors, also in the Corporate Any issues are addressed locally and a consolidated Governance Report. Novo Nordisk’s diversity policy is report is shared with the Board of Directors and Executive available at www.novonordisk.com/sustainable-business/esg- Management. portal/principles-positions-and-policies/diversity-inclusion- policy.html Disclosure regarding change of control provisions The EU Takeover Bids Directive,10 as partially implemented In 2022, 5 units were found not to be operating in full accordance with the Novo Nordisk Way, a similar number to 2021. In most cases the root causes related to leadership competencies, style and behaviours not living up to by the Danish Financial Statements Act, requires listed the Novo Nordisk Way. Key improvement opportunities companies to disclose information that may be of interest were primarily linked to Essentials 2 and 5: a) leadership to the market and potential take-over bidders, in particular team’s ability to manage a larger and more complex in relation to disclosure of change-of-control provisions in organisation, b) lead units with a cohesive vision that is material contracts. clearly communicated and understood and c) successfully It is disclosed that Novo Nordisk does not have any material contracts that take effect, alter or terminate upon a change Company reputation implement organisational change. of control of Novo Nordisk following implementation of a The Novo Nordisk reputation score among key stakeholders takeover bid. (i.e., the informed general public, people with diabetes, people with obesity, healthcare professionals and diabetes In relation to the registered management of Novo Nordisk specialists) is an indicator of the extent to which we live up A/S, the current employment contracts allow for severance to societies' expectations. payments of up to 24 months' fixed base salary plus pension contributions in the event of a merger, acquisition or takeover We achieved a reputation score of 82.3 points in 2022, of Novo Nordisk. Governing Processes measured on a scale of 0-100. In line with 2021, we continue to enjoy a better reputation than our peers, underpinned by the quality of our products and services' perceptions, which are the most important reputational drivers. Novo Nordisk Way Business ethics The Novo Nordisk Way is a set of guiding principles, which Our approach to business ethics is acting with integrity and in underpin every decision we make. We use a unique, compliance with the Novo Nordisk Way, our Business Ethics systematic approach known as facilitation to ensure that Code of Conduct and international and local standards for 10. Directive 2004/25/EC. The Novo Nordisk Way: Essentials 1 2 3 4 5 6 7 8 9 We create value by having a patient centred business approach. We set ambitious goals and strive for excellence. We are accountable for our financial, environmental and social performance. We provide innovation to the benefit of our stakeholders. We build and maintain good relations with our key stakeholders. We treat everyone with respect. We focus on personal performance and development. We have a healthy and engaging working environment. We strive for agility and simplicity in everything we do. 10 We never compromise on quality and business ethics. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 23 PURPOSE AND SUSTAINABILITY (ESG) / GOVERNANCE responsible business conduct. Business ethics covers anti-fraud, anti-bribery, anti off-label promotion, transparency in dealing After implementing initiatives to improve the compliance level at the contract manufacturer site, the production of Wegovy® subject to the same robust governance that applies to our financial reporting. To ensure that the internal audit with healthcare professionals and healthcare organisations, the was resumed. In 2022, 150 inspections were conducted, function operates independently of Executive Management, protection of personal data, as well as respect for human rights compared to 97 in 2021. At year-end, 113 inspections were its charter, audit plan and budget are approved by the with the aim of minimising any potential risks to our patients, passed and 37 were unresolved, as final inspection reports Audit Committee. The Audit Committee must approve the business, people and stakeholders. had not been received or the final authority's acceptance was appointment, remuneration and dismissal of the head of Annual training in business ethics is mandatory for in 2023. Please see note 9.4 on Failed inspections for further all employees, including all new hires. In 2022, 99% of information. employees completed and documented their training, with the remaining 1% missing mainly due to employees being on In 2022, a total of 294 supplier audits were conducted Integrated reporting approach pending. Follow-up on unresolved inspections will continue the internal audit function. leave. In 2022, 35 business ethics reviews were completed to assess compliance levels with our supplier standards. Sustainability frameworks and performance with 98 findings, compared to 37 reviews with 129 findings We report on our ESG performance in accordance with in 2021. Consolidated findings are reported to Executive In 2022, we had 3 product recalls from the market. relevant disclosure frameworks, including those of the Carbon Management and the Audit Committee. Please see note 9.3 on Product recalls for further information. Disclosure Project (CDP) and the Value Reporting Foundation (VRF) / Sustainability Accounting Standards Board (SASB), Group Internal Audit assesses that the level of business ethics Financial and ESG assurance now part of the International Financial Reporting Standards compliance is sound. Management action plans and closure We are committed to ensuring the accuracy of our financial (IFRS) Foundation. This year, we augmented our disclosures of findings progressed as planned and there were no overdue and ESG reporting. Our financial reporting and the internal regarding the average list and net price of our US product management actions or findings at the end of 2022. controls of financial reporting processes are audited portfolio and US insulin portfolio by incorporating them into according to the Sarbanes-Oxley Act by an independent audit our ESG statement (please refer to note 8.6 on US pricing). We have implemented a set of data and artificial intelligence firm elected at the Annual General Meeting. As part of our ethics principles in our Global Ethics and Compliance ESG responsibility, we voluntarily include an Assurance Report We continue working on implementing recommendations Framework. These principles define Novo Nordisk’s ethical from an independent external auditor for ESG reporting in from the Taskforce on Climate-related Financial Disclosures data management across the Group and aim to promote a the Annual Report. The assurance provider reviews whether (TCFD), taking a stepwise approach to incorporating material sound and ethical data culture within Novo Nordisk and in the consolidated ESG statement is accurately presented. climate-related risk-assessments into our governance, all business partner relationships. Ethical data management strategy and execution on climate and environmentally includes transparency and accountability for decisions and Our internal audit function provides independent and related initiatives. As recommended, we work to identify, processes involving the use of data. objective assurance, primarily within internal control of assess and mitigate short-, medium- and long-term climate- financial processes, IT security and business ethics. As of related risks within our operations and supply chain, such as Product quality and supplier audits 2022, our internal audit function also provides assurance flooding, storm surges, earthquakes, tornadoes and wildfires At the end of 2021, the contract manufacturer filling syringes for Wegovy® failed an FDA inspection causing disruption in the supply of Wegovy® in 2022. within internal control of ESG reporting. As part of our ESG that could disrupt production. Annually, we map risk levels responsibility, the Audit Committee also oversees our ESG from lowest to highest risk. Based on the assigned risk level, reporting. We thereby ensure that our ESG reporting is mitigation plans are implemented at production site level. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 24 PURPOSE AND SUSTAINABILITY (ESG) / GOVERNANCE Shirley Stewart is living with type 2 diabetes in the US. She lived in New Orleans when Hurricane Katrina hit and destroyed everything 1.5°C We have been working with the Science Based Targets initiative (SBTi) for a number of years, where our CO2 emissions reduction targets for 2030 are validated in line with the target of limiting global warming to 1.5°C In addition to the TCFD, we have been working with the Science Based Targets initiative (SBTi) for a number of years, where our CO2 emissions reduction targets for 2030 are validated in line with the target of limiting global warming to 1.5°C. We disclose our climate and water performance based on the CDP annually, in the areas of governance, risks and opportunities, strategy and impact. This enables us to monitor our progress regarding environmental stewardship. We will publish further information on our adherence to selected frameworks on our ESG Portal at novonordisk.com on an ongoing basis. Please also refer to the consolidated ESG statement and to novonordisk.com for more information on our sustainability governance. Remuneration As described in the Remuneration Report, executive remuneration is linked to performance on financials as well as non-financials (e.g., innovation, sustainability). Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 25 PURPOSE AND SUSTAINABILITY (ESG) / GOVERNANCE Raters and rankers performance MSCI: MSCI’s ESG Rating is designed to measure a company’s resilience to long-term, industry-material ESG risks. Novo Nordisk maintained an AAA leadership ESG rating in line with the past five years. Sustainalytics: Sustainalytics' ESG Risk Ratings score the ESG performance of more than 12,000 companies from “negligible” to “severe”. Novo Nordisk ranked 132 out of 1,008 companies in the "Pharmaceuticals" industry group with a medium ESG risk. CDP: CDP scores companies from “D-“ to “A”. In 2022, Novo Nordisk maintained an “A” leadership ranking in CDP Climate and improved from a “B” to an “A-” leadership ranking in CDP Water. ATMI: The ATMI evaluates 20 of the world’s largest pharmaceutical companies in areas where they have the biggest potential and responsibility to effectuate change. Novo Nordisk ranked 11th, with the strongest performance in the governance of access area, where a score of 4.43 out of 5 was achieved. S&P CSA: S&P Global’s CSA drives corporate sustainability disclosures. At the end of 2022, Novo Nordisk ranked in the 87th percentile within its pharma peer group with a score of 58 (out of 100). The average score among our peer group was 29. Joseph Gagnon has a growth disorder and lives in Canada We strive to follow and adhere to international standards, recommendations and commitments including: Standards – Value Reporting Foundation / Sustainability Accounting Standards Board (now part of the International Financial Reporting Standards Foundation) – Taskforce on Climate-related Financial Disclosures – Science Based Targets initiative – World Economic Forum's "Core" Stakeholder Capitalism Metrics – World Economic Forum’s Good Work Framework Recommendations and 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 – Danish Corporate Governance Recommendations Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 26 PURPOSE AND SUSTAINABILITY (ESG) / GOVERNANCE EU Taxonomy The EU Taxonomy11 is a European sustainability classification 13% Taxonomy-eligible CapEx for two economic activities. plant and equipment assets. The OpEx KPI is defined as Given the ambiguity around evidencing Taxonomy alignment Taxonomy-eligible OpEx (numerator) divided by total OpEx framework. It enables corporates to communicate to and lack of required information to confirm adherence with (denominator). investors which of their business activities have the potential technical screening criteria, we do not have any Taxonomy to be considered sustainable (i.e., are “Taxonomy-eligible”) alignment to disclose this year. Double counting: or can in fact be considered sustainable (i.e., are “Taxonomy- aligned”). For each relevant business activity, the corporate Eligibility and alignment None of our activities contribute to multiple objectives. For the CapEx and OpEx allocations, we have identified the has to disclose how much of its Turnover, Operating We followed a two-step process to arrive at our present relevant purchases and measures as well as the primary Expenditures (OpEx) and Capital Expenditures (CapEx) can Taxonomy disclosures. Firstly, we screened the Taxonomy rules related economic activity in the Climate Delegated Act. be considered eligible and aligned, respectively. to create a list of economic activities that could potentially Thereby, we ensure that no CapEx or OpEx is double-counted. be eligible. The description of each economic activity was We are adjusting the R&D cost for amortisations in order not The EU Taxonomy’s currently published environmental assessed against how we perform the economic activity. to double count these costs, as the amortisation would also objectives on climate change mitigation and climate change Then, after applying materiality considerations, we decided have been part of CapEx in prior years. adaption do not directly apply to the pharmaceutical to report Taxonomy-eligible CapEx for economic activities 7.1 sector. However, we reviewed the relevant activities and and 7.2, i.e., regarding the construction of new buildings and Disaggregation of KPIs: assessed their applicability to our core business. Because the renovation of existing buildings, respectively. Secondly, Our identified economic activities do not require of the nature of our business activities, we do not have any we evaluated whether we could classify any of our Taxonomy- disaggregation of KPIs. Taxonomy-eligible Turnover. Regarding OpEx, we apply the eligible CapEx as Taxonomy-aligned. exemption and report this at zero. However, we can report Accounting policies CapEx: Contextual information about the CapEx KPI: Our Taxonomy-eligible CapEx pertaining to the construction of new buildings and the renovation of existing buildings EU Taxonomy eligibility and alignment Total CapEx consists of additions to fixed assets (including mainly relates to the expansion of production capacity by Financial lease) and intangible assets. Additions resulting either building new facilities or improving existing facilities from business combinations are also included. Goodwill is not to expand yield. Economic activity Turnover OpEx CapEx Hereof 7.1 Construction of new buildings Hereof 7.2 Renovation of existing buildings Total (DKK million) Eligible (DKK million) Eligible (%) Aligned (DKK million) Aligned (%) included in CapEx because it is not defined as an intangible 176,954 23,348 23,961 0 0 0 0 3,173 13% 1,166 5% 2,007 8% 0 0 0 0 0 0 0 0 0 0 asset in accordance with IAS 38. The CapEx KPI is defined as Looking ahead Taxonomy-eligible CapEx (numerator) divided by total CapEx We will keep focusing on the requirements of the evolving (denominator). OpEx: OpEx consists of direct non-capitalised costs that relate to research and development, building renovation, short- term lease, maintenance and repair and any other direct expenditures relating to the day-to-day servicing of property, EU Taxonomy as we expect future rules to also apply to our sector directly. 11. Regulation (EU) 2020/852. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 27 Anne-Sophie Weekes Hald, who has type 1 diabetes, is photographed with her two daughters INNOVATION AND THERAPEUTIC FOCUS A pipeline of far-reaching innovation As the burden of serious chronic diseases continues to rise, the need for better treatments remains urgent – and we are expanding our pipeline to meet this challenge. Thanks to the expertise of our in-house scientists and a growing network of external partners, we now have a wide range of opportunities to deliver disruptive innovation across multiple diseases. As we enter our 100th year, innovation remains our key contribution towards easing the human, social and economic suffering and burden caused by serious chronic diseases. It is also driving our evolution from a diabetes focused company to one with a broader remit encompassing other serious chronic conditions, such as obesity, cardiovascular disease (CVD), non-alcoholic steatohepatitis (NASH), chronic kidney disease (CKD) and rare diseases. Importantly, our reputation for pursuing high levels of innovation means we are increasingly recognised as a partner of choice for academic groups, biotech firms and technology companies. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 28 INNOVATION AND THERAPEUTIC FOCUS Over the past year, we have stepped up our partnering The extensive R&D efforts are delivering results. Our efforts, both through traditional disease-specific alliances increasingly diverse pipeline is expanding with the number and less conventional tie-ups. The latter include a strategic of early-stage drug candidates almost doubling over the partnership with Microsoft to accelerate R&D using artificial past three years. In late-stage development, we are focused intelligence and big data, as well as a collaboration with on expanding indications within our existing portfolio and Flagship Pioneering to leverage scientific expertise within continue to test the boundaries of what our molecules the venture firm’s portfolio of companies across obesity, are capable of in different dose strengths. The continuous cardiometabolic disease and rare diseases. optimisation of our drug development process also means that we expect to be able to progress our pipeline and projects much faster in the future without compromising safety or quality. 2.0 mg The launch of a 2.0 mg dose of our once- weekly GLP-1 injection Ozempic® in the US has increased options for patients Strategic Aspirations 2025 Innovation and therapeutic focus Further raise the innovation bar for diabetes treatment 1 2 3 4 Building on our core capabilities in protein and peptide We are excited by the potential of once-weekly insulin icodec, engineering by investing in digitalisation and next-generation which has successfully completed the phase 3 ONWARDS technology platforms – such as ribonucleic acid (RNA) programme, demonstrating superior reductions in blood interference, cell therapy and gene editing – will be pivotal glucose levels compared to once-daily basal insulin degludec to these endeavours. By focusing on new opportunities to and insulin glargine in insulin naïve people with type 2 leverage disease and patient data, we are working towards diabetes. offering patient-oriented solutions that fully integrate drug, device, digital, diagnostics and data. We believe that applying this "5D" approach across our early- and late-stage projects will deliver more convenient and better products and devices, The launch of a 2.0 mg dose of our once-weekly GLP-1 injection Ozempic® in the US has increased options for patients, while Rybelsus® is continuing to expand choice in benefiting both patients and wider society. the oral anti-diabetic space. Looking to the future, our new CagriSema experimental therapy for type 2 diabetes – a Develop a leading portfolio of superior Further raise the innovation bar for diabetes treatment combination of the established GLP-1 semaglutide and the treatment solutions for obesity A century on from first commercialising the production of long-acting amylin analogue cagrilintide – is set to enter phase insulin, we are continually raising the innovation bar for 3 development in 2023 following promising phase 2 results. Strengthen and progress the Rare diabetes treatment to help more of the growing number Disease pipeline of people around the world living with the condition. Our Develop a leading portfolio of superior treatment Establish presence in other serious chronic diseases focusing on cardiovascular disease (CVD), non- alcoholic steatohepatitis (NASH) and chronic kidney disease (CKD) next-generation injectable and oral GLP-1-based medicines solutions for obesity offer hope for millions, while digital tools are providing new levels of support for people with diabetes in meeting their We are making meaningful advances in addressing obesity, with the launch of Wegovy®, helping to change the narrative treatment goals. by redefining obesity as a treatable chronic disease. The disproportionate impact of COVID-19 on people living with Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 29 INNOVATION AND THERAPEUTIC FOCUS obesity has underscored the need for better treatments (PKR) activator designed to improve anaemia and red blood that can deliver substantial and sustained weight loss. cell health in people with these life-threatening conditions. Our pipeline contains investigational therapies that we Meanwhile, we are optimising our competitive late-stage pipeline, which includes Sogroya®, a next-generation once- believe may have even greater efficacy, offering even greater weekly growth hormone, as well as concizumab and Mim8 levels of weight loss. This includes the aforementioned for haemophilia. combination therapy CagriSema, which has now also commenced large-scale phase 3 trials in obesity. Cagrilintide Establish presence in other serious chronic diseases works by reducing appetite by targeting specific parts of the focusing on cardiovascular disease (CVD), non-alcoholic brain, thereby providing an additive effect to semaglutide. steatohepatitis (NASH) and chronic kidney disease (CKD) The large patient overlaps between diabetes, obesity and In addition, we are continuing a phase 3 study of 50 mg other cardiometabolic disorders mean that we are well-placed once-daily oral semaglutide as a potential additional to leverage our extensive experience to build a presence in treatment option in obesity. adjacent areas. This plan is gaining traction as we look at both internal and external innovation to expand into new Strengthen and progress the Rare Disease pipeline therapeutic areas, such as CVD, Alzheimer’s disease and NASH. We are expanding into new areas and advancing the development of key products within our Rare Disease Our first standalone CVD asset, ziltivekimab, is currently unit – comprising treatments for rare blood, rare renal in phase 3 development for atherosclerotic cardiovascular and endocrine disorders – in a strategy to grow existing disease (ASCVD), CKD and high inflammatory burden. operations and expand the core business. In Alzheimer’s disease, an area of huge unmet need with an This includes the initiation of phase 3 development of Mim8, estimated global patient population of around 100 million a next-generation subcutaneous prophylactic treatment for people, we are investigating the efficacy and safety of oral haemophilia A, as well as the submission of nedosiran, an semaglutide 14 mg in people in the stages of mild cognitive advanced RNA interference (RNAi) drug candidate developed impairment and mild dementia. for the treatment of primary hyperoxaluria (PH), a rare inherited condition affecting the kidneys and the liver. We are also addressing one of the major challenges of treating NASH, which is often referred to as a “silent” liver We have also strengthened our presence in disease because patients rarely exhibit symptoms in the early haemoglobinopathies, including sickle cell disease (SCD) and stages of progression. To address this problem, we have thalassemia, with the acquisition of Forma Therapeutics. partnered with diagnostic specialist Echosens to increase Forma Therapeutics' lead product etavopivat is an awareness and advance early diagnosis of the condition, investigational oral, once-daily selective pyruvate kinase R which is estimated to affect up to 6.5% of people worldwide. CagriSema The combination therapy CagriSema has now also commenced large-scale phase 3 trials in obesity. Cagrilintide works by reducing appetite by targeting specific parts of the brain, thereby providing an additive effect to semaglutide Ole Therkildsen is living with chronic heart failure in Denmark Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 30 INNOVATION AND THERAPEUTIC FOCUS Pipeline overview Diabetes care Rare Disease Project Indication Description Phase Project Indication Description Phase Oral semaglutide HD1 NN9924 Type 2 diabetes 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 basal insulin analogue icodec intended for once-weekly treatment. A combination of semaglutide and a long acting GIP analogue intended for once-weekly treatment. A combination of amylin analogue cagrilintide and GLP-1 analogue semaglutide intended for once-weekly treatment. Glucose-sensitive insulin NN1845 Type 1 and 2 diabetes A glucose-sensitive insulin analogue intended for once-daily treatment. Pumpsulin NN1471 DNA Immunotherapy NN9041 Oral GLP-1 GIP NN9541 OW Oral Semaglutide NN9904 SemaDapa FDC NN9917 Type 1 diabetes Type 1 diabetes Type 2 diabetes Type 2 diabetes Type 2 diabetes SOMA oral device DV3395 Type 1 and 2 diabetes A novel insulin analogue ideal for use in a closed loop pump device. A novel plasmid encoding pre- and pro-insulin intended for preservation of beta cell function. A combination of GLP-1/GIP co-agonist intended for once-daily oral treatment. A pro-drug of semaglutide intended for once-weekly treatment. A fixed dose combination of oral semaglutide and dapagliflozin, a SGLT2 inhibitor. A device for the oral delivery of peptides and proteins. Obesity care Oral Sema Obesity NN9932 CagriSema NN9838 PYY1875 NN9775 Oral Amycretin NN9487 Obesity Obesity Obesity Obesity A long acting GLP-1 analogue intended for once-daily treatment. A combination of amylin analogue cagrilintide and GLP-1 analogue semaglutide intended for once-weekly treatment. A novel analogue of the appetite-regulating hormone, PYY, intended for once-weekly treatment. A long-acting co-agonist of GLP-1 and amylin intended for once-daily oral treatment. 2021 2022 Phase 1 Phase 2 Phase 3 Submission and/or approval Somapacitan NN8640 Concizumab NN7415 Nedosiran NN7022 Mim8 NN7769 Etavopivat NN7535 NDec NN7533 GHD2 A long-acting HGH3 derivative intended for once- weekly subcutaneous administration in children. Haemophilia A or B w/wo inhibitors A monoclonal antibody against tissue factor pathway inhibitor (TFPI) intended for subcutaneous prophylaxis. Primary Hyperoxaluria An siRNA targeting lactate dehydrogenase A (LDHA) for once-monthly subcutaneous treatment. Haemophilia A w/wo inhibitors A next generation FVIII-mimetic bispecific antibody for subcutaneous prophylaxis of haemophilia A regardless of inhibitor status. Sickle cell disease Sickle cell disease Second generation selective, small molecule PKR- activator intended for once-daily oral administration. An oral combination of decitabine and tetrahydrouridine. Project is developed in collaboration with EpiDestiny. Other serious chronic diseases Semaglutide7 NN9931 NASH4 A long-acting GLP-1 analogue for once-weekly subcutaneous treatment. Semaglutide Alzheimer NN6535 Alzheimer's A long-acting GLP-1 analogue for once-daily treatment. Ziltivekimab NN6018 Belcesiran NN6021 FGF21 NASH NN9500 ATTR-CM NN6019 DCR-AUD NN6020 LXRa NN6582 MARC1 NN6581 CVD5 AATD6 NASH4 CVD5 A 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 FGF21 analogue for once-weekly treatment. An anti-amyloid immunotherapy treatment. Alcohol Use Disorder An siRNA targeting ALDH2 for once-monthly subcutaneous treatment. NASH4 NASH4 An siRNA targeting LXRa for once-monthly subcutaneous treatment. An siRNA targeting MARC1 for once-monthly subcutaneous treatment. 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. This project also includes a phase 2b study in F4 in collaboration with Gilead. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 31 INNOVATION AND THERAPEUTIC FOCUS Research and development progress Diabetes care Regulatory events Obesity care Regulatory events Rare Disease Regulatory events Other serious chronic diseases Clinical progress – Ozempic® 2.0 mg was approved by the EMA. – Wegovy® was approved in the EU as an adjunct to – NovoSeven® was approved for use in women with – Phase 2 trial investigating antibody ATTR- – Market authorisation application was submitted to the NMPA for approval of Rybelsus® for treatment of adults with type 2 diabetes (T2D). – Actrapid® and Insulatard® were included in WHO prequalification list of essential medicines. – Label extension for Insulatard® and Actrapid® received positive opinion from the EMA increasing the non-refrigerated storage time. Clinical progress – Phase 3a programme, ONWARDS, investigating basal insulin icodec in people with type 1 (T1D) and type 2 diabetes (T2D), was completed. – Phase 2 trial investigating the effects of the combination of semaglutide and cagrilintide in people with T2D was completed. – Phase 2 trial investigating the effects of 8.0mg and 16.0mg semaglutide administrated subcutaneously in people with T2D was initiated. – Phase 1 trial investigating Pumpsulin for treatment of T1D was completed. – Phase 1 trial investigating the effects of the fixed dose combination of semaglutide and GIP in people with T2D was completed. – Phase 1 trial investigating the effects of the combination of semaglutide and SGLT2i inhibitor dapagliflozin in people with T2D was initiated. – Phase 1 trial investigating once-weekly oral semaglutide for treatment of T2D was initiated. – Phase 1 trial investigating the SOMA device for oral treatment currently done by tablets was initiated. – Phase 1 trial investigating the effects of insulin 965 in T2D was completed. The project was terminated. – Phase 1 trial investigating oral GLP-1/GIP co-agonist for treatment of T2D was initiated. diet and exercise for the use of weight management in adults with obesity. – Wegovy® was approved in the US for the treatment of obesity in teens aged 12 years and older, making it the first-and-only prescription anti- obesity medicine for adolescents with once-weekly treatment. Clinical progress – Phase 3a programme, REDEFINE, investigating once-weekly combination of cagrilintide and semaglutide in people with obesity was initiated. – Following interim analysis, the SELECT cardiovascular outcome trial continues in accordance with the trial protocol. severe postpartum hemorrhage by the EMA. – Marketing authorisation application was submitted to the FDA and PMDA for the approval of concizumab for treatment of haemophilia A or B with inhibitors. – Marketing authorisation application was submitted to the FDA for approval of nedosiran for treatment of primary hyperoxaluria. – Marketing authorisation application was submitted to the EMA, FDA and PMDA for approval of somapacitan for treatment of growth hormone deficiency in children. – REBINYN® was approved for prophylactic use in the treatment of haemophilia B by the FDA and for pediatric prophylaxis by Health Canada. – Phase 1 trial investigating once-daily oral amycretin for the treatment of obesity was initiated. Clinical progress – Phase 1 trial for long-acting GDF15 analogue was – Phase 3a trials investigating concizumab CM in people with rare heart disease ATTR cardiomyopathy was initiated. – Phase 2 trial investigating the dose response of oral PCSK9i was completed. The project was terminated. – Phase 1 trial investigating the siRNA MARC1 for treatment of NASH was initiated. – Phase 1 trial investigating the siRNA LXRa for treatment of NASH was initiated. – Collaboration with Staten Biotechnology was terminated. completed. The project was terminated. prophylaxis in people with haemophilia A or B with or without inhibitors, were completed. – Phase 3a trial investigating somapacitan in paediatric non-replacement indications was initiated. – Phase 1/2 trial investigating the effects of Mim8 in people with haemophilia A was completed. Phase 3 trial programme was initiated. – Phase 2 trial investigating NDec in people with sickle cell disease was initiated. – Novo Nordisk acquired Forma Therapeutics Holding Inc., with the lead compound etavopivat, a phase 3 asset for treatment of sickle cell disease and thalassemia. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 32 INNOVATION AND THERAPEUTIC FOCUS Patent status for products with marketing authorisation The patent expiry dates for the products are shown in the table on the right. The dates provided are for expiry in the US, China, Japan and Europe of patents on the active ingredient, unless otherwise indicated, and include actual and estimated extensions of patent term, when applicable. 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. Diabetes care Obesity care Rare Disease Human insulin and Modern insulins9 Victoza®10 Tresiba® Ryzodeg® Xultophy® Fiasp® Ozempic® Rybelsus® Zegalogue® Saxenda® Wegovy® US Expired 2023 2029 2029 2029 203012 2032 2032 14 2035 2023 2032 China Expired Expired 2024 2024 2024 203012 202613 202614,13 2033 Expired 202613 Japan Expired Expired 2027 202411 202411 203012 2031 203114 2033 Expired 2031 Europe8 Expired 2023 2028 2028 2028 203012 2031 203114 2033 2023 2031 Norditropin® (SimpleXx®) Expired Expired Expired Expired Sogroya® NovoSeven® NovoEight® 2034 2031 2036 2036 Expired15 Expired15 Expired15 Expired15 No patent No patent No patent No patent NovoThirteen® (TRETTEN®) Expired No patent No patent No patent Refixia® (REBINYN®) Esperoct® Vagifem® 10 mcg 2028 2032 2027 2029 2032 2034 2027 2034 Expired No patent Expired Expired 8. Patent status varies from country to country. The figures in the table are based on Germany. 9. Modern insulins are NovoRapid® (NovoLog®), NovoMix® 30 (NovoLog® Mix 70/30), Levemir® and NovoNorm® (Prandin®). 10. 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. 11. Patent term extension until 2027 may apply. 12. Formulation patent; active ingredient patent has expired. 13. Patent was subject to invalidation actions and has been held invalid by the Patent Office. This decision has been appealed to the Beijing IP Court. 14. Tablet formulation and once- daily treatment regimen are protected by additional patents expiring in 2031-2034. 15. Room temperature-stable formulation patent until 2023 in China, Japan and Germany and, until 2025, in the US. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 33 COMMERCIAL EXECUTION Commercial excellence in exceptional times Faced with a series of geopolitical and healthcare challenges, Novo Nordisk has maintained effective commercial operations and built momentum in our business. Our commercial teams have shown agility and ingenuity in delivering our medicines to more patients than ever before. As a result, we have grown market share and launched key products, allowing us to make significant progress across our strategic aspirations for commercial execution. However, it has not been easy. COVID-19 and the war in Ukraine have adversely impacted global supply chains, while higher than expected demand, including for our GLP-1 products and temporary capacity limitations at some of our manufacturing sites have led to periodic supply constraints for some of our products – including our flagship GLP-1 therapies Ozempic® and Wegovy® – which we expect to continue into 2023. We have responded by ramping up production, with our global manufacturing facilities now operating 24 hours a Simona Chirino is living with obesity in Mexico City Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 34 COMMERCIAL EXECUTION day, seven days a week, and we have invested around DKK industry – driven by our strong product line-up. To further GLP-1 medicine, is available in 43 markets. The strong growth 12.7 billion in 2022 alone to expand capacity. As a result, all dose strengths of Wegovy® are now available in the US and accelerate this growth, we have created a new global Commercial Strategy organisation based around three of these newer products has more than offset a fall in sales of Victoza® and our GLP-1 value market share has risen by 2.2% we have also made the product available in the first markets therapy areas – diabetes, obesity and other serious chronic from a year ago to 54.9%. within International Operations. diseases – that will drive greater focus across our broadening In Russia, we have suspended marketing investments and responsibility, including therapy area strategy and ambition, in both operating units. Yet, Novo Nordisk's insulin value changed our focus from launching new medications and early planning, access, commercial strategies, launch market share has increased from 43.8% to 44.6% in the last 12 clinical investment, to securing supply of insulin to ensure our preparations and digital solutions. months. North America insulin sales were hit by lower realised patients have access to these essential medicines. Our factory prices in the US, due to intensified biosimilar competition and in Russia supplies insulin to patients in Russia only. These endeavours mean that we are progressing towards our higher demanded rebates coupled with channel and payer portfolio. Crucially, each unit will have full functional The picture is different for insulin, where sales are in decline Despite these unprecedented challenges, we have seen of more than one-third and recording obesity sales of over International Operations, where we provide significantly more overall sales growth of 16%, at CER, across our global DKK 25 billion by 2025. Meanwhile, our Rare Disease business people with insulin than any other class of product, insulin operations – among the highest in the pharmaceutical continues to make progress towards our aspiration for sales are growing in emerging markets. However, sales have aspirations of achieving a global diabetes value market share mix, as well as flat to declining class volume growth. Within sustained growth, driven by a strong pipeline and an exciting declined in China due to the implementation of Volume Based line-up of new products. Procurement and sales in EMEA were also lower. Strategic Aspirations 2025 Commercial execution 1 2 3 Strengthen Diabetes leadership – aim at global value market share of more than 1/3 More than DKK 25 billion in Obesity sales by 2025 Secure a sustained growth outlook for Rare Disease Strengthen diabetes leadership – aim at global value market share of more than 1/3 Diabetes value market share (%) In the diabetes space, we increased our value market share GLP-1 Insulin Diabetes by 1.8 percentage points to 31.9%, driven by strong growth for our GLP-1 products across both North America and International Operations. We continue to benefit from the growing switch to greater use of GLP-1s around the world, although rates of uptake vary widely between regions. In the US, where GLP-1 use is the highest, we have witnessed a paradigm shift in diabetes treatment following the launch of Ozempic® and our once-weekly injectable is now the country’s best-selling diabetes product. Despite the arrival of more competition, we remain the global market leader in the GLP-1 segment with our type 2 diabetes products Rybelsus®, Ozempic® and Victoza®. Ozempic® has now been launched in 75 countries and Rybelsus®, our oral 50.5% 44.3% 29.3% 60 50 40 30 20 52.7% 43.8% 30.1% 54.9% 44.6% 31.9% 2020 2021 2022 Source: IQVIA MAT, Nov 2022. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 35 COMMERCIAL EXECUTION Obesity care sales Sales as reported Growth at CER DKK billion 18 15 12 9 6 3 0 42% 3% 60% 2018 2019 2020 2021 2022 Rare Disease sales Sales as reported Growth at CER DKK billion -1% 4% 1% 4% 1% 25 20 15 10 5 0 Despite these commercial headwinds, we are continuing to new products that may offer even greater weight innovate in the insulin sector by offering increased efficacy loss efficacy. and convenience to patients, both through the continuing 84% rollout of smart connected insulin pens and the development Secure a sustained growth outlook for Rare Disease of our once-weekly insulin icodec, which has successfully completed final-stage clinical trials. Rare Disease growth has been driven by our treatments for rare blood disorders, fueled by demand for NovoSeven® and the newly launched products Esperoct® and Refixia®. Sales In 2022, we further enhanced our offering to people with of haemophilia A and haemophilia B products increased by 55% diabetes through an in-licensing deal to develop and commercialise Zegalogue® – a next-generation glucagon 6% and 16%, respectively. Sales of rare endocrine disorder products were broadly flat, with revenues held back by lower treatment for severe hypoglycaemic episodes. realised prices in the US. However, we remain the leading company in the global human growth disorder market with More than DKK 25 billion in Obesity sales by 2025 a value share of 35.2%, which is comparable to last year. The growth of our products in the dynamic obesity market segment has been strong, despite the supply constraints affecting Wegovy®. It is becoming clear that the efficacy of Wegovy® has changed perceptions around obesity treatment, We are excited by the imminent arrival of new products in the Rare Disease portfolio. These include our once-weekly Sogroya® injection for children living with growth hormone both among clinicians and patients – a fact reflected in the deficiency, which is expected to launch in 2023 following higher than expected demand for the product in the US. regulatory approvals, and our next-generation rare blood Encouragingly, the availability of anti-obesity medication is disorder therapies concizumab and Mim8. improving around the world, with around 80% of commercial formularies in the US now providing access and around 15 Focusing on other serious chronic diseases other countries offering varying levels of reimbursement. Beyond the main pillars of our established business, we Within this accelerating global obesity market, we are many of which are associated with diabetes and obesity. In capturing the vast majority of growth and we expect to build on this significantly in 2023 as we resolve Wegovy® supply the short term, this involves leveraging potential broader indications for semaglutide and building up our primary care constraints. The volume growth of the global branded obesity footprint for entry of stand-alone cardiovascular products. are expanding our work into other serious chronic diseases, market was 63%. Outside the US market, our first-generation GLP-1 obesity drug Saxenda® has seen continued robust uptake and we hope to build on this in 2023 with the launch of Wegovy® in more countries across International Operations. Expanding into new treatments for diseases such as cardiovascular disease (CVD), non-alcoholic steatohepatitis (NASH), chronic kidney disease (CKD) and Alzheimer’s disease is a growing focus for our teams and forms a central plank of 2018 2019 2020 2021 2022 than 750 million people. Importantly, our pipeline contains in the second half of the decade and beyond. The global obesity epidemic is now estimated to affect more our commercial strategy as we look to maintain momentum Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 36 FINANCIALS 2022 performance and 2023 outlook Financial performance In the following sections, unless otherwise noted, market data are based on moving annual total (MAT) from November Sales increased by 26% measured in Danish kroner and by 2021 and November 2022 provided by the independent data 16% at CER to DKK 176,954 million in 2022. Novo Nordisk's provider IQVIA. 2022 sales and operating profit performance measured at CER were within the ranges provided in November 2022. The Diabetes care free cash flow, effective tax rate, capital expenditure as well Sales in Diabetes care increased by 23% measured in Danish as depreciation, amortisation and impairment losses were kroner and by 14% at CER to DKK 139,548 million driven by all in line with the guidance. growth of GLP-1-based products. Novo Nordisk has improved Financial performance North America Operations net sales Geographic sales development Sales in International Operations increased by 17% measured in Danish kroner and by 13% at CER. Sales in EMEA increased by 17% measured in Danish kroner and by 15% at CER. Sales in Region China increased by 1% measured in Danish kroner and decreased by 6% at CER. International Operations net sales Growth at CER Sales in Rest of World increased by 28% measured in Danish Strategic Aspirations 2025 kroner and by 24% at CER. Financial DKK billion 200 150 100 50 0 16% Sales in North America Operations increased by 35% measured in Danish kroner and by 21% at CER. 6% 7% 5% 14% Sales development across therapeutic areas Sales in Diabetes care increased by 23% measured in Danish kroner and by 14% at CER. Sales of Obesity care products, Saxenda® and Wegovy®, increased by 101% measured in Danish kroner and by 84% at CER. Sales of Rare Disease products increased by 7% measured in Danish kroner and 2018 2019 2020 2021 2022 by 1% at CER. 1 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) 2 3 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 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 37 FINANCIALS Sales by therapeutic area the global diabetes value market share over the last 12 Insulin sales Diabetes care Obesity care Rare Disease Growth at CER months from 30.1% to 31.9%. The market share increase was Sales of insulin decreased by 5% measured in Danish kroner DKK billion driven by market share gains in both International Operations and by 11% at CER to DKK 52,952 million. Sales decline at and North America Operations. CER was driven by declining sales in the US, Region China 200 150 100 50 0 16% 14% 6% 7% 5% and EMEA. GLP-1 therapy for type 2 diabetes Sales of GLP-1 products for type 2 diabetes (Rybelsus®, Ozempic® and Victoza®) increased by 56% measured in Danish kroner and by 42% at CER to DKK 83,371 million. The GLP- Obesity care Sales of Obesity care products, Saxenda® and Wegovy®, increased by 101% measured in Danish kroner 1 segment’s value share of the total diabetes market has and by 84% at CER to DKK 16,864 million. Sales growth was increased to 33.5% compared with 26.5% 12 months ago. Novo Nordisk continues to be the global market leader in the GLP-1 segment with a 54.9% value market share, an increase driven by both North America Operations and International Operations. Saxenda® has now been launched in 71 countries and Wegovy® has been launched in the US, Denmark and of 2.2 percentage points compared to 12 months ago. Norway. The volume growth of the global branded obesity market was 53%. 2018 2019 2020 2021 2022 Rybelsus® sales increased by 134% measured in Danish Sales split in Diabetes care Insulin sales GLP-1 sales Other diabetes care Growth at CER kroner and by 114% at CER to DKK 11,299 million. Sales Rare Disease growth was driven by North America Operations as well as Rest of World and EMEA. Rybelsus® has been launched Sales of Rare Disease products increased by 7% measured in Danish kroner and by 1% at CER to DKK 20,542 million. in 43 countries. Rare blood disorders 4% 8% 4% DKK billion 150 120 90 60 30 0 14% 13% Ozempic® sales increased by 77% measured in Danish kroner Sales of Rare blood disorder products increased by 15% and by 61% at CER to DKK 59,750 million. Sales growth was driven by both North America Operations and International Operations. Ozempic® has been launched in 75 countries. measured in Danish kroner and by 7% at CER to DKK 11,706 million. The increasing sales were driven by NovoSeven® as well as the launch products Esperoct® and Refixia®. Sales growth has resulted in periodic supply constraints and related drug shortage notifications across geographies. Rare endocrine disorders Victoza® sales decreased by 18% measured in Danish kroner by 2% measured in Danish kroner and by 6% at CER to and by 24% at CER to DKK 12,322 million as the GLP-1 market DKK 7,138 million. The sales decline was driven by North is moving towards once-weekly and tablet-based treatments. America Operations' sales decreasing by 18% at CER and by The sales decline was driven by both North America International Operations' sales decreasing by 1% at CER. The Operations and International Operations. sales decline was driven by lower realised prices in the US as Sales of Rare endocrine disorder products decreased 2018 2019 2020 2021 2022 well as supply constraints in the fourth quarter of 2022. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 38 FINANCIALS Novo Nordisk continues to be the leading company in the improvements. This is partially countered by lower realised Financial items (net) and tax global human growth disorder market with a value market prices mainly in the US and Region China. share of 35.1%. Financial items (net) showed a net loss of DKK 5,747 million Sales and distribution costs increased by 25% measured in compared with a net gain of DKK 436 million in 2021. Danish kroner and by 16% at CER to DKK 46,217 million. The Development in costs and operating profit increase in costs is driven by both International Operations In line with Novo Nordisk’s treasury policy, the most and North America Operations. In International Operations, significant foreign exchange risks for Novo Nordisk have The cost of goods sold increased by 20% measured in Danish kroner and by 15% at CER to DKK 28,448 million, resulting in a gross margin of 83.9% measured in Danish kroner compared with 83.2% in 2021. The increase in gross promotional spend is related to promotional activities for Ozempic® and Rybelsus®, as well as Obesity care market been hedged, primarily through foreign exchange forward contracts. The foreign exchange result was a net loss of DKK development activities. In North America Operations, the cost increase is driven by promotional activities for Ozempic® and 4,651 million compared with a net gain of DKK 344 million in 2021. This primarily reflects losses on hedged currencies, margin reflects a positive product mix, driven by increased market development activities for Obesity care. The increase primarily the US dollar. GLP-1 sales, a positive currency impact and productivity is also reflecting higher distribution costs. Operating profit and margin Operating profit (left axis) Operating profit margin (right axis) Growth at CER DKK billion 15% 6% 7% 13% 3% 80 70 60 50 40 30 20 10 0 As per the end of December 2022, a positive market value Research and development costs increased by 35% measured of financial contracts of approximately DKK 1.0 billion has in Danish kroner and by 29% at CER to DKK 24,047 million been deferred for recognition in 2023. reflecting increased late-stage clinical trial activity compared to 2022. Increased activities within Other serious chronic diseases The effective tax rate was 19.6% in 2022 compared with and GLP-1 are driving the cost increase as well as the operating an effective tax rate of 19.2% in 2021, mainly reflecting costs and amortisations related to Dicerna Pharmaceuticals non-recurring impacts from acquisitions. Inc. which was acquired in the fourth quarter of 2021. The cost increase also reflects inflationary impacts on the cost base. Net profit increased by 16% to DKK 55,525 million and diluted earnings per share increased by 18% to DKK 24.44. Administration costs increased by 10% measured in Danish kroner and by 6% at CER to DKK 4,467 million. Other operating income and expenses (net) was DKK 1,034 Cash flow and capital allocation million compared with DKK 332 million in 2021, driven by income Free cash flow was DKK 57.4 billion compared with DKK from partnerships related to Dicerna Pharmaceuticals Inc. 29.3 billion in 2021 supporting the strategic aspiration to deliver attractive capital allocation to shareholders. The Operating profit increased by 28% measured in Danish kroner cash conversion in 2022 is positively impacted by timing of and by 15% at CER to DKK 74,809 million. Operating profit payment of rebates in the US, including provisions related to growth was negatively impacted by around 2 percentage points the revised 340B distribution policy in the US. Income under % 80 70 60 50 40 30 20 10 0 2018 2019 2020 2021 2022 from the acquisition of Dicerna Pharmaceuticals Inc. in 2021. the 340B Program has been partially recognised. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 39 FINANCIALS Cash flow and capital allocation The guidance reflects expectations for sales growth in both Dividend for prior year Interim dividend Share repurchases North America Operations and International Operations, Operations as well as promotional activities for Ozempic® and Rybelsus®. Finally, the guidance also reflects inflationary DKK billion 60 50 40 30 20 10 0 mainly driven by volume growth of GLP-1-based treatments impacts on the cost base. for Diabetes and Obesity care, partially countered by declining sales in Rare Disease due to supply constraints. Novo Nordisk expects financial items (net) to amount to Intensifying competition and continued pricing pressure a gain of around DKK 2.4 billion, mainly reflecting gains within Diabetes care are included in the guidance. associated with foreign exchange hedging contracts. The guidance ranges reflect the level of volume growth The effective tax rate for 2023 is expected to be in the range of GLP-1-based diabetes treatments and the inherent of 19-21%. uncertainty of the pace of Obesity care market expansion following the relaunch of Wegovy® in the US and an expected Capital expenditure is expected to be around DKK 25 billion gradual roll-out in International Operations. in 2023, reflecting the innovation based growth strategy Following higher than expected volume growth in recent years, including GLP-1-based products such as Ozempic®, relating to investments in additional capacity for active pharmaceutical ingredient (API) production and fill-finish combined with the expectation of continued volume growth capacity for both current and future injectable and oral pursued by Novo Nordisk. The CapEx increase is primarily 2019 2020 2021 2022 2023E¹ and capacity limitations at some manufacturing sites, the products. In the coming years, the capital expenditure to 1. Expectations for 2023. outlook also reflects expected continued periodic supply sales ratio is expected to be low double digit. constraints and related drug shortage notifications across a number of products and geographies. The supply capacity Depreciation, amortisation and impairment losses are is gradually being expanded. expected to be around DKK 8 billion. Capital expenditure for property, plant and equipment was CER. Given the current exchange rates versus the Danish the sales growth and the investments in capital expenditure as DKK 12.1 billion compared with DKK 6.3 billion in 2021. krone, growth reported in DKK is now expected to be around well as a favourable impact from rebates in the US. Operating profit growth is expected to be 13% to 19% at The free cash flow is expected to be DKK 60-68 billion, reflecting 2023 outlook 5 percentage points lower than at CER. The expectation for operating profit growth primarily reflects the sales All of the above expectations are based on assumptions growth outlook and continued investments in future and that the global or regional macroeconomic and political current growth drivers within Research, Development and environment will not significantly change business Sales growth is expected to be 13% to 19% at CER. Given the Commercial. Within R&D, investments are related to the conditions for Novo Nordisk during 2023, including energy current exchange rates versus the Danish krone, sales growth reported in DKK is expected to be around 4 percentage points continued expansion of the pipeline. Commercial investments are mainly related to the relaunch of Wegovy® in the US, and supply chain disruptions, the potential implications from major healthcare reforms and legislative changes as lower than at CER. Obesity care market development activities in International well as outcome of legal cases including litigations related Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 40 FINANCIALS Expectations are as reported, if not otherwise stated Expectations 1 February 2023 Forward-looking statements These statements are based on current plans, estimates and projections. By their very nature, forward-looking statements Sales growth at CER as reported Operating profit growth at CER as reported Financial items (net) Effective tax rate Capital expenditure (PP&E) Depreciation, amortisation and impairment losses Free cash flow (excluding impact from business development) Novo Nordisk’s reports filed with or furnished to the US involve inherent risks and uncertainties, both general and 13% to 19% Securities and Exchange Commission (SEC), including this specific. Novo Nordisk cautions that a number of important Around 4 percentage points lower than at CER 13% to 19% Around 5 percentage points lower than at CER Gain of around DKK 2.4 billion statutory Annual Report 2022 and Form 20-F, which are factors, including those described in this Annual Report 2022, both expected to be filed with the SEC in February 2023 could cause actual results to differ materially from those in continuation of the publication of this Annual Report contemplated in any forward-looking statements. 2022, and written information released, or oral statements made, to the public in the future by or on behalf of Factors that may affect future results include, but are not Novo Nordisk, may contain forward-looking statements. limited to, global as well as local political and economic 19% to 21% Words such as "believe", "expect", "may", "will", "plan", conditions, such as interest rate and currency exchange rate Around DKK 25 billion "strategy","prospect","foresee", "estimate", "project", fluctuations, delay or failure of projects related to research and/ Around DKK 8 billion "anticipate","can","intend", "target" and other words and or development, unplanned loss of patents, interruptions of DKK 60-68 billion terms of similar meaning in connection with any discussion supplies and production, including as a result of interruptions of future operating or financial performance identify or delays affecting supply chains on which Novo Nordisk relies, forward-looking statements. Examples of such forward- shortages of supplies, including energy supplies, product recalls, looking statements include, but are not limited to: unexpected contract breaches or terminations, government- – statements of targets, plans, objectives or goals for future mandated or market-driven price decreases for Novo Nordisk’s operations, including those related to Novo Nordisk’s products, introduction of competing products, reliance on to the 340B Drug Pricing Programme in the US, and that products, product research, product development, product information technology including the risk of cybersecurity the currency exchange rates, especially the US dollar, will introductions and product approvals as well as cooperation breaches, Novo Nordisk’s ability to successfully market current remain at the current level versus the Danish krone. Neither in relation thereto, and new products, exposure to product liability and legal does the guidance include the financial implications of any – statements containing projections of or targets for proceedings and investigations, changes in governmental laws significant business development transactions and significant revenues, costs, income (or loss), earnings per share, and related interpretation thereof, including on reimbursement, impairments of intangible assets during 2023. Finally, the capital expenditures, dividends, capital structure, net intellectual property protection and regulatory controls on potential wider consequences of Russia's invasion of Ukraine, financials and other financial measures, testing, approval, manufacturing and marketing, perceived including impacts on energy supply and supply chains, – statements regarding future economic performance, or actual failure to adhere to ethical marketing practices, could cause uncertainty to the outlook and the business future actions and outcome of contingencies, such as legal investments in and divestitures of domestic and foreign performance of Novo Nordisk. proceedings, and companies, unexpected growth in costs and expenses, strikes – statements regarding the assumptions underlying or and other labour market disputes, failure to recruit and retain Novo Nordisk has hedged expected net cash flows in a number relating to such statements. the right employees, failure to maintain a culture of compliance, of invoicing currencies and, all other things being equal, In this Annual Report 2022, examples of forward looking epidemics, pandemics or other public health crises, effects movements in key invoicing currencies will impact Novo Nordisk’s statements can be found under the section related to our of domestic or international crises, civil unrest, war or other operating profit as outlined in note 4.3 on Financial risks. "Strategic Aspirations" and elsewhere. conflict and factors related to the foregoing matters and other factors not specifically identified herein. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 41 FINANCIALS For an overview of some, but not all, of the risks that could adversely affect Novo Nordisk’s results or the accuracy of forward-looking statements in this Annual Report 2022, reference is made to the overview of risk factors in "Risk management" of this Annual Report 2022. Unless required by law, Novo Nordisk is under no duty and undertakes no obligation to update or revise any forward-looking statement after the distribution of this Annual Report 2022, whether as a result of new information, future events, or otherwise. Shares and capital structure Through open and proactive communication, Novo Nordisk aims to provide the basis for fair and efficient pricing of our shares. Share capital and ownership Novo Nordisk’s share capital of DKK 456 million is divided into A and B share capital. The A and B shares are calculated in units of DKK 0.20, amounting to 2.28 billion shares. The A share capital, consisting of 537 million shares, has a nominal value of DKK 107 million and the B share capital, consisting of 1,743 million shares, has a nominal value of DKK 349 million. Each A share carries 200 votes and each B share carries 20 votes. Novo Nordisk's B shares are listed on Nasdaq Copenhagen and on the New York Stock Exchange (NYSE) as American Depository Receipts (ADRs). The general meeting has authorised the Board of Directors to distribute extraordinary dividends, issue new shares in accordance with the Articles of Association and repurchase shares in accordance with authorisations granted. 1. Treasury shares are included; however, voting rights of treasury shares cannot be exercised. Ownership structure1 Novo Nordisk Foundation Novo Holdings A/S 76.9% of votes 28.1% of capital 537 million A shares (nominal value DKK 107 million) Institutional and private investors 23.1% of votes 71.9% of capital 1,743 million B shares (nominal value DKK 349 million) Novo Nordisk A/S Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 42 FINANCIALS 2023 financial calendar 23 March 2023 Annual General Meeting 2023 27 March 2023 Record date 4 April 2023 Payment, ADRs 10 August 2023 Financial statement for the first six months of 2023 21 August 2023 Record date 29 August 2023 Payment, ADRs 31 January 2024 Financial statement for 2023 and Annual Report 2023 24 March 2023 Ex-dividend 28 March 2023 Payment, B-shares 4 May 2023 Financial statement for the first three months of 2023 18 August 2023 Ex-dividend 22 August 2023 Payment, B shares 2 November 2023 Financial statement for the first nine months of 2023 The company’s A shares are not listed and are held by Novo Holdings A/S,2 a Danish public limited liability company wholly A shares, while B shares take priority for liquidation proceedings. Capital structure A shares take priority for dividends below 0.5%, and B shares take owned by the Novo Nordisk Foundation. According to the priority for dividends between 0.5 and 5%. However, in practice, Novo Nordisk’s Board of Directors and Executive Management Articles of Association of the Foundation, the A shares cannot be A and B shares receive the same amount of dividend per share. consider that the current capital and share structure of Novo divested. Special rights attached to A shares include pre-emptive Nordisk serve the interests of the shareholders and the subscription rights in the event of an increase in the A share As of 31 December 2022, Novo Holdings A/S held a B share company well. Novo Nordisk’s capital structure strategy offers capital and pre-emptive purchase rights in the event of a sale of capital of nominally DKK 20 million. Together with the A a balance between long-term shareholder value creation and Geographical split of shareholders3 % of share capital Denmark North America UK Other 32 3 shares, Novo Holdings A/S's total ownership amounted to competitive shareholder return in the short term. nominally DKK 128 million. Novo Holdings A/S ownership is reflected in the "Ownership structure" chart on page 41. In 2021, the capital structure was adjusted following Novo Nordisk’s Eurobond issuance with an aggregate principal There is no complete record of all shareholders; however, based amount of EUR 1.3 billion. In 2022, Novo Nordisk issued on available sources of information, as of 31 December 2022 Eurobonds in the amount of EUR 1.5 billion. The total it is estimated that shares were geographically distributed as outstanding Eurobonds in 2022 amounted to EUR 2.8 billion. shown in the "Geographical split of shareholders" chart. As of 31 December 2022, the free float of listed B shares was 92.41% 39 (of which approximately 10.93% are listed as ADRs), excluding Dividend policy Novo Holdings A/S's holding and Novo Nordisk’s holding of treasury shares. As of 31 December 2022, Novo Holdings A/S The company’s dividend policy applies a pharmaceutical and Novo Nordisk’s holding of B shares equalled 132,207,875 industry benchmark to ensure a competitive payout ratio shares and had a nominal value of DKK 26 million. For details for dividend payments, which are complemented by share 26 about the share capital, please refer to note 4.2 on Share repurchase programmes. The final dividend for 2021 paid capital, Treasury shares and Other reserves. in March 2022 was equal to DKK 6.90 per A and B share of 2. Novo Holdings A/S’s registered address is Tuborg Havnevej 19, DK-2900 Hellerup, Denmark. 3. Split of shareholders is denoted according to the location of legal deposit-owners. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 43 FINANCIALS Share price performance 2022 Novo Nordisk share price and indexed peers4 (%) Novo Nordisk OMXC25 Peer group5 DKK 950 850 750 650 550 450 350 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 4. OMXC25 and pharmaceutical industry development have been rebased to Novo Nordisk share price in January 2022. 5. Abbvie, Amgen, AstraZeneca, Biogen Idec Inc, Bristol-Myers Squibb, Eli Lilly & Co., Gilead Sciences, Glaxo Smith Kline, Johnson & Johnson, Lundbeck, Merck & Co, Novartis AG, Pfizer, Roche and Sanofi-Aventis SA. Share repurchase programme for 2022/2023 During the twelve-month period beginning 2 February 2022, Novo Nordisk repurchased shares worth DKK 24 billion. The share repurchase programme has primarily been conducted in accordance with the safe harbour rules in the EU Market Abuse Regulation (MAR).6 For the next 12 months, Novo Nordisk has decided to implement a new share repurchase programme. The expected total repurchase value of B shares amounts to a cash value of up to DKK 28 billion. The total programme may be reduced in size if significant business development opportunities arise during 2023. Novo Nordisk expects to conduct the majority of the new share repurchase programme according to the safe harbour rules in MAR. At the Annual General Meeting in March 2023, the Board of Directors will propose a further reduction in the company’s B share capital, corresponding to approximately 1.1% of the total share capital, by cancelling 25 million treasury shares. Share price development From end of December 2021 until 30 December 2022, Novo Nordisk’s share price increased from DKK 735 to DKK 938, an DKK 0.20 as well as for ADRs. The total dividend for 2021 was of DKK 8.15 to be paid in March 2023, equivalent to a total increase of 27.6%. The total market value of Novo Nordisk’s DKK 10.40 per A and B share of DKK 0.20, corresponding to a dividend for 2022 of DKK 12.40 and a payout ratio of 50.3%. B shares, excluding treasury shares and Novo Holdings A/S payout ratio of 49.6%, which was in line with the 2021 pharma The company expects to distribute an interim dividend in shares, was DKK 1,510,514,045,250, as of 30 December 2022. peer group average of 50.5%. August 2023. Further information regarding this interim dividend will be announced in connection with the financial In August 2022, an interim dividend was paid equaling DKK report for the first six months of 2023. Dividends are paid 4.25 per A and B share of DKK 0.20 as well as for ADRs. For from distributable reserves. Novo Nordisk does not pay a 2022, the Board of Directors will propose a final dividend dividend on its holding of treasury shares. 6. Regulation (EU) 596/2014. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 4 4 The picture was taken shortly after Erik Hageman (left) was diagnosed. One hundred years ago, being diagnosed with diabetes was a death sentence, but our founders set out to change this reality. Their passion and determination have driven us ever since, relentlessly turning challenges into positive change for millions of people worldwide Key risks 45 Risk Management Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 45 Risk management 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. The main strategic risks are: capacity is complex and associated with a long lead time. Therefore, planning and management of our supply chain Access and affordability 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 affordability is a risk and responsibility Operational risk management process Novo Nordisk shares with all actors involved in healthcare. In the short- to medium-term, we are exposed to risks We recognise that we cannot defeat serious chronic diseases throughout our value chain. Some risks are inherent in alone but to mitigate the risk, we can accelerate our actions the pharmaceutical industry, such as delays or failures of to find solutions in collaboration with relevant stakeholders. potential late-stage medicines in the R&D pipeline. Other risks, such as geopolitical instability, supply disruptions and Innovation and competition competitive threats, are well-known to any manufacturing We are a science-based company whose future depends on company with global production. We will never compromise raising the innovation bar. To remain competitive in the future on product quality, patient safety or business ethics: these and thereby mitigate innovation risk, we invest significantly are front and centre of our enterprise-wide risk management in internal and external pipeline opportunities to ensure set-up. We assess risks to potential financial loss and patients receive improved treatments. reputational damage. We apply a dual lensed approach to risk management. This Digital disruption Executive Management, the Board of Directors and the Audit means we identify and mitigate both operational risks that New digital technologies could bring new competitors Committee review a "risk grid" of our biggest operational pose a threat to our short to medium-term plans, as well into the pharmaceutical industry. They also provide an risks every six months. This grid is based on insights from as strategic risks that could reduce our ability to realise our opportunity for us to deliver more value to our stakeholders management teams across the organisation and includes corporate strategy over the long-term. and help patients live a life free from the limitations of their risks that could cause significant disruptions to the business disease. Digital health solutions bring new risks particularly over a three-year horizon. The overview on the next page regarding data regulation and privacy, as well as potential provides more details of our key risks. Addressing risks in our strategic planning quality risks. We strive to monitor and mitigate these risks in close collaboration with relevant partners. Key operational risks Scenario and risk-thinking exercises are part of our strategic An aggregated illustration of our key operational risks, planning. They include analyses of market dynamics, climate Production capacity and supply chain risks with associated descriptions, is outlined on the next page. change, as well as socioeconomic and political developments Demand fluctuations, resource shortages, geopolitical that present risks or opportunities for our business. Annually, instability, trade disputes, quality assurance and local For more information Executive Management and the Board of Directors review a manufacturing requirements are all factors that can pressure See our Corporate Governance Report available at strategic risk profile. global supply chains. Furthermore, expanding production www.novonordisk.com/about/corporate-governance.html Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 46 Key operational risks (Illustrative) High Impact 2 3 4 6 1 5 Low Likelihood High 1 2 3 4 5 6 Clinical Pipeline Risks Product Supply, Quality and Safety Risks Commercialisation Risks IT Security Risks Financial Risks Legal, Patents and Compliance Risks Risk area Description Impact Mitigating actions 1 Clinical Pipeline Risks 2 Findings in clinical activities, regulatory – Patients would not benefit from innovative – Pre-clinical and clinical activities to processes or misunderstanding of commercial treatments demonstrate safety and efficacy potential, leading to delays or failure of – Could have an adverse impact on sales, – Consultations with regulators to review products in the pipeline profits and market position pre-clinical and clinical findings and obtain guidance on development path Disruption of product supply due to, e.g., – Product shortages could have potential – Establishing global production with multiple geopolitical instability or quality failures may implications for patients facilities and safety stock to reduce supply risk Product Supply, Quality and Safety compromise the availability of products, – Could put patients' health and lives at risk – Regular quality audits of internal units ultimately impacting the health of patients and jeopardise reputation and license to and suppliers and annual inspections by and represent a lost commercial opportunity operate if regulatory compliance is not authorities document Good Manufacturing Risks 3 Commercialisation Risks 4 IT Security Risks 5 Financial Risks 6 Legal, Patents and Compliance Risks ensured Practice (GMP) compliance – Could have an adverse impact on sales, – Identification and correction of root causes profits and market position when issues are identified. If necessary, products are recalled Market dynamics and geopolitical, – Market dynamics could impact price levels – Innovation of novel products, clinical trial macroeconomic, or healthcare crises (e.g., and patient access data and real-world evidence demonstrate pandemics) leading to reduced payer ability – Could have an adverse impact on sales, added value of new products and willingness to pay profits and market position – Payer negotiations to ensure improved patients' access – Increased and new access and affordability initiatives Disruption to IT systems, such as cyber-attacks – Could limit our ability to produce and – Company-wide information security or infrastructure failure, resulting in business safeguard product quality awareness activities disruption or breach of data confidentiality – Could compromise patients' or other – Contingency plans for non-availability individuals' privacy of IT systems – Could limit our ability to maintain operations – Company-wide internal audit of IT security or limit future business opportunities if controls proprietary information is lost – Detection and protection mechanisms – Could have an adverse impact on sales, in IT systems and business processes profits and market position Exchange rate fluctuations (mainly in USD, – Could lead to significant tax adjustments, – Hedging for selected currencies CNY and JPY), disputes with tax authorities and fines and higher than expected tax level – Integrated treasury management changes to tax legislation and interpretation – Could have an adverse impact on sales, – Applicable taxes paid in jurisdictions where profits and market position business activity generates profits and multi- year Advance Pricing Agreements with tax authorities Breach of legislation, industry codes, or – Potential exposure to investigations, criminal – Legal review of key activities company policies. Competitors asserting and civil sanctions and other penalties – Business Ethics Code of Conduct integrated patents against Novo Nordisk or challenging – Could compromise our reputation and the in our business, Compliance hotline in place patents critical for protection of commercial rights and integrity of individuals involved – Internal Audit of compliance with business product and pipeline candidates – Unexpected loss of exclusivity for or injunctions ethics standards against existing and pipeline products could – Internal controls to minimise vulnerability to have an adverse impact on future sales patent infringement and invalidity actions – Could have an adverse impact on sales, profits and market position Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 47 Hans Christian Hagedorn (1888–1971), Doctor of Medicine and one of Nordisk Insulinlaboratorium’s founders. He was the doctor of Erik Hageman Management 48 51 Board of Directors Executive Management Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 48 Board of Directors As of 31 December 2022, the Board of Directors consisted of 13 members, 7 men and 6 women. Helge Lund Chair Henrik Poulsen Vice Chair Elisabeth Dahl Christensen Jeppe Christiansen Laurence Debroux Norwegian. Born October 1962. Male. First elected 2017.1 Term 2023. Chair of the Nomination Committee and the Chair Committee. Danish. Born September 1967. Male. First elected 2021. Term 2023. Member of the Audit Committee, the Remuneration Committee and the Chair Committee. Danish. Born November 1965. Female. First elected 2022. Term 2026. Employee representative. Member of the Remuneration Committee. Positions and management duties: Full-time union representative at Novo Nordisk A/S. Competences: Not mapped for employee representatives. 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 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 & pharma industry; finance & accounting; business development, M&A and external innovation sourcing; human capital management; environmental, social & governance (ESG). Positions and management duties: Chair of the supervisory board and chair of the nomination committee and member of the remuneration committee 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 Faerch 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). 1. In addition, Helge Lund was a member of the Board for one year in 2014-2015. French. Born July 1969. Female. First elected 2019. Term 2023. Chair of the Audit Committee and member of the Remuneration Committee. 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 and member of the audit committee of Solvay S.A. Member of the board of directors of HEC Paris Business School and of Kite Insights (The Climate School). Competences: Global corporate leadership; healthcare & pharma industry; finance & accounting; business development, M&A and external innovation sourcing; human capital management; environmental, social & governance (ESG). Danish. Born November 1959. Male. First elected 2013. Term 2023. Chair of the Remuneration Committee. 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, A/S United Shipping & Trading Company (USTC), 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 & pharma industry; finance & accounting; business development, M&A and external innovation sourcing; human capital management; environmental, social & governance (ESG). Novo Nordisk Annual Report 2022 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 49 Board of Directors (continued) Andreas Fibig Sylvie Grégoire Liselotte Hyveled Mette Bøjer Jensen Kasim Kutay Christina Law German. Born February 1962. Male. First elected 2018. Term 2023. Member of the Research & Development Committee. Positions and management duties: Member of the board of directors of Indigo Agriculture Inc. Member of the board of directors of Evodiabio ApS. Member of the board of directors of ExlService Holdings, Inc. Honorary director of the German American Chamber of Commerce. Competences: Global corporate leadership; healthcare & pharma industry; technology, data & digital; finance & accounting; business development, M&A and external innovation sourcing; human capital management; environmental, social & governance (ESG). Canadian and American. Born November 1961. Female. First elected 2015. Term 2023. Member of the Audit Committee, the Research & Development Committee and the Nomination Committee. Positions and management duties: Co-founder and executive chair of the board of directors of EIP Pharma, Inc. Member of the board of directors and member of the nominating & corporate governance committee and the compensation & benefits committee of Perkin Elmer Inc. Member of the board of directors of F2G Ltd. Advisor to the Soffinova Telethon Fund. Competences: Global corporate leadership; healthcare & pharma industry; medicine & science; finance & accounting; business development, M&A and external innovation sourcing; human capital management. Danish. Born January 1966. Female. First elected 2022.2 Term 2026. Employee representative. Member of the Research & Development Committee. Danish. Born December 1975. Female. First elected 2018. Term 2026. Employee representative. Member of the Audit Committee. British. Born May 1965. Male. First elected 2017. Term 2023. Member of the Nomination Committee and the Research & Development Committee. Positions and management duties: Chief patient officer and principal vice president of Patient Voice Strategy & Alliances, Novo Nordisk A/S. Competences: Not mapped for employee representatives. 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. Competences: Global corporate leadership; healthcare & pharma industry; finance & accounting; business development, M&A and external innovation sourcing; human capital management. Chinese. Born January 1967. Female. First elected 2022. Term 2023. Member of the Audit Committee. Positions and management duties: Group CEO of Raintree Group of Companies. Member of the board of directors and member of the nomination and compensation committee of INSEAD Business School. Member of the boards of Raintree Group Limited, Raintree Investment Pte Ltd. and La Fondation des Champions. Competences: Global corporate leadership; technology, data & digital; business development, M&A and external innovation sourcing; human capital management. 2. In addition, Liselotte Hyveled was an employee-elected member of the Board in 2014-2018. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 50 Board of Directors (continued) Independence and meeting attendance overview Martin Mackay Thomas Rantzau Danish. Born March 1972. Male. First elected 2018. Term 2026. Employee representative. Member of the Nomination Committee. Positions and management duties: Area specialist in Product Supply, Novo Nordisk A/S. Competences: Not mapped for employee representatives. American and British. Born April 1956. Male. First elected 2018. Term 2023. Chair of the Research & Development Committee and member of the Remuneration Committee. Positions and management duties: Co-founder, chair and CEO of Rallybio LLC. Senior advisor to New Leaf Venture Partners, LLC. Member of the board of directors and member of the science & technology committee and the finance committee of Charles River Laboratories International, Inc. Competences: Global corporate leadership; healthcare & pharma industry; medicine & science; technology, data & digital; business development, M&A and external innovation sourcing; human capital management. Meeting attendance in 20223 Name Independence4 Board of Directors Chair Committee Audit Committee9 Nomination Committee Remuneration Committee R&D Committee Helge Lund Independent 10/10 Henrik Poulsen Not independent5,6,7,10 9/10 Elisabeth Dahl Christensen Not independent8 7/7 7/7 5/5 Jeppe Christiansen Not independent5 10/10 2/2 Laurence Debroux Independent6,7,10 10/10 Andreas Fibig Sylvie Grégoire Independent Independent6 9/10 9/10 Liselotte Hyveled Not independent8 7/7 Mette Bøjer Jensen Not independent6,8 10/10 Kasim Kutay Christina Law Not independent5 10/10 Independent6 7/7 Martin Mackay Independent 10/10 Thomas Rantzau Not independent8 10/10 4/5 5/5 1/1 5/5 4/4 4/4 4/4 4/4 1/1 4/4 3/3 Board members who stepped down at the Annual General Meeting in March 2022 Anne Marie Kverneland Not independent Stig Strøbæk Not independent 3/3 3/3 1/1 3/4 4/4 5/5 4/5 5/5 1/1 4/4 5/5 4/4 5/5 5/5 1/1 3. Number of meetings attended by each Board member out of the total number of meetings within the member's term. 4. In accordance with recommendation 3.2.1 of the Danish Corporate Governance Recommendations as designated by Nasdaq Copenhagen. 5. Member of the board of directors or executive management of Novo Holdings A/S. 6. Pursuant to the US Securities Exchange Act, Ms Debroux, Ms Grégoire and Ms Law qualify as independent Audit Committee members, while Ms Bøjer Jensen and Mr Poulsen rely on an exemption from the independence requirements. 7. 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. 8. Elected by employees of Novo Nordisk. 9. Collectively, the members have relevant industry expertise. 10. Designated as financial experts as defined by the US Securities and Exchange Commission (SEC). Novo Nordisk Annual Report 2022 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 51 Executive Management Lars Fruergaard Jørgensen Monique Carter Maziar Mike Doustdar11 Ludovic Helfgott11 Karsten Munk Knudsen President and chief executive officer (CEO). Born November 1966. Male. Executive vice president. People & Organisation. Born December 1973. Female. Executive vice president. International Operations. Born August 1970. Male. Executive vice president. Rare Disease. Born July 1974. Male. Executive vice president. Chief financial officer (CFO). Born December 1971. Male. Other positions and management duties: 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: Member of the board of directors and the personnel and the remuneration committee of Orion Corporation. 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, member of the equity & capital markets committee and chair of the audit committee of Hempel A/S. Doug Langa11 Martin Holst Lange Marcus Schindler Camilla Sylvest Henrik Wulff Executive vice president. North America Operations. Born October 1966. Male. Executive vice president. Development. Born October 1970. Male. Other positions and management duties: No other management positions. Other positions and management duties: No other management positions. 11. Not registered as an executive with the Danish Business Authority. Executive vice president. Research & Early Development and chief scientific officer (CSO). Born September 1966. Male. Executive vice president. Commercial Strategy & Corporate Affairs. Born November 1972. Female. 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 Danish Crown A/S. Member of the board of directors of Argenx SE. Executive vice president. Product Supply, Quality & IT. Born November 1970. Male. Other positions and management duties: Member of the board of directors and the remuneration committee and the innovation committee of Ambu A/S. Member of the board of directors of Grundfos Holding A/S. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 52 Steno Memorial Hospital, Nordisk, 1933. The very modern, functional and comfortable hospital was officially opened in 1932 and Erik Hageman was admitted here several times throughout his childhood Consolidated statements and additional information 54 Consolidated financial statements Consolidated ESG statement 89 Statement and Auditor's Reports 98 102 Additional information Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 53 PAGE 54-88 Consolidated financial statements Consolidated financial statements Income Statement and Statement of comprehensive income Cash flow statement Balance sheet Equity statement p. 54 p. 55 p. 56 p. 57 Notes to the consolidated financial statements Section 1 Basis of preparation 1.1 1.2 Principal accounting policies and key accounting estimates Changes in accounting policies and disclosures Section 2 Results for the year 2.1 2.2 2.3 2.4 2.5 Other operating income and expenses 2.6 2.7 Net sales and rebates Segment information Research and development costs Employee costs Income taxes and deferred income taxes Earnings per share Section 3 Operating assets and liabilities 3.1 3.2 3.3 3.4 3.5 Intangible assets Property, plant and equipment Inventories Trade receivables Provisions and contingent liabilities p. 58 p. 58 p. 59 p. 60 p. 62 p. 62 p. 63 p. 63 p. 64 p. 65 p. 67 p. 68 p. 69 p. 70 Section 4 Capital structure and financial items Distribution to shareholders 4.1 Share capital, Treasury shares and Other reserves 4.2 Financial risks 4.3 Derivative financial instruments 4.4 Borrowings 4.5 Cash and cash equivalents 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. 72 p. 72 p. 73 p. 75 p. 76 p. 77 p. 77 p. 77 p. 78 p. 79 p. 80 p. 81 p. 82 p. 83 p. 84 p. 84 p. 85 p. 86 p. 87 PAGE 89-97 Consolidated ESG statement Consolidated ESG statement Statement of Environmental, Social and Governance (ESG) performance 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 Scope 1, 2 and 3 emissions 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 US pricing 8.7 Total tax contribution 8.8 Donations and other contributions 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. x p. 89 p. 90 p. 90 p. 91 p. 91 p. 91 p. 93 p. 93 p. 93 p. 94 p. 94 p. 94 p. 95 p. 95 p. 95 p. 96 p. 96 p. 96 p. 96 p. 96 p. 97 p. 97 Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 54 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 2022 2021 2020 DKK million Note 2022 2021 2020 Statement of comprehensive income 2.1, 2.2 176,954 140,800 126,946 Net profit 55,525 47,757 42,138 2.2 (28,448) (23,658) (20,932) 148,506 117,142 106,014 Other comprehensive income: Sales and distribution costs 2.2 (46,217) (37,008) (32,928) Research and development costs 2.2, 2.3 (24,047) (17,772) (15,462) Items that will not be reclassified subsequently to the income statement: Remeasurements of retirement benefit obligations 615 146 (67) Administrative costs 2.2 (4,467) (4,050) (3,958) Items that will be reclassified subsequently to the income statement: Other operating income and expenses 2.2, 2.5 1,034 332 460 Exchange rate adjustments of investments in subsidiaries 2,289 1,624 (1,689) 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 74,809 58,644 54,126 Cash flow hedges: 239 2,887 1,628 Realisation of previously deferred (gains)/losses (5,986) 69,062 (2,451) (2,624) Deferred gains/(losses) incurred during the period 59,080 53,130 Other items 2.6 (13,537) (11,323) (10,992) Tax on other comprehensive income, net 55,525 47,757 42,138 Other comprehensive income 4.2, 4.4 4.2, 4.4 2.6 1,740 1,026 (3) (889) 4,778 (1,802) (1,755) 112 1,005 (670) 329 1,384 10 (577) (610) Total comprehensive income 60,303 47,087 41,528 2.7 2.7 24.51 24.44 20.79 20.74 18.05 18.01 Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 55 Cash flow statement for the year ended 31 December DKK million Cash flow statement Net profit Adjustment of non-cash items: Note 2022 2021 2020 DKK million Note 2022 2021 2020 Purchase of treasury shares 55,525 47,757 42,138 Dividends paid Proceeds from borrowings 4.2 4.1 4.5 4.5 (24,086) (19,447) (16,855) (25,303) (21,517) (20,121) 11,215 (13,623) 22,160 (6,689) 5,682 (950) Income taxes in the income statement 2.6 13,537 11,323 10,992 Repayment of borrowings Depreciation, amortisation and impairment losses 3.1, 3.2 7,362 6,025 5,753 Net cash used in financing activities (51,797) (25,493) (32,244) Other non-cash items Change in working capital Interest received Interest paid Income taxes paid 4.7 4.8 22,310 (5,336) 276 (272) 13,009 7,849 (8,656) (4,353) 241 (261) 100 (422) 2.6 (14,515) (14,438) (10,106) Net cash generated from activities 2,172 (2,098) (2,729) Cash and cash equivalents at the beginning of the year 10,719 12,226 15,411 Exchange gains/(losses) on cash and cash equivalents (238) 591 (456) Cash and cash equivalents at the end of the year 4.6 12,653 10,719 12,226 Net cash generated from operating activities 78,887 55,000 51,951 Purchase of intangible assets 3.1 (2,607) (1,050) (16,256) Proceeds from sale of property, plant and equipment — — 7 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 Dividend received from associated companies 3.2 5.3 5.4 5.4 (12,146) (6,335) (5,825) (7,075) (18,283) — (169) — (4) (9,566) (7,109) 6,645 1,172 — 12 — — — — — — 4 (392) 18 Net cash used in investing activities (24,918) (31,605) (22,436) Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 56 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 2022 2021 DKK million Note 2022 2021 Equity and liabilities 3.1 3.2 51,416 66,671 327 43,171 Share capital 55,362 Treasury shares 525 Retained earnings 2.6 13,427 8,672 Other reserves 206 1,016 267 916 Total equity Borrowings 133,063 108,913 Deferred income tax liabilities 3.3 3.4 4.3 4.4 4.6 24,388 50,560 940 6,005 10,921 2,727 12,653 108,194 19,621 Retirement benefit obligations 40,643 Other liabilities 1,119 Provisions 5,037 Total non-current liabilities 6,765 1,690 10,720 85,595 Borrowings Trade payables Tax payables Other liabilities 241,257 194,508 Derivative financial instruments Provisions Total current liabilities Total liabilities 4.2 4.2 456 (6) 80,587 4.2 2,449 83,486 462 (6) 72,004 (1,714) 70,746 24,318 12,961 4.5 2.6 7,061 762 100 5,271 1,280 360 4,374 3.5 4,590 36,831 24,246 4.5 1,466 13,684 15,587 7,091 8,870 3,658 23,606 19,600 4.4 3.5 2,903 70,287 120,940 2,184 51,520 99,516 157,771 123,762 Total equity and liabilities 241,257 194,508 Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 57 Equity statement at 31 December DKK million Share capital Treasury shares Retained earnings Other reserves 2022 Total Share capital Treasury shares Retained earnings Other reserves 2021 Total Share capital Treasury shares Retained earnings Other reserves 2020 Total Balance at the beginning of the year 462 (6) 72,004 (1,714) 70,746 470 (8) 63,774 (911) 63,325 480 (10) 57,817 (694) 57,593 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. 55,525 55,525 615 4,163 4,778 56,140 4,163 60,303 47,757 146 47,903 47,757 (670) 47,087 (816) (816) 42,138 (67) 42,071 42,138 (610) 41,528 (543) (543) — — 13 13 326 326 (25,303) (25,303) (21,517) (21,517) (20,121) (20,121) 1,539 287 (6) (24,080) (6) 456 6 (6) 1,539 287 (24,086) — 1,040 245 (6) (19,441) (8) 462 8 (6) 80,587 2,449 83,486 72,004 (1,714) 70,746 1,040 245 (19,447) — 823 31 (16,847) 823 31 (16,855) — 63,774 (911) 63,325 (8) 10 (8) (10) 470 Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 58 Section 1 Basis of preparation 1.1 Principal accounting policies and key accounting estimates 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. 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 the 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. When determining estimates and assumptions, Management has assessed the qualitative and quantitative impact of climate related risks. It is Management’s assessment that the effect of climate related risks do not significantly impact estimates and assumptions. 1.2 Changes in accounting policies and disclosures 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. 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 below are regarded as the principal accounting policies applied by Management: – Net sales and rebates (Note 2.1) – Research and development costs (Note 2.3) – Income taxes and deferred income taxes (Note 2.6) – Intangible assets (Note 3.1) – Provisions and contingent liabilities (Note 3.5) – Derivative financial instruments (Note 4.4) – Acquisition of businesses (Note 5.3) 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 has assessed the impact of new or amended accounting standards and interpretations (IFRSs) issued by the IASB and IFRSs endorsed by the European Union effective on or after 1 January 2022. Management assessed that application of these has not had a material impact on the consolidated financial statements for 2022. Furthermore, Management has assessed the impact of new or amended accounting standards and interpretations (IFRSs) issued by the IASB that has not yet become effective. Management does not anticipate any significant impact on future periods from the adoption of these amendments. 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. Key accounting estimates and judgements Estimate of US sales deductions and provisions for sales rebates Estimate in determining the fair value of intangible assets and assessment of impairment of intangible assets Estimate regarding deferred income tax assets and provision for uncertain tax positions Estimate of ongoing legal disputes, litigation and investigations Judgement of whether a transaction is an asset acquisition or a business combination Risk High Medium Medium Medium Low Note(s) 2.1, 3.5 3.1, 5.3 2.6 3.5 5.3 Novo Nordisk Annual Report 2022 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 59 Section 2 Results for the year 2.1 Net sales and rebates Gross-to-net sales reconciliation DKK million Gross sales 2022 2021 2020 455,692 340,180 298,187 US Managed Care and Medicare (161,123) (112,929) (96,716) US wholesaler charge-backs (56,443) (40,354) (37,036) US Medicaid rebates (24,667) (19,810) (17,307) Other US discounts and sales returns (18,300) (14,119) (10,867) Non-US rebates, discounts and sales returns (18,205) (12,168) (9,315) Total gross-to-net sales adjustments (278,738) (199,380) (171,241) Net sales 176,954 140,800 126,946 Provisions for sales rebates DKK million 2022 2021 2020 At the beginning of the year 50,822 34,052 30,878 Additional provisions, including increases to existing provisions 206,354 155,602 111,921 Amount paid during the year (189,580) (141,370) (106,116) Adjustments, including unused amounts reversed during the year (1,141) (284) 166 Effect of exchange rate adjustment 3,044 2,822 (2,797) At the end of the year 69,499 50,822 34,052 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. 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. In 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 has recognised revenue related to the 340B Drug Pricing Program to the extent that it is highly probable that its inclusion will not result in a significant revenue reversal in the future. Please refer to note 3.5 Provisions and contingent liabilities for a more elaborate description of the ongoing litigation related to the 340B Drug Pricing Program. Sales discounts and sales rebates are predominantly issued in the US. As such, rebates amount to 75% of gross sales in the US (75% in 2021 and 74% in 2020). Provisions for sales rebates include US Managed Care, Medicare, Medicaid, 340B drug pricing program and other US rebate types, as well as rebates in a number of European countries and Canada. 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 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. 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 2022, Novo Nordisk had three major wholesalers distributing products in the US, representing 19%, 14% and 13% respectively of global net sales (18%, 13% and 13% in 2021 and 19%, 13% and 12% in 2020). Sales to these three wholesalers are within both Diabetes and Obesity care and Rare disease. 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 1,835 million within 12 months (DKK 1,012 million in 2021) and DKK 798 million thereafter (DKK 962 million in 2021). 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 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, Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 60 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. 2.2 Segment information Business segments – Key figures Diabetes and Obesity care Rare disease Total Unsettled rebates are recognised as provisions when the timing or amount is uncertain (note 3.5). DKK million Total net sales 2022 2021 2020 2022 2021 2020 2022 2021 2020 156,412 121,597 108,020 20,542 19,203 18,926 176,954 140,800 126,946 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 related to 340B drug pricing program can only be recognised to the extent that it is highly probable that a significant reversal of the recognised revenue will not occur. Determining the amount of revenue to recognise requires significant estimation. Management has considered interpretations of applicable laws, whether the consideration is highly susceptible to factors outside Novo Nordisk's influence, as well as the historical claims experience. Please refer to note 3.5 Provisions and contingent liabilities for information on the ongoing litigation related to the 340B Drug Pricing Program. 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. Cost of goods sold (23,405) (19,363) (17,715) (5,043) (4,295) (3,217) (28,448) (23,658) (20,932) Sales and distribution costs (42,392) (33,791) (29,903) (3,825) (3,217) (3,025) (46,217) (37,008) (32,928) Research and development costs (20,157) (15,600) (13,535) (3,890) (2,172) (1,927) (24,047) (17,772) (15,462) Administrative costs (3,955) (3,504) (3,387) Other operating income and expenses 892 199 264 (512) 142 (546) 133 (571) (4,467) (4,050) (3,958) 196 1,034 332 460 Segment operating profit 67,395 49,538 43,744 7,414 9,106 10,382 74,809 58,644 54,126 Operating margin 43.1% 40.7% 40.5% 36.1% 47.4% 54.9% 42.3% 41.7% 42.6% Depreciation, amortisation and impairment losses expensed (5,701) (4,895) (4,624) (1,661) (1,130) (1,129) (7,362) (6,025) (5,753) Novo Nordisk operates in two business segments based on therapies: Diabetes and Obesity care and Rare disease (formerly known as Biopharm), representing the entirety of the Group's operations. The activities of the segments include research, development, manufacturing and marketing of products within the following areas: – Diabetes and Obesity care: diabetes, obesity and other serious chronic diseases – Rare disease: rare blood disorders, rare endocrine disorders and 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 generally been split between business segments according to a specific allocation. Certain corporate overhead costs are allocated between segments based on overall allocation keys. 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. We consider Executive Management to be the operating decision-making body. Geographical areas In 2022, Novo Nordisk operated in two main commercial units: – 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). In 2022, the US contributed with 10% or more of total net sales. In 2021 and 2020 Mainland China also contributed with 10% or more of total net sales. 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. Out of total property, plant and equipment and intangible assets of DKK 118,087 million (DKK 98,533 million in 2021), DKK 54,492 million is located in Denmark (DKK 46,705 million in 2021) and DKK 44,744 million is located in the US (DKK 41,035 million in 2021) where the majority of production facilities and intangible assets are located. Refer to note 5.7 for an overview of companies in the Novo Nordisk Group based on geographical areas. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 61 Net sales – Business segments and geographical areas DKK million 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 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® 3,155 524 36 1,714 289 36 63 17,369 8,856 3,634 10,417 6,393 3,112 2,196 — 303 — 10 1,378 235 — 8,144 4,314 1,837 8,011 4,243 1,826 11,299 4,838 1,873 4,756 2,160 512 42,381 24,849 17,577 38,750 23,168 16,650 59,750 33,705 21,211 5,672 6,726 7,095 2,724 3,527 4,251 1,478 1,544 1,033 1,470 1,655 1,811 6,650 8,328 11,652 6,406 8,031 11,292 12,322 15,054 18,747 26,196 16,106 10,765 14,855 10,209 7,399 3,737 1,847 1,043 7,604 4,050 2,323 57,175 37,491 31,066 53,167 35,442 29,768 83,371 53,597 41,831 11,403 11,074 9,959 7,157 6,729 6,451 1,636 2,080 1,471 2,610 2,265 2,037 5,338 6,990 8,480 4,685 6,412 7,962 16,741 18,064 18,439 6,092 5,486 4,407 3,485 2,979 2,574 1,050 1,095 418 1,557 1,412 1,415 3,261 4,243 4,561 2,723 3,793 4,191 9,353 9,729 8,968 2,400 2,135 1,789 1,716 1,693 1,605 2,911 3,453 3,763 1,956 2,057 2,272 45 541 3 1 982 1,052 639 414 439 414 183 439 409 522 655 399 512 642 2,809 2,657 2,444 1,668 2,225 3,264 1,563 2,107 3,129 4,579 5,678 7,027 10,023 10,512 10,246 2,622 2,879 2,959 4,912 5,224 4,852 2,489 2,409 2,435 2,889 1,711 1,291 495 392 321 1,218 283 39 1,176 1,036 931 7,134 8,801 8,955 2,127 2,487 2,638 3,694 4,941 4,813 1,313 1,373 1,504 539 — 539 691 — 691 679 — 679 517 — 517 665 — 665 652 10,562 11,203 10,925 — 2,889 1,711 1,291 652 7,673 9,492 9,634 10,826 10,903 10,808 6,456 6,454 6,584 1,942 2,288 2,075 2,428 2,161 2,149 6,637 6,784 7,505 6,247 6,357 7,101 17,463 17,687 18,313 1,354 1,106 832 1,138 965 764 — — — 216 141 68 649 642 553 606 605 519 2,003 1,748 1,385 – of which NovoRapid® 9,472 9,797 9,976 5,318 5,489 5,820 1,942 2,288 2,075 2,212 2,020 2,081 5,988 6,142 6,952 5,641 5,752 6,582 15,460 15,939 16,928 Human insulin Total insulin Other Diabetes care Total Diabetes care Wegovy® Saxenda® 6,508 7,453 7,339 1,983 2,152 2,370 1,812 2,692 2,655 2,713 2,609 2,314 1,678 1,599 1,534 1,605 1,515 1,431 8,186 9,052 8,873 38,760 39,942 38,352 18,218 18,214 18,364 10,302 12,284 11,053 10,240 9,444 8,935 14,192 16,064 18,198 13,054 14,949 17,146 52,952 56,006 56,550 2,428 2,644 2,946 717 713 725 1,181 1,432 1,546 530 499 675 797 950 1,085 660 806 943 3,225 3,594 4,031 67,384 58,692 52,063 33,790 29,136 26,488 15,220 15,563 13,642 18,374 13,993 11,933 72,164 54,505 50,349 66,881 51,197 47,857 139,548 113,197 102,412 Total Obesity care 5,886 3,117 2,118 3,615 1,809 1,124 54 — — 54 — — 5,832 3,117 2,118 3,561 1,809 1,124 — 133 133 — 61 61 — 10 10 — — — 6,134 1,386 — 6,134 1,386 — 6,188 1,386 — 2,138 1,247 984 4,844 3,897 3,490 4,368 3,526 3,230 10,676 7,014 5,608 2,138 1,247 984 10,978 5,283 3,490 10,502 4,912 3,230 16,864 8,400 5,608 Diabetes and Obesity care total 73,270 61,809 54,181 37,405 30,945 27,612 15,353 15,624 13,652 20,512 15,240 12,917 83,142 59,788 53,839 77,383 56,109 51,087 156,412 121,597 108,020 Rare disease segment: Rare blood disorders 6,671 5,784 5,708 3,795 3,712 3,579 604 222 361 2,272 1,850 1,768 5,035 4,433 3,954 4,710 4,170 3,675 11,706 10,217 9,662 – of which Haemophilia A 1,769 1,625 1,332 1,137 1,162 – of which Haemophilia B 479 400 306 294 268 983 199 – of which NovoSeven® 4,335 3,673 3,996 2,311 2,225 2,352 Rare endocrine disorders 4,904 4,880 4,832 2,232 2,212 2,220 1,002 1,064 1,108 804 837 886 81 13 510 246 6 24 4 194 167 6 16 — 551 172 439 128 333 107 569 280 487 237 381 212 543 152 460 102 358 2,338 2,112 1,713 86 759 637 518 345 1,514 1,254 1,299 3,973 3,548 3,207 3,811 3,461 3,089 8,308 7,221 7,203 66 5 2,426 2,501 2,546 2,234 2,423 2,875 2,205 2,400 2,857 7,138 7,303 7,707 192 221 217 696 619 449 358 330 205 1,698 1,683 1,557 Total sales by geographical area 85,847 73,537 65,829 44,236 37,706 34,297 16,209 16,019 14,084 25,402 19,812 17,448 91,107 67,263 61,117 84,656 63,009 57,824 176,954 140,800 126,946 Total sales growth as reported 16.7% 11.7% 6.9% 17.3% 9.9% 6.5% 1.2% 13.7% 9.7% 28.2% 13.5% 5.7% 35.4% 10.1% 1.1% 34.4% 9.0% 0.6% 25.7% 10.9% 4.0% 12,577 11,728 11,648 6,831 6,761 6,685 856 395 432 4,890 4,572 4,531 7,965 7,475 7,278 7,273 6,900 6,737 20,542 19,203 18,926 Other Rare disease Rare disease total Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 62 2.3 Research and development costs DKK million Employee costs (note 2.4) 2022 9,952 2021 2020 7,328 6,269 Amortisation and impairment losses, intangible assets (note 3.1) Depreciation and impairment losses, property, plant and equipment (note 3.2) 1,364 744 1,025 922 736 724 Other research and development costs 11,809 8,964 7,444 Total research and development costs 24,047 17,772 15,462 As percentage of net sales 13.6% 12.6% 12.2% Novo Nordisk's research and development is mainly focused on: – 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 haemophilia and other rare blood disorders – human growth hormone and new modes of action for treatment of growth disorders and other rare endocrine disorders 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. Research and development costs primarily comprise employee costs as well as 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 intellectual property rights and property, plant and equipment used in the research and development activities. Amortisations of intellectual property rights related to marketed products are recognised in cost of goods sold. The largest individual type of cost included in Other research and development costs are clinical trial cost. Certain research and development activities are recognised outside research and development costs: 2.4 Employee costs DKK million 2022 2021 2020 Wages and salaries 34,575 28,939 26,778 Share-based payment costs (note 5.1) Pensions – defined contribution plans Pensions – defined benefit plans Other social security contributions Other employee costs 1,539 2,472 185 2,713 3,105 1,040 2,022 139 2,203 2,189 823 1,961 138 1,862 2,044 Total employee costs for the year 44,589 36,532 33,606 Employee costs capitalised as intangible assets and property, plant and equipment (1,451) (1,240) (1,279) Change in employee costs capitalised as inventories (70) (56) (60) Total employee costs in the income statement Included in the income statement: 43,068 35,236 32,267 Cost of goods sold 11,766 9,611 8,896 – new indications with existing assets within NASH, Alzheimer’s and chronic – Royalty expenses paid to partners after regulatory approval are expensed Sales and distribution costs 17,700 15,003 14,146 kidney disease as cost of goods sold – Research technology platforms including cell therapy and RNAi for – Royalty income received from partners is recognised as part of other treatment of NASH, cardiovascular disease, chronic kidney disease and Parkinson's disease, among others operating income and expenses – Contractual research and development obligations to be paid in the future are disclosed separately as commitments in note 5.2. 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 utilise new technology platforms including stem cells, gene therapy and 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. Research and development costs Administrative costs Other operating income and expenses 9,952 3,517 133 7,328 3,098 196 6,269 2,848 108 Total employee costs in the income statement 43,068 35,236 32,267 Number of employees 2022 2021 2020 Average number of full-time employees 51,046 46,171 43,759 Year-end number of full-time employees 54,393 47,792 44,723 Year-end employees (total) 55,185 48,478 45,323 Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 63 Remuneration to Executive Management and Board of Directors 2.6 Income taxes and deferred income taxes 2021 126 2020 119 Income taxes expensed DKK million Salary and short-term incentive Pension Benefits Long-term incentive1 Severance payments Executive Management in total2 Fee to Board of Directors3 Total 2022 141 13 9 97 — 260 20 280 12 10 100 29 277 17 294 26 10 52 — 207 17 224 1. Please refer to note 5.1 for further information. 2. Total remuneration for registered members of Executive Management amounts to DKK 175 million (DKK 202 million in 2021 and DKK 141 million in 2020). 3. 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 other 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 costs associated with secondary income and transaction costs incurred in connection with acquisition of businesses. DKK million 2022 2021 2020 Current tax on profit for the year 17,829 13,871 11,557 Deferred tax on profit for the year (3,806) (1,528) 1,105 Tax on profit for the year 14,023 12,343 12,662 Current tax adjustments recognised for prior years Deferred tax adjustments recognised for prior years 339 (603) (563) (825) (417) (1,107) Income taxes in the income statement 13,537 11,323 10,992 Tax on other comprehensive income for the year, (income)/expense 889 (1,005) 577 Computation of effective tax rate DKK million 2022 2021 2020 Statutory corporate income tax rate in Denmark 22.0% 22.0% 22.0% Deviation in foreign subsidiaries' tax rates compared to the Danish tax rate (net) (1.1%) (1.5%) (2.5%) Non-taxable income less non-tax- deductible expenses (net) Other adjustments (net) (0.5%) (0.8%) (0.3%) (0.2%) (1.0%) 1.4% Effective tax rate 19.6% 19.2% 20.7% 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 2022 2021 2020 9,181 9,703 4,262 5,647 3,439 4,508 (313) 1,296 1,336 Income taxes paid 14,515 14,438 10,106 The deviation in foreign subsidiaries' tax rates from the Danish tax rate is mainly driven by Swiss and US business activities. Other adjustments consist of tax related to acquisitions 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 2022, paid taxes related to prior years are impacted by a refund of overpaid tax from 2021. 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. In some countries withholding tax will be applied to dividends paid to Denmark. A provision for withholding tax is only recognised if a concrete distribution of dividends is planned. The unrecognised potential withholding tax amounts to DKK 567 million (DKK 444 million in 2021). 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. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 64 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 456 million in 2022 (DKK 166 million in 2021). 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. Development in deferred income tax assets and liabilities DKK million 2022 Property, plant and equipment Intangible assets Inventories Liabilities Other Net deferred tax asset/(liability) at 1 January (1,980) (7,375) Income/(charge) to the income statement Income/(charge) to other comprehensive income Income/(charge) to equity Additions from acquisitions (5.3) Effect of exchange rate adjustment (413) — — — (9) 674 — — (1,475) (103) 3,195 (465) (130) — — (5) 6,932 3,999 (141) — — 217 2,629 836 (608) 234 242 112 Offset within countries — Net deferred tax asset/(liability) at 31 December (2,402) (8,279) 2,595 11,007 3,445 — Classified as follows: Deferred tax asset at 31 December 579 195 2,627 11,027 4,169 (5,170) Deferred tax liability at 31 December (2,981) (8,474) (32) (20) (724) 5,170 2021 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 (5.3) Effect of exchange rate adjustment (330) — — — (36) 632 2 (2) (4,456) 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 719 109 (2,699) (7,484) 3,210 (15) 4,617 2,037 (41) — — 319 6,932 7,223 (291) — 1,404 (781) 793 194 976 43 2,629 — 3,541 (6,130) 8,672 (912) 6,130 (5,271) Total 3,401 4,631 (879) 234 (1,233) 212 6,366 13,427 (7,061) 3,363 1,945 1,005 192 (3,480) 376 3,401 2.7 Earnings per share Net profit 55,525 47,757 42,138 2022 2021 2020 Average number of shares outstanding1 in million shares Dilutive effect of average outstanding share pool2 in million shares Average number of shares outstanding, including dilutive effect of outstanding share pool in million shares 2,265.3 2,296.6 2,333.9 7.0 6.5 6.1 2,272.3 2,303.1 2,340.0 Basic earnings per share Diluted earnings per share DKK DKK 24.51 24.44 20.79 20.74 18.05 18.01 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 2022 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 65 Section 3 Operating assets and liabilities 3.1 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 2022 846 34 1,364 19 96 2,359 1,599 760 DKK million 2022 Cost at the beginning of the year Additions from acquisition of businesses (note 5.3) Additions during the year Disposals during the year Effect of exchange rate adjustment Cost at the end of the year 2021 2020 Amortisation and impairment losses at the beginning of the year Amortisation for the year Impairment losses for the year Amortisation and impairment losses reversed on disposals during the year Effect of exchange rate adjustment Amortisation and impairment losses at the end of the year 844 39 744 11 1 1,639 1,066 573 369 40 1,025 10 2 1,446 1,096 350 2022 additions Additions from acquisition of businesses relates to Novo Nordisk’s acquisition of Forma Therapeutics Holdings, Inc., which primarily includes the lead candidate Etavopivat, which is recognised within intellectual property rights and goodwill; please refer to note 5.3. Of the total addition of intangible assets in 2022 DKK 544 million is related to software projects and internally generated intangible assets (DKK 492 million in 2021). Carrying amount at the end of the year 5,092 42,994 2021 Cost at the beginning of the year Additions from acquisition of businesses (note 5.3) Additions during the year Disposals during the year Effect of exchange rate adjustment Cost at the end of the year Amortisation and impairment losses at the beginning of the year Amortisation for the year Impairment losses for the year Amortisation and impairment losses reversed on disposals during the year Effect of exchange rate adjustment Amortisation and impairment losses at the end of the year — 4,346 — — — 22,404 18,687 583 — 128 4,346 41,802 — — — — — — 3,135 866 573 — 78 4,652 Carrying amount at the end of the year 4,346 37,150 Intellectual property rights Software and other intangibles Total intangible assets Goodwill 4,346 524 — — 222 5,092 — — — — — — 41,802 5,766 1,310 (151) 1,004 49,731 4,652 1,404 760 (149) 70 6,737 3,434 492 1,426 (33) (38) 5,281 1,759 195 — (13) 10 1,951 3,330 2,936 24 492 (45) 27 3,434 1,548 200 — (1) 12 1,759 1,675 49,582 6,782 2,736 (184) 1,188 60,104 6,411 1,599 760 (162) 80 8,688 51,416 25,340 23,057 1,075 (45) 155 49,582 4,683 1,066 573 (1) 90 6,411 43,171 Novo Nordisk Annual Report 2022 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 66 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. Impairment test Intangible assets other than goodwill In 2022, an impairment loss of DKK 760 million (DKK 573 million in 2021) was recognised, all related to intellectual property rights. DKK 250 million (DKK 436 million in 2021) of the impairment was related to the Diabetes and Obesity care segment and DKK 510 million (DKK 137 million in 2021) was related to Rare disease. The entire impairment loss in 2022 was recognised in research and development costs (DKK 573 million in research and development costs in 2021). 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 2022 or in 2021. on discounted cash flow projections. The applied post-tax discount rates for Diabetes and Obesity care and Rare diseases are 7.0% (Pre-tax discount rate of 8.3%). Cash flow projections are based on budgets approved by management. The forecast period for Diabetes and Obesity care, and Rare diseases is 9 years. The discounted cash flows from the forecast period significantly exceeds the carrying amount of goodwill. The key assumptions and sensitivities are Novo Nordisk’s volume market share, growth rates, pricing, development of new markets and the success rate for introducing new products and treatments. Sensitivities are affected by external factors such as market- and generic competition, and price regulation. The value assigned to key assumptions reflects past experience adjusted for market specific risks or expected changes. Fair value is determined using largely unobservable inputs. Other intangible assets disclosures Intangible assets with an indefinite useful life and intangible assets not yet available for use amount to DKK 28,013 million (DKK 22,690 million in 2021), primarily intellectual property rights and goodwill. Intellectual property rights include DKK 5,546 million provisionally allocated to Etavopivat (please refer to note 5.3), DKK 4,648 million related to Ziltivekimab (DKK 4,612 million in 2021) and DKK 3,704 million related to Nedosiran (DKK 3,854 million in 2021), all of which are intangible assets under development. Goodwill As of 31 December 2022, goodwill is allocated to the segments Diabetes and Obesity care (DKK 4,154 million) and Rare diseases (DKK 938 million). At 31 December 2021, goodwill from the acquisition of Dicerna Pharmaceuticals, Inc was unallocated as the purchase price allocation for the acquisition was provisional. As of 31 December 2022, goodwill from the acquisition of Forma Therapeutics Holdings, Inc. is allocated to Rare disease based on a provisional purchase price allocation. No impairment of goodwill was recognised in 2022 or 2021 as the annual impairment test showed that the estimated recoverable amount in the forecast period exceeded the carrying amount of the cash-generating units to which goodwill was allocated. Goodwill is monitored for impairment at the operating segment level, which is the lowest level CGU to which consolidated goodwill is allocated and monitored by Management. CGUs are therefore defined as Novo Nordisk's business segments, Diabetes and Obesity care and Rare disease. Fair value less costs of disposal is estimated using an income-approach and is based In addition, intellectual property rights contain DKK 6,584 million related to Rybelsus (DKK 7,150 million in 2021), which has a remaining useful life of 12 years (13 years in 2021); and DKK 10,251 million (DKK 10,135 million in 2021) related to the RNAi technology platform, with a remaining useful life of 22 years (23 years in 2021). Accounting policies Research and development projects Internal and subcontracted research costs are fully charged 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 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. For acquired research and development projects, and 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. Recognition and measurement Intangible assets are initially measured at cost, and are subsequently measured at cost less any accumulated amortisation and any impairment loss. 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. Impairment tests are based on Management’s projections and anticipated net present value of estimated future cash flows from marketable products. Goodwill is allocated to operating segments based on expected future cash flow from products utilizing the synergies and know- how acquired. For intellectual property rights acquired for research and development projects, upfront fees and acquisition costs are capitalised as the historical cost. Subsequent milestone payments payable on achievement of a contingent event will be capitalised when the contingent event is 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 commences after regulatory approval has been obtained or when assets are put in use. Amortisation of software is based on the straight-line method over the estimated useful life of 3-15 years. The amortisation commences when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by Management. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 67 Impairment test Goodwill and intangible assets with an indefinite useful life and intangible assets not yet available for use are tested for impairment when indicators of impairment exist. They are tested annually, irrespective of whether there is any indication that they may be impaired. Impairment tests are based on Management’s projections and anticipated net present value of estimated future cash flows from marketable products. 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 – Realised sales trending below predicted sales – Changes or anticipated changes in participation rates or reimbursement policies – Inconsistent or unfavourable clinical readouts – Changes in the legal framework covering patents, rights and licences – Advances in medicine and/or technology that affect the medical treatments – 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. 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. Key accounting estimates and judgements on intangible assets Impairment tests are based on management’s projections and anticipated net present value of estimated future cash flows from marketable products. When collaboration agreements contain elements of acquisition of intangible assets and research and development activities to be performed by the counterpart, management estimates the allocation of payments that should be deferred to the acquisition of intangible assets and prepaid research and development activities respectively. 3.2 Property, plant and equipment DKK million 2022 Land and buildings Plant and machinery Other equipment Assets under construction Property, plant and equipment Cost at the beginning of the year 41,076 35,944 7,776 11,091 95,887 Additions from acquisition of businesses (note 5.3) Additions during the year Disposals during the year Transfer and reclassifications Effect of exchange rate adjustment Cost at the end of the year Depreciation and impairment losses at the beginning of the year Depreciation for the year Impairment losses for the year Depreciation and impairment losses reversed on disposals during the year Effect of exchange rate adjustment Depreciation and impairment losses at the end of the year Carrying amount at the end of the year 2021 297 706 (205) 1,000 529 43,403 14,669 2,245 3 (188) 52 16,781 26,622 2 143 (123) 1,152 430 37,548 21,138 1,793 10 (123) 117 22,935 14,613 14 645 (621) 329 (29) 8,114 4,718 916 3 (615) 17 5,039 3,075 — 313 13,160 14,654 (33) (2,481) 624 (982) — 1,554 22,361 111,426 — — 33 (33) — — 22,361 40,525 4,954 49 (959) 186 44,755 66,671 Cost at the beginning of the year 37,509 31,503 6,876 10,798 86,686 Additions from acquisition of businesses (note 5.3) Additions during the year Disposals during the year Transfer and reclassifications Effect of exchange rate adjustment Cost at the end of the year Depreciation and impairment losses at the beginning of the year Depreciation for the year Impairment losses for the year Depreciation and impairment losses reversed on disposals during the year Effect of exchange rate adjustment Depreciation and impairment losses at the end of the year Carrying amount at the end of the year 522 827 (359) 1,529 1,048 41,076 12,936 1,892 14 (365) 192 14,669 26,407 — 890 (148) 3,078 621 35,944 19,444 1,529 32 (140) 273 21,138 14,806 57 516 (305) 468 164 7,776 4,037 824 54 (305) 108 4,718 3,058 3 4,858 (41) (5,075) 548 11,091 — — 41 (41) — — 11,091 582 7,091 (853) — 2,381 95,887 36,417 4,245 141 (851) 573 40,525 55,362 Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 68 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 2022 3,229 424 922 408 20 5,003 1,052 2021 2,836 409 736 386 19 2020 2,729 403 724 433 18 Accounting policies Property, plant and equipment is measured at historical cost less accumulated depreciations and any impairment loss. The cost of self-constructed assets includes costs directly 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). 4,386 4,307 899 964 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. Capital expenditure in the reporting period was primarily related to investments in facility upgrades and new production facilities for active pharmaceutical ingredients (API) for diabetes products, mainly the new facilities in Kalundborg. The investments will establish additional capacity across the entire global value chain from manufacturing of API to assembly and packaging, with the vast majority being invested in API capacity. These expansions will provide capacity for the production of Novo Nordisk’s current and future oral and injectable products. Leased property, plant and equipment DKK million Land and buildings Other equipment Total 2022 3,544 587 4,131 2021 3,340 499 3,839 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 2022, the total amount recognised in the income statement related to leases was DKK 1,491 million (DKK 1,303 million in 2021). The total cash outflow for leases amounted to DKK 1,438 million (DKK 1,275 million in 2021). As of 31 December 2022, the lease liability excludes potential lease payments of DKK 3,723 million (undiscounted) related to optional lease term extension rights on properties that were not considered reasonably certain to be exercised (DKK 2,209 million in 2021). Please refer to note 4.5 for a maturity analysis of lease payments. 3.3 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 2022 6,392 2021 4,310 13,673 12,285 6,038 26,103 (1,715) 24,388 10,640 44% 2,256 1,110 (1,482) (169) 1,715 5,282 21,877 (2,256) 19,621 8,929 46% 2,153 883 (661) (119) 2,256 All write-downs in both 2022 and 2021 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 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 69 3.4 Trade receivables Movements in allowance for doubtful trade receivables DKK million Gross carrying amount Loss allowance Net carrying amount 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 2022 1,430 (15) 212 (107) 1,520 2021 1,380 (62) 102 10 1,430 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 2022 have overall remained unchanged from 2021. No loss allowance has been recognised on trade receivables in factoring portfolios in 2022 and 2021. Please refer to note 4.3 for more info on 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 Dun & Bradstreet country risk ratings and an individual assessment. Please refer to note 4.3 for a general description of credit risk. DKK million 2022 Not yet due 1-90 days 91-180 days 181-270 days 271-360 days More than 360 days past due 50,649 729 194 149 57 302 (920) (113) (77) (51) (57) (302) 49,729 616 117 98 — — Trade receivables 52,080 (1,520) 50,560 EMEA China Rest of World 9,486 1,138 5,297 (859) — (632) 8,627 1,138 4,665 North America Operations 36,159 (29) 36,130 Trade receivables 52,080 (1,520) 50,560 2021 Not yet due 1-90 days 91-180 days 181-270 days 271-360 days More than 360 days past due 40,274 (844) 39,430 1,132 212 87 63 305 (93) (74) (51) (63) (305) 1,039 138 36 — — Trade receivables 42,073 (1,430) 40,643 EMEA China Rest of World 7,827 2,564 4,227 (852) — (558) 6,975 2,564 3,669 North America Operations 27,455 (20) 27,435 Trade receivables 42,073 (1,430) 40,643 Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 70 3.5 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 2022 Total 2021 Total 50,822 2,157 206,354 (189,580) (1,141) 3,044 69,499 322 69,177 437 (103) (245) 130 2,376 2,028 348 858 591 2,057 55,894 39,340 333 207,715 157,164 (437) (158) (190,278) (142,691) 10 8 1,030 412 618 (292) (1,668) 32 3,214 (970) 3,051 1,972 1,828 74,877 55,894 4,590 4,374 144 70,287 51,520 1. Provisions for sales rebates are related to US Managed Care, Medicare, Medicaid, 340B drug pricing program and other types of US rebates, as well as rebates in a number of European countries and Canada. 2. Other provisions consists of various types of provisions, including obligations in relation to employee benefits such as jubilee benefits, company-owned life insurance, etc. 3. For non-current liabilities, provisions for sales rebates are 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 inherent uncertainties connected with these estimates. Pending litigation against Novo Nordisk In January 2021, Novo Nordisk made changes to its policy in the US related to facilitating delivery of its discounted medicines to commercial pharmacies that contract with covered entities participating in the 340B Drug Pricing Program. Novo Nordisk is currently engaged in litigation against the government seeking a declaration that its 340B policy is consistent with relevant US laws. On 30 January 2023, the U.S. Court of Appeals for the Third Circuit issued a ruling holding that Novo Nordisk’s drug distribution policy meets the requirements of the 340B statute. This ruling, as well as other expected rulings in related matters pending before the U.S. Courts of Appeals for the Seventh and DC Circuits, may be subject to further discretionary appellate review before the US Supreme Court. Depending on the outcome of any subsequent appeals in this and related matters, there may be a material 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. The lawsuit was subsequently dismissed by the Court on 2 September 2022, and the plaintiffs have sought leave to file an amended complaint. Novo Nordisk does not expect this matter to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow. Novo Nordisk is currently defending fourteen lawsuits, including three putative class actions, relating to the pricing of diabetes medicines. Four of these cases are pending in New Jersey federal court; four are pending in federal courts in Mississippi, Arkansas, Montana and New York and the remaining six are pending in state courts in Kansas, Illinois, Kentucky, California, Missouri and Puerto Rico. 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 US 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 in 2015 by a former Novo Nordisk US employee (the “Relator”) 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. In 2019, the DOJ and 28 state AGs declined to intervene in the Relator’s lawsuit. The State of Washington chose to intervene, and a consolidated complaint was filed and unsealed by the court on 28 May 2020. Novo Nordisk moved to dismiss the complaint, which resulted in certain claims being dismissed and certain claims remaining at this stage of the case. This matter is in the early stages of discovery and Novo Nordisk does not expect the lawsuit 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 Novo Nordisk US has received Civil Investigative Demands (CIDs) or subpoenas from several US authorities including Attorneys General from the states of Washington, New Mexico, New York, Colorado, Vermont, Illinois, Texas, Ohio and the US Federal Trade Commission that call for the production of documents and information relating to, among other things, the company’s trade practices relating to its insulin and GLP-1 products. Novo Nordisk is cooperating with the relevant government authorities in each of these investigative matters and does not expect these matters to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow. In December 2021, Novo Nordisk US received a CID from the United States Department of Justice relating to the company’s financial relationships with healthcare professional and prescriptions for Ozempic® and Rybelsus® during the period of 1 January 2016 to present. Novo Nordisk is cooperating with Department of Justice in this investigation and does not expect this matter 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. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 71 Key accounting estimates regarding ongoing legal disputes, litigation and investigations 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 counsel 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. 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 nor 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 Management's interpretation of applicable laws and regulations, 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 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 72 Section 4 Capital structure and financial items 4.1 Distribution to shareholders DKK million Interim dividend for the year Dividend for prior year Share repurchases for the year Total 2022 9,613 15,690 24,086 49,389 2021 8,021 2020 7,570 13,496 12,551 19,447 16,855 40,964 36,976 4.2 Share capital, Treasury shares and Other reserves Development in number of shares Million shares A shares B shares Total Shares beginning of 2021 Shares cancelled in 2021 Outstanding shares end of 2021 Shares cancelled in 2022 Outstanding shares end of 2022 537 — 537 — 537 1,813 2,350 (40) (40) 1,773 2,310 (30) (30) 1,743 2,280 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 2022, the share capital amounted to DKK 107 million in A share capital (DKK 107 million in 2021 and 2020) and DKK 349 million in B share capital (DKK 355 million in 2021 and DKK 363 million in 2020). 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. Treasury shares The net cash distribution to shareholders in the form of dividends and share repurchases amounts to DKK 49,389 million, compared with a free cash flow of DKK 57,362 million. The total dividend for 2022 amounts to DKK 27,950 million (DKK 12.40 per share). The 2022 final dividend of DKK 18,337 million (DKK 8.15 per share) is expected to be distributed pending approval at the Annual General Meeting. The interim dividend of DKK 9,613 million (DKK 4.25 per share) was paid in August 2022. The total dividend for 2021 was DKK 23,711 million (DKK 10.40 per share), of which the final dividend of DKK 15,690 million (DKK 6.90 per share) was paid in March 2022. No dividend is declared on treasury shares. Novo Nordisk's dividend pay-outs are complemented by share repurchase programmes. Holding at the beginning of the year Cancellation of treasury shares Released allocated shares to employees Purchase during the year Value adjustment Holding at the end of the year 2022 2021 2021 Market value, DKK million Number of B shares (million) Number of B shares (million) 22,858 (22,050) (1,350) 24,086 4,698 28,242 31.1 (30.0) (1.8) 30.8 — 30.1 37.5 (40.0) (1.1) 34.7 — 31.1 Other comprehensive income, net Transferred to intangible assets Reserve at the end of the year 2022 Other comprehensive income, net Reserve at the end of the year The purchase of treasury shares during the year relates to the remaining part of the 2021 share repurchase programme, totalling DKK 1.6 billion and the DKK 24 billion Novo Nordisk B share repurchase programme for 2022, of which DKK 1.5 billion was outstanding at year-end. The programme ended on 30 January 2023. Specification of Other reserves DKK million 2020 Reserve at the beginning of the year Other comprehensive income, net Transferred to intangible assets Reserve at the end of the year Exchange rate ad- justments Cash flow hedges Tax and other items Total (839) (329) 474 (694) (1,689) 1,713 (567) (543) — 418 (92) 326 (2,528) 1,802 (185) (911) 1,624 (3,557) 1,117 (816) — 15 (2) 13 (904) (1,740) 930 (1,714) 2,289 2,766 (892) 4,163 1,385 1,026 38 2,449 At the end of 2022, the holding of treasury shares amounted to 1.3% of the total outstanding shares (1.3% of the outstanding shares in 2021). 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 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 received for disposing of treasury shares are deducted directly in retained earnings. 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 2022, distributable reserves total DKK 63,136 million (DKK 51,114 million in 2021), corresponding to the parent company's retained earnings and reserve for cash flow hedges and exchange rate adjustments. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 73 4.3 Financial risks Management has assessed the following key financial risks: Type Financial risk Foreign exchange risk Credit risk Interest rate risk Liquidity risk High Low Low Low 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 Sensitivity of all currencies Income statement Other comprehensive income Total Hereof sensitivity of USD Income statement Sensitivity of an immediate 5% decrease in currency rates on 31 December versus DKK and EUR2 DKK million 2022 2021 (37) 3,431 3,394 150 2,923 3,073 (113) 2,677 2,564 87 2,218 2,305 Novo Nordisk has a centralised management of the Group's financial risks. The overall objectives and policies for the company's financial risk management are outlined in the 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 CAD, 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. USD CNY JPY CAD GBP Other comprehensive income Average exchange rate applied (DKK per 100) Total 2022 2021 2020 708 629 654 105 97 95 5.40 5.73 6.13 Year-end exchange rate applied (DKK per 100) 2022 2021 2020 697 657 606 101 103 93 5.29 5.70 5.88 543 502 488 515 517 474 873 865 839 838 885 824 Foreign exchange rate sensitivity analysis At year-end, an immediate 5% 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% decrease in key currencies1 DKK million 2023 2022 USD (3,180) (2,350) CNY (500) (360) JPY (240) (230) CAD (320) (200) GBP (160) (120) 1. An immediate 5% increase would have the opposite impact of the above. As per the end of 2022, a positive market value of financial contracts related to hedging of foreign exchange risk of DKK 1,026 million has been deferred for recognition in 2023 (In 2021 a negative market value of DKK 1,740 million was deferred for recognition in 2022). 2. An immediate 5% increase 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 CNY3 2022 2021 12 12 0 0 JPY 12 12 CAD GBP 9 9 11 11 3. 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 2022, the hedging horizon varied between 9 and 12 months for USD, JPY, CAD and GBP. Average hedge rate for USD cash flow hedges is 696 at the end of 2022 (628 at the end of 2021). Novo Nordisk Annual Report 2022 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 74 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 2022 AAA range AA range A range BBB range Not rated or below BBB range Total 2021 AAA range AA range A range BBB range Not rated or below BBB range Cash at bank Marketable securities Derivative financial instruments 6 10,797 5,507 6,550 124 466 — 124 — — — 963 1,764 — — Total 10,803 6,470 8,438 124 466 477 3,726 5,637 23 857 6,765 — — — — — 585 1,105 — — 7,242 4,311 6,742 23 857 Total 10,720 6,765 1,690 19,175 Novo Nordisk considers its maximum credit exposure to financial counterparties to be DKK 26,301 million (DKK 19,175 million in 2021). 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 52,714 million (DKK 43,425 million in 2021). 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 rating 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 predominantly 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 2022 have overall remained unchanged from 2021 to 2022. 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 facility4 Undrawn bridge facility5 2022 2021 2020 12,653 10,921 11,527 — 10,719 12,226 6,765 — 11,526 11,531 — 5,577 (576) Borrowings (Note 4.5) (480) (12,861) DKK million US Japan 2022 1,394 2,273 2021 1,313 2,453 2020 1,817 2,351 Financial reserves 34,621 16,149 28,758 4. The undrawn committed credit facility comprises a EUR 1,550 million facility (EUR 1,550 million in 2021 and EUR 1,550 million in 2020) committed by a portfolio of international banks. The facility matures in 2025. 5. For 2020, the undrawn bridge facility comprises the EUR 750 million (DKK 5,577 million) undrawn portion of EUR 1,500 million bridge facility. 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. Please refer to note 3.4 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. Interest rate risk on marketable securities of DKK 10,921 million is considered low due to a low portfolio duration. 12,653 10,921 2,727 26,301 Trade receivable programmes At year-end, the Group had derecognised receivables without recourse having due dates after 31 December 2022 amounting to: Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 75 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 forecasted transaction is ultimately recognised in the income statement. When a forecasted 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. 4.4 Derivative financial instruments Derivative financial instruments 2022 2021 DKK million Forward contracts USD1 Forward contracts JPY, GBP and CAD Forward contracts, cash flow hedges Forward contracts USD1 Forward contracts CNH, CAD, EUR, GBP and JPY Forward contracts, fair value hedges 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 59,292 10,677 69,969 38,432 4,111 42,543 1,591 373 1,964 639 124 763 907 31 938 1,942 23 1,965 2,903 1,965 938 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 49 1,789 Total derivative financial instruments 112,512 2,727 Recognised in the income statement Recognised in other comprehensive income 763 1,964 1. Average hedge rate for USD cash flow hedges is 696 at the end of 2022 (628 at the end of 2021) and average hedge rate for USD fair value hedges is 714 at the end of 2022 (628 at the end of 2021). The fair value of cash flow hedges at year-end 2022, a gain of DKK 1,026 million, has been recognised in other comprehensive income. Accounting policies On initiation of the contract, Novo Nordisk designates each derivative financial contract that qualifies for hedge accounting as one of: 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 2022, primarily because hedging instruments match currencies of hedged cash flows. 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. – 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. Novo Nordisk Annual Report 2022 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 76 4.5 Borrowings Reconciliation of liabilities arising from financing activities Contractual undiscounted cash flows DKK million Leases 2022 Issued Euro- bonds Bank over- drafts1 Loans DKK million 2022 Total Lease liabilities Issued Eurobonds 480 1,568 Loans Bank overdrafts1 Within 1 year 1,088 — 1-3 years 3-5 years 1,566 8,556 923 3,707 More than 5 years 1,416 8,512 Total 4,993 20,775 Carrying amount end of the year 4,529 20,775 Non-current liabilities 3,543 20,775 Current liabilities 986 — 2021 — — — — — — — — — 10,122 — — 4,630 9,928 480 26,248 480 25,784 — 24,318 480 1,466 Within 1 year 946 — 12,503 359 13,808 1-3 years 3-5 years 1,475 4,854 942 — More than 5 years 1,266 4,800 — — — — — — 6,329 942 6,066 Total 4,629 9,654 12,503 359 27,145 Carrying amount end of the year 4,129 9,654 12,503 359 26,645 Non-current liabilities 3,307 9,654 — — 12,961 Current liabilities 822 — 12,503 359 13,684 Issuance of Eurobonds Nominal value in millions Interest 0.000% Fixed 0.750% Fixed 1.125% Fixed 0.125% Fixed 1.375% Fixed Maturity Jun 2024 Mar 2025 Sep 2027 Jun 2028 Mar 2030 EUR 650 500 500 650 500 DKK 4,834 3,718 3,718 4,834 3,718 Beginning of the year Re- payments Proceeds Additions2 Disposals Exchange rates Other End of the year Non-cash movements 4,129 9,654 (998) — 1,358 — 11,120 12,503 (12,623) 358 (2) — 95 — — — Liabilities arising from financing activities 26,644 (13,623) 11,215 1,358 Bank overdrafts1 Total borrowings 2021 Lease liabilities Issued Eurobonds Loans Bank overdrafts1 1 (1) — — 26,645 (13,624) 11,215 1,358 3,672 (874) — 1,183 — — 9,657 5,577 (5,577) 12,503 576 (238) — — — — Liabilities arising from financing activities 9,825 (6,689) 22,160 1,183 Bank overdrafts1 Total borrowings 531 (527) — — 10,356 (7,216) 22,160 1,183 (1) — — — (1) — (1) — — — — — — — 43 (2) 120 27 188 — 188 146 — — 17 163 — 163 (2) 3 — 2 3 — 3 2 (3) — 3 2 (3) (1) 4,529 20,775 — 480 25,784 — 25,784 4,129 9,654 12,503 358 26,644 1 26,645 1. Bank overdrafts includes DKK 480 million classified as financing activities (DKK 358 million in 2021) and none classified as cash and cash equivalents (DKK 1 million in 2021). 2. Includes additions from acquisitions of businesses. Eurobonds In 2022, three tranches with aggregate principal amount of EUR 1.5 billion corresponding to DKK 11.1 billion were launched under the programme. Net proceeds of the issuances have been used for general corporate purposes, including refinancing of the bridge loan facility established in connection with Novo Nordisk’s acquisition of Dicerna Pharmaceuticals, Inc. in 2021. In 2021, two tranches with an aggregate principal amount of EUR 1.3 billion corresponding to DKK 9.7 billion were launched. 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. Issued Eurobonds are listed on Euronext Dublin. The total fair value of issued Eurobonds amounts to DKK 18.7 billion (DKK 9.6 billion in 2021). Sale and repurchase agreement In 2021, 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 was DKK 5,937 million, and the associated liabilities amounted to DKK 5,937 million. The repurchase was fixed, and Novo Nordisk therefore retained full exposure from fair value changes of the marketable securities. Therefore, the transaction was treated as a collateralised lending arrangement. The marketable securities were repurchased in 2022. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 77 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. 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 4.7 Other non-cash items DKK million 2022 2021 2020 DKK million 2022 2021 2020 Cash at bank (note 4.3) 12,653 10,720 12,757 Borrowings1 (note 4.5) — (1) (531) Cash and cash equivalents 12,653 10,719 12,226 1. Bank overdrafts includes DKK 480 million classified as financing activities (DKK 358 million in 2021) and none classified as cash and cash equivalents (DKK 1 million in 2021). Cash and cash equivalents at 31 December 2022 includes DKK 458 million that is restricted (DKK 1,123 million in 2021). 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. 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 3.5) and retirement benefit obligations Other Total other non-cash items 139 124 189 58 53 (340) 195 24 (149) 1,539 1,040 823 19,080 1,239 22,310 16,581 (4,354) 13,009 3,605 3,322 7,849 4.8 Change in working capital DKK million Inventories 2022 2021 (4,767) (1,085) 2020 (895) Trade receivables (9,917) (12,909) (2,822) Other receivables and prepayments Trade payables Other liabilities Adjustment for payables related to non-current assets Adjustment related to acquisition of businesses Change in working capital including exchange rate adjustments (968) 6,717 4,006 (469) 3,153 2,595 (419) (641) 1,274 (1,567) (15) 879 (143) (1,409) — (6,639) (10,139) (2,624) Exchange rate adjustments 1,303 1,483 (1,729) Cash flow change in working capital (5,336) (8,656) (4,353) Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 78 4.9 Financial assets and liabilities Financial assets by category DKK million Other financial assets Marketable securities Financial assets at fair value through the income statement Derivative financial instruments (note 4.4) Derivatives used as hedging instruments (assets) Other financial assets Trade receivables (note 3.4) 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 portfolio Financial assets at fair value through other comprehensive income Total financial assets at the end of the year by category Financial liabilities by category Derivative financial instruments (note 4.4) 2,903 2,184 Derivatives used as hedging instruments (liability) Borrowings (non-current) (note 4.5) Borrowings (current) (note 4.5) Trade payables Other liabilities (non-current) Other liabilities (current) – less VAT and duties payable 2,903 24,318 1,466 15,587 100 2,184 12,961 13,684 8,870 360 23,606 19,600 (875) (590) Financial liabilities measured at amortised cost 64,202 54,885 Total financial liabilities at the end of the year by category1 67,105 57,069 1. 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 206 million in 2022, DKK 267 million in 2021) are all due within one year. Other financial assets at amortised cost include DKK 433 million which are due in more than five years (DKK 335 million in 2021). Other financial assets measured at fair value through the income statement are minor shareholdings. 2022 559 2021 553 10,921 6,765 Fair value measurement hierarchy 11,480 2,727 2,727 457 7,318 1,690 1,690 363 DKK million Active market data Directly or indirectly observable market data Not based on observable market data Total financial assets at fair value 16,593 15,036 Active market data 2022 11,288 2,727 34,159 48,174 — 2021 7,169 1,690 25,756 34,615 — 6,211 (5,073) 12,653 30,841 33,967 5,304 (3,438) 10,720 27,985 25,607 33,967 25,607 79,015 62,600 Directly or indirectly observable market data 2,903 2,184 Not based on observable market data — — Total financial liabilities at fair value 2,903 2,184 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 2022 or 2021. Disclosed fair value of issued Eurobonds are based on 'Active market data'. 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 used as hedging instruments – Financial assets at amortised cost – Financial assets at fair value through other comprehensive income – Financial liabilities used as hedging instruments – Financial liabilities at amortised cost Recognition and measurement Financial assets at fair value through the income statement consist of equity investments and marketable securities. These financial instruments 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 3.4. 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 Eurobonds, bank overdrafts and lease liabilities), trade payables and other liabilities (primarily employee cost payables, payables related to non-current assets, sales rebates as well as deferred revenue). Other liabilities primarily comprises employee cost payables, payables related to non-current assets, sales rebates as well as deferred revenue. 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. 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. Financial liabilities are derecognised when the obligation is repaid, cancelled or expires. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 79 Fair value measurement If an active market exists, the fair value of a financial instrument 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. 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 such financial instruments are determined on the basis of quoted market prices of financial instruments traded in active markets. 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 input 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. 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 2022 2021 2020 239 — — — — 231 — 2,316 340 — 337 1,142 — — 149 DKK million 2022 2021 2020 Income/(loss) transferred from other comprehensive income Value adjustment of transferred contracts Unrealised fair value adjustments of forward contracts2 Realised foreign exchange gain/ (loss) on forward contracts Financial income/(expense) from forward contracts (1,740) 1,802 (329) (3,772) (1,411) 79 (1,202) 1,246 (835) 4,948 679 (804) (1,766) 2,316 (1,889) 2. Please refer to note 4.4 Derivative financial instruments for information on open fair Total financial income 239 2,887 1,628 value hedge contracts at 31 December. 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 378 2,885 1,766 124 463 189 181 289 1,972 — — 44 24 122 390 — 1,889 195 — — 150 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. Total financial expenses 5,986 2,451 2,624 1. Total interest income and expenses is measured at amortised cost for financial assets and liabilities. 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. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 80 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 Share-based payment expensed in the income statement 2022 265 2021 189 2020 189 250 234 162 819 205 598 436 19 36 1,539 1,040 823 1. In 2021, Novo Nordisk introduced a new share-based compensation programme with terms, which amortises the grant date valuation over three years (2019 and 2020 programmes were amortised over four years). The 2022 expense includes amortisation of the 2019, 2020, 2021 and 2022 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. The grant date of the programme was February 2022, and the share price used for the determining the grant date fair value of the award was the average share price for Novo Nordisk B shares on Nasdaq Copenhagen in the period 2-16 February 2022, adjusted for the expected dividend (DKK 639). Based on the split of participants when the share allocation was decided, 47% of the allocated shares will be allocated to members of Executive Management and 53% to other members of the Management Board. Long-term share-based incentive programme Management Board On 31 January 2023, the Board of Directors approved an interim allocation of 0.4 million Novo Nordisk B shares to the members of the Management Board for the 2022 financial year. The number of shares is periodically estimated based on long-term incentive performance. The final number of shares allocated for the 2022 programme is to be decided at the end of the performance period in 2024. The value at launch of the programme (adjusted for expected dividends) was DKK 234 million. The shares allocated for 2019 were released to the individual participants subsequent to approval of the 2022 Annual Report by the Board of Directors and after the announcement of the 2022 full-year financial results on 1 February 2023. The shares allocated correspond to a value at launch of the programme of DKK 152 million, expensed over the vesting period of 2019- 2022. The number of shares to be transferred (0.6 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%. The cost of the 2022 programme is amortised over the vesting period of 2022-2024 at an annual amount of DKK 78 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, with the first time having been in February 2022 for the year 2022. All restricted stock units and shares allocated to Management are settled by treasury shares at the time of vesting. 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 Outstanding at the beginning of the year Released allocated shares Cancelled allocated shares Allocated in the year Performance adjustment2 Outstanding at the end of the year 2022 2.0 (0.0) — 0.4 — 2.4 2021 2.1 (0.1) — — — 2.0 2020 2.1 (0.0) — — — 2.1 2022 2.2 (0.5) (0.1) 0.4 — 2.0 2021 1.8 (0.3) 0.0 0.5 0.2 2.2 2020 1.3 (0.1) (0.0) 0.4 0.2 1.8 2022 5.5 (1.2) (0.2) 1.7 — 5.8 2021 4.5 (0.6) (0.3) 1.6 0.3 5.5 2020 3.2 (0.2) (0.1) 1.0 0.6 4.5 2022 0.2 (0.1) (0.0) 0.4 — 0.5 2021 0.2 (0.1) (0.0) 0.1 — 0.2 2020 0.3 (0.1) (0.0) — — 0.2 2. The number of shares for Management Board and management group below Management Board has been adjusted as the targets set by the Board are expected to be exceeded for the 2019, 2020, 2021 and 2022 programmes. Total 2021 8.6 (1.1) (0.3) 2.2 0.5 9.9 2022 9.9 (1.8) (0.3) 2.9 — 10.7 2020 6.9 (0.4) (0.1) 1.4 0.8 8.6 Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 81 General terms and conditions of 2020-2022 programmes 5.2 Commitments Number of shares awarded in the year (million) Value per share at launch (DKK) Total market value at year-end (DKK million) Performance and vesting period Shares for Management Board Shares for management group below Management Board Shares allocated to individual employees 2022 2021 2020 2022 2021 2020 2022 2021 2020 0.4 639 234 0.5 423 223 0.4 411 1.7 639 152 1,062 1.6 423 649 1.0 411 416 0.4 743 316 0.1 538 71 0.0 391 17 2022 to 2024 2021 to 2023 2020 to 2023 2022 to 2024 2021 to 2023 2020 to 2023 2022 to 2025 2021 to 2024 2020 to 2023 Allocated to recipients Feb 2025 Feb 2024 Feb 2024 Feb 2025 Feb 2024 Feb 2024 2025 2024 2023 Amortisation period 3 years 3 years 4 years 3 years 3 years 4 years 3 years 3 years 3 years Management group below the Management Board The management group below the Management Board has a share-based incentive programme with similar performance criteria. For 2022, a total of 1.7 million shares have currently been allocated to this group, corresponding to a value at launch of the programme adjusted for expected dividends of DKK 1,062 million. The number of shares is periodically estimated based on long-term incentive performance. The final number of shares allocated for the 2022 programme is decided at the end of the performance period in 2024. The cost of the 2022 programme is amortised over the vesting period of 2022-2024 at an annual amount of DKK 354 million. Financial targets are set by the Board for a three-year period, while every year the Board sets the non-financial targets. The shares allocated for 2019 were released to the individual participants subsequent to approval of the 2022 Annual Report by the Board of Directors and after the announcement of the 2022 full-year financial results on 1 February 2023. The shares allocated correspond to a value at launch of the programme of DKK 387 million amortised over the period 2019-2022. The number of shares to be transferred (1.5 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%. 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. Contractual obligations not recognised in the balance sheet DKK million (Undiscounted) Current Non- current Total 2022 Leases1 205 Research and development obligations 5,988 1,641 7,582 1,846 13,570 Research and development – potential milestone payments2 Commercial product launch – potential milestone payments2 Purchase obligations relating to investments in property, plant and equipment 376 5,011 5,387 — 7,598 7,598 1,696 1,427 3,123 Other purchase obligations 18,762 14,366 33,128 Total obligations not recognised in the balance sheet 27,027 37,625 64,652 2021 Leases1 145 636 781 Research and development obligations 4,196 6,357 10,553 Research and development – potential milestone payments2 Commercial product launch – potential milestone payments2 Purchase obligations relating to investments in property, plant and equipment 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 1. Predominantly relates to estimated variable property taxes, leases committed but not yet commenced and low value leases. 2. Potential milestone payments are associated with uncertainty as they are linked to successful achievements in research activities. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 82 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. 5.3 Acquisition of businesses Fair value recognised at date of acquisition DKK million Intellectual property rights Other intangible assets Financial assets Marketable securities Cash The purchase obligations related to investments in property, plant and equipment primarily relates to production capacity expansion projects. Novo Nordisk expects to fund these commitments with existing cash and cash flow from operations. Deferred tax assets (liabilities), net Other net assets Net identifiable assets acquired The contractual obligations not recognised in the balance sheet represent contractual payments and are not discounted and are not risk-adjusted. Goodwill Purchase price Other guarantees Other guarantees amount to DKK 1,222 million (DKK 1,251 million in 2021). Other guarantees primarily relate to performance guarantees issued by Novo Nordisk. Settlement of pre-existing relationship Fair value of existing shareholdings Consideration transferred Cash acquired Cash used for acquisition of businesses 2022 2021 Forma Thera- peutics Dicerna Pharma- ceuticals 5,766 18,687 492 77 1,470 1,027 (1,233) (21) 7,578 524 8,102 — — 8,102 (1,027) 7,075 24 31 861 3,033 (3,480) (1,468) 17,688 4,346 22,034 (145) (573) 21,316 (3,033) 18,283 Business combinations in 2022 On 14 October 2022, Novo Nordisk acquired all outstanding shares of the publicly held US company Forma Therapeutics Holdings, Inc. at a price of 20 USD per share via a cash tender offer, equal to a total purchase price of DKK 8,102 million. Novo Nordisk had no pre-acquisition ownership stake in, or pre-existing collaboration with Forma Therapeutics Holdings, Inc. About Forma Therapeutics Holdings, Inc. Forma Therapeutics Holdings, Inc., including its two fully owned subsidiaries Forma Therapeutics, Inc. and Forma Securities Corp, (Collectively Forma Therapeutics) is a clinical-stage biopharmaceutical company focused on the research, development and commercialization of novel therapeutics to transform the lives of patients with rare haematological diseases. Strategic rationale The acquisition of Forma Therapeutics, including its lead development candidate, etavopivat, is aligned with Novo Nordisk’s strategy to complement and accelerate its scientific presence and pipeline in haemoglobinopathies, a group of disorders in which there is abnormal production or structure of the haemoglobin protein in the red blood cells. Etavopivat, an investigational oral, once-daily, selective pyruvate kinase-R (PKR) activator, is being developed to improve anaemia and red blood cell health in people with sickle cell disease (SCD), a seriously debilitating, life-threatening and life shortening disease. Details of the acquisition The purchase price allocated to goodwill, intellectual property rights, other intangible assets, and deferred tax assets and liabilities, is considered provisional due to uncertainty on key assumptions which require detailed analysis which has not been possible to conclude as of 31 December 2022. Adjustments may be applied to the purchase price allocation for a period of up to 12 months from the acquisition date. The goodwill is primarily attributable to the highly-skilled workforce in place at Forma Therapeutics. The goodwill is fully allocated to the rare disease business segment and is not deductible for tax purposes. Transaction costs of DKK 51 million are included in other operating income and expenses in the income statement for 2022. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 83 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. 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 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 deductible for tax purposes. Transaction costs of DKK 124 million are included in other operating income and expenses in the income statement for 2021. At end of 2021, the purchase price allocation for the acquisition of Dicerna Pharmaceuticals, Inc. was provisional. The allocation was finalised in 2022 without any adjustments. 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 standards. 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. Goodwill is recognised at the excess of purchase price over the fair value of net identifiable assets acquired and liabilities assumed. Key accounting estimate in determining the fair value of intangible assets and judgement of whether a transaction is an asset acquisition or a business combination 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 is made if the acquired company comprise of a business, and should be accounted for as 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. For the 2022 acquisition of Forma Therapeutics Holdings, Inc. valuations of intellectual property rights were based on estimated and risk adjusted net present value of future cash flows. For the 2021 acquisition of Dicerna Pharmaceuticals, Inc. valuation of intellectual property rights 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 and risk adjusted net present value of future cash flows. 5.4 Related party transactions Material transactions with related parties DKK million Novo Holdings A/S 2022 2021 2020 Purchase of Novo Nordisk B shares 6,984 6,695 5,963 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 7,207 6,144 5,767 660 — (78) 92 593 (4) (116) 78 775 (18) (113) 72 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 76.9% 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 associated companies 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 and Executive Management of Novo Nordisk A/S. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 84 In 2022, Novo Nordisk A/S acquired 8,415,000 B shares, worth DKK 7.0 billion, from Novo Holdings A/S as part of the DKK 24.0 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 2022. 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, Inc., Sonion A/S or CS Solar Fund XIV. 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 2022, nor were there any in 2021 or 2020. There were no material unsettled balances with related parties at the end of the year. 5.5 Fee to statutory auditors 5.6 General accounting policies DKK million Statutory audit1 Audit-related services Tax advisory services Other services Total fee to statutory auditors 2022 38 2 3 12 55 2021 26 3 4 4 37 2020 26 3 9 4 42 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. 1. 2022 statutory audit fee includes DKK 9 million of additional fee related to 2021. Fees for services other than statutory audit of the financial statements amount to DKK 17 million (DKK 11 million in 2021 and DKK 16 million in 2020). In 2022, Deloitte Statsautoriseret Revisionspartnerselskab provided other services than statutory audit in the amount of DKK 12 million (DKK 6 million in 2021) which relate to tax compliance and transfer pricing, management consulting for strategic projects, educational training, review of ESG data, and other assurance assessments and opinions. PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab (PricewaterhouseCoopers Denmark) provided other services in the amount of DKK 9 million in 2020 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 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 85 Company and country Percentage of shares owned Activity Company and country Company and country Percentage of shares owned Percentage of shares owned Activity Activity 5.7 Companies in the Novo Nordisk Group Activity: Sales and marketing Research and development Production Services/investments Company and country Parent company Novo Nordisk A/S, Denmark Subsidiaries by geographical area Novo Nordisk Egypt Pharmaceuticals Ltd., Egypt Novo Nordisk Farma OY, Finland Novo Nordisk, France Novo Nordisk Production SAS, France Novo Nordisk Pharma GmbH, Germany Novo Nordisk Hellas Epe., Greece Activity Novo Nordisk Hungária Kft., Hungary • • • • Novo Nordisk Limited, Ireland Novo Nordisk Ltd, Israel Novo Nordisk S.P.A., Italy Novo Nordisk Kazakhstan LLP, Kazakhstan Company and country Percentage of shares owned Activity Novo Nordisk Kenya Ltd., Kenya Region China Novo Nordisk (China) Pharmaceuticals Co. Ltd., China 100 • • Novo Nordisk (Shanghai) Pharma Trading Co., Ltd., China 100 • Novo Nordisk Region China A/S, Denmark Novo Nordisk Hong Kong Limited, Hong Kong Novo Nordisk Pharma (Taiwan) Ltd., Taiwan Beijing Novo Nordisk Pharmaceuticals Science & Technology Co., Ltd., China Region 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 • 100 • 100 100 • 100 • 100 • North America Operations Novo Nordisk Canada Inc., Canada Novo Nordisk Inc., US Novo Nordisk North America Operations A/S, Denmark Novo Nordisk Pharmaceutical Industries LP, US Novo Nordisk Pharmatech US, Inc., US Novo Nordisk Pharma, Inc., US Novo Nordisk Research Center Indianapolis, Inc., US Novo Nordisk Research Center Seattle, Inc., US Novo Nordisk US Bio Production, Inc., US Novo Nordisk US Commercial Holdings, Inc., US Novo Nordisk US Holdings Inc., US Corvidia Therapeutics, Inc., US Dicerna Pharmaceuticals, Inc., US Emisphere Technologies, Inc., US Forma Therapeutics, Inc., US Region 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 Region 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 100 • 100 • 100 100 100 • 100 • 100 100 100 100 100 100 100 100 100 100 100 • 100 100 100 • • • • • • • • • • • • • • • • 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 Portugal, Lda., Portugal Novo Nordisk Farma S.R.L., Romania Novo Nordisk Production Support LLC, Russia 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 100 • • 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, UK Novo Nordisk Limited, UK Novo Nordisk Research Centre Oxford Limited, UK 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • • 100 • Novo Nordisk Limited Liability Company, Russia 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 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 Vietnam Ltd., Vietnam Other subsidiaries and associated companies NNE A/S, Denmark NNIT A/S, Denmark CS Solar Fund XIV, LLC, US • • 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 • 100 • 100 18 99 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 100 • 100 • 100 • 100 • 100 • 100 • 100 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 • 100 100 • 100 • • • • • • Novo Nordisk Annual Report 2022 86 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. The amount for 2018 have been restated in 'Financial highlights'. Working capital Working capital measures the liquid assets Novo Nordisk has available for operations. 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 payout 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 net sales. Net profit margin Net profit as a percentage of net sales. Number of shares outstanding The total number of shares, excluding the holding of treasury shares. Operating margin Operating profit as a percentage of net sales. Purchase of intangible assets Cash flow statement amount for the purchase of intangible assets. Novo Nordisk Annual Report 2022Part of Management´s review – not audited87 Non-IFRS financial measures (part of Management's review – not audited) 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. Sales in constant exchange rates DKK million Net sales IFRS 2022 2021 2020 176,954 140,800 126,946 Effect of exchange rate (13,024) 3,643 3,254 Sales in constant exchange rates 163,930 144,443 130,200 Net sales previous year 140,800 126,946 122,021 % increase/(decrease) in reported currencies % increase/(decrease) in constant exchange rates 25.7% 10.9% 4.0% 16.4% 13.8% 6.7% The non-IFRS financial measures presented in the Annual Report are: Operating profit in constant exchange rates Return on invested capital (ROIC) 'ROIC' 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 ROIC 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. The following tables show the reconciliation of ROIC with operating profit/ equity in %, the most directly comparable IFRS financial measure: – sales and operating profit in constant exchange rates (CER) – return on invested capital (ROIC) – 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. 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 2022 74,809 (7,578) 67,231 58,644 2021 2020 58,644 54,126 2,332 1,930 Operating profit/equity in % DKK million Operating profit IFRS 60,976 56,056 / Equity IFRS 54,126 52,483 Operating profit/equity in % 27.6% 8.3% 3.1% ROIC 14.6% 12.7% 6.8% DKK million Operating profit after tax / Average net operating assets ROIC in % ROIC numerator 2022 74,809 83,486 89.6% 2022 60,146 81,744 73.6% 2021 2020 58,644 54,126 70,746 63,325 82.9% 85.5% 2021 2020 47,384 42,922 68,634 51,824 69.0% 82.8% Reconciliation of operating profit to operating profit after tax: DKK million 2022 2021 2020 Operating profit IFRS 74,809 58,644 54,126 Tax on operating profit (using effective tax rate) (14,663) (11,260) (11,204) Operating profit after tax 60,146 47,384 42,922 Novo Nordisk Annual Report 2022Part of Management´s review – not audited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: 88 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: 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 2022 2021 2020 Cash flow from operating activities/net profit in % 78,887 55,000 51,951 DKK million 2022 2021 2020 (24,918) (31,605) (22,436) 2,921 5,937 — 1,470 (998) 861 (874) — (950) Net cash generated from operating activities IFRS / Net profit IFRS Cash flow from operating activities/net profit in % 78,887 55,525 55,000 47,757 51,951 42,138 142.1% 115.2% 123.3% Cash to earnings DKK million Free cash flow / Net profit IFRS Cash to earnings 2022 57,362 55,525 103.3% 2021 29,319 47,757 61.4% 2020 28,565 42,138 67.8% Free cash flow 57,362 29,319 28,565 ROIC 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 income 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 assets 2022 51,416 66,671 13,427 206 24,388 50,560 940 6,005 (7,061) (762) (100) (4,590) (15,587) (7,091) (23,606) (70,287) 84,529 81,744 2021 43,171 55,362 8,672 267 19,621 40,643 1,119 5,037 (5,271) (1,280) (360) (4,374) (8,870) (3,658) 2020 20,657 50,269 5,865 674 18,536 27,734 289 4,161 (2,502) (1,399) — (4,526) (5,717) (3,913) (19,600) (17,005) (51,520) (34,814) 78,959 68,634 58,309 51,824 Reconciliation of net operating assets to equity: IFRS DKK million Equity IFRS Investment in associated companies Other financial assets Marketable securities Derivative financial instruments 2022 2021 2020 83,486 70,746 63,325 (327) (1,016) (10,921) (2,727) (525) (916) (6,765) (1,690) (582) (1,066) — (2,332) Cash at bank (12,653) (10,720) (12,757) Borrowings – non-current Borrowings – current Derivative financial instruments 24,318 1,466 2,903 12,961 13,684 2,184 2,897 7,459 1,365 Net operating assets 84,529 78,959 58,309 Novo Nordisk Annual Report 2022Part of Management´s review – not auditedContents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 89 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 Scope 1 emissions (1,000 tonnes CO2) Scope 2 emissions (1,000 tonnes CO2) Scope 3 emissions (1,000 tonnes CO2)1 Waste from production sites (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)2 – Hereof children reached through the Changing Diabetes® in Children programme (cumulative) People & employees Employees Employee turnover Sustainable employer score3 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 Change in average list price across US product portfolio (% change to previous year) Change in average net price across US product portfolio (% change to previous year) Change in average list price across US insulin portfolio (% change to previous year) Change in average net price across US insulin portfolio (% change to previous year) Total tax contribution (DKK million) Donations and other contributions (DKK million) Governance performance Governing processes Business ethics reviews Employees trained in business ethics Supplier audits Product recalls Failed inspections Values & trust Facilitations of the Novo Nordisk Way Company reputation (scale 0-100)4 Animals purchased for research Note 2022 2021 2020 7.1 7.1 7.2 7.3 7.4 7.4 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 8.6 8.6 8.6 8.7 8.8 9.1 9.1 9.2 9.3 9.4 9.5 9.6 9.7 3,677 100% 3,918 75 76 16 2,041 213,505 3,387 100% 3,488 12 77 16 N/A 3,191 100% 3,368 15 75 15 N/A 180,806 140,783 36.3 1.8 34.6 1.7 32.8 3.2 41,033 31,846 28,296 55,185 8.2% 85% 1.5 56:44 61:39 54:46 2.4% (10.5%) 0.0% (19.5%) 36,003 126 35 99% 294 3 — 36 82.3 79,750 48,478 11.0% 84% 1.3 57:43 64:36 67:33 45,323 7.9% N/A 1.3 59:41 65:35 62:38 1.6% 2.3% (12.3%) (16.9%) 0.0% (10.9%) 32,593 92 0.5% (26.9%) 26,376 158 37 98% 253 1 — 34 82.6 32 99% 177 — — 26 N/A 47,879 50,036 1. 2022 is the first year of full Scope 3 emissions' disclosure, which in 2020 and 2019 was limited to business flights and product distribution. 2. In 2020, the ceiling price was lowered from USD 4 to USD 3, which affects the comparability of 2021 and prior years. 3. In 2021, the engagement survey was entirely redesigned to support Novo Nordisk’s strategic goals. As a result, a comparison to previous surveys is not appropriate. 4. In 2021, Company reputation replaced Company trust in order to capture more dimensions of how Novo Nordisk is perceived by external stakeholders. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 90 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. As recommended by the Taskforce 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: – Limiting temperature increase to well below 2ºC scenario, preferably 1.5ºC, compared to pre-industrial times in accordance with the Paris Agreement. – 4ºC scenario as an alternative high-emission scenario. 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's CDP disclosures at cdp.net. 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's 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. 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 trend-spotting 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 thereby the future business performance and may support stakeholders in their decision-making. 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. Impact Understanding, measuring and communicating the positive and negative impacts on society and the planet of Novo Nordisk's activities is important and remains a priority for Novo Nordisk. 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. Novo Nordisk Engineering A/S is not in the scope of reporting for Sustainable Employer Score, failed inspections, facilitations of Novo Nordisk Way, employees trained in business ethics and gender in management and senior management. Novo Nordisk Pharmatech A/S is not in scope for facilitations of the Novo Nordisk Way and employees trained in business ethics. have been found relevant to Novo Nordisk: primarily Scope 3 emissions from purchased goods and services, capital goods, fuel and energy related activities not included in Scope 1 and 2, waste from operations, business travel, employee commuting, upstream and downstream transportation and distribution and end-of-life treatment of sold products. Additionally, while they were disclosed in the Management review in the Annual Report 2021, the percentage changes in average list price and net price across the US product portfolio and insulin portfolio have now been included in the ESG statement with new accounting policies. Novo Nordisk’s US product portfolio is inclusive of Diabetes, Obesity and Rare Disease products. Percentage 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. Section 7 Environmental performance 7.1 Energy consumption for operations and share of renewable power Energy consumption for operations 1,000 GJ Production 2022 3,091 586 3,677 2021 2,859 528 2020 2,718 473 3,387 3,191 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. Office buildings and laboratories Total energy consumption Materiality When assessing whether a disclosure is material to include in the consolidated ESG statement, Management considers whether the matter is of such Disclosure on emissions has been expanded to include the full range of Scope 3 emissions. Nine categories of the Greenhouse Gas (GHG) Protocol Energy consumption for production increased by 8% primarily due to increased production volumes and ramp-up activities within production sites. Energy-saving projects implemented in 2022 within production sites resulted Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 91 in annual savings of 63 thousand GJ. Energy consumption in office buildings and laboratories increased by 11%, as facilities were utilised more through the year compared to 2021. In 2022, 100% of power sourced for production sites was from renewable sources. Since 2020, we have transitioned to sourcing 100% renewable power through a mix of solutions, primarily Renewable Electricity Certificates (REC), Power Purchase Agreements (PPA) as well as on-site renewable solutions. 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 office buildings outside of Denmark is limited to the consumption of power. 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 country that comes from 100% renewable sources, either sourced or self-produced. Renewable solutions include both bundled (PPA) and unbundled solutions (REC) from sources such as wind, hydroelectric, solar and biomass. 7.2 Water consumption for production sites In 2022, production sites consumed 3,918 thousand cubic metres of water, an increase of 12% compared to 2021 due to higher production volumes and ramp-up activities within production sites. Production sites in France, Brazil, China, Iran and Algeria are located in areas subject to water stress or high seasonal variations (please refer to the CDP Water Security 2022 Reporting Guidance). They consume 13% of the total water for global production. Overall, water consumption at these facilities increased by 7% compared to 2021 due to an increase in production volumes. Implementation of water conservation projects in water-stressed areas led to savings of 6 thousand cubic meters of water. Accounting policies Water consumption is measured based on meter readings and invoices. It includes drinking water, industrial water and steam water used at production sites. 7.3 Breaches of environmental regulatory limit values CO2 emissions by Scope 1, 2 and 3 In 2022, there were 75 breaches, an increase from 12 breaches in 2021. The increase is mainly related to wastewater and approximately 90% of the breaches were related to a single site. For all breaches, mitigation mechanisms are now in place and they were reported to the authorities. Accounting policies Breaches of regulatory limit values cover all breaches reported to the environmental authorities. 7.4 Scope 1, 2 and 3 emissions In 2022, Scope 1 emissions decreased by 1% compared to 2021 due to an increase in usage of renewable energy sources as a result of two production facilities, in the US and France, having converted to using biogas. Scope 2 emissions were in line with 2021. In 2022, we have expanded our Scope 3 reporting to include all categories of emissions from the GHG protocol relevant to Novo Nordisk. The highest portion of Scope 3 emissions was in purchased goods and services and capital goods. These two categories together make up to 85% of the overall Scope 3 emissions. 1,000 tonnes Scope 1 – Production – Office buildings and laboratories – Company cars Scope 2 – Production – Office buildings and laboratories Scope 31 – Purchased goods and services2 – Capital goods2 – Fuel and energy related activities2 – Upstream transportation and distribution2 – Waste generated in operations2 – Business travel – Employee commuting2 – Downstream transportation and distribution2 – End-of-life treatment of sold products2 2022 2021 2020 76 25 3 48 16 11 5 2,041 1,251 477 55 123 5 55 35 37 3 77 29 2 46 16 10 6 75 28 2 45 15 9 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 N/A N/A N/A N/A N/A N/A N/A N/A Total CO2 emissions 2,133 N/A N/A 1. The calculation of Scope 3 emissions is substantially based on estimations and therefore inherently uncertain. 2. Categories measured in CO2 equivalents (CO2e). Accounting policies Scope 1 and 2 emissions are limited to CO2 emissions from energy and do not include other greenhouse gases. 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. Market-based emissions are calculated based on emission factors from the previous year. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 92 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. Upstream transportation and distribution Upstream transportation and distribution includes CO2e emissions from product distribution and transportation from tier 1 suppliers to Novo Nordisk facilities. Scope 1 and 2 emissions 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, heat and steam. For a full overview of location-based emissions, please visit cdp.net. Scope 3 emissions Novo Nordisk has identified nine relevant categories, out of the 15 categories of Scope 3 emissions as defined by the GHG protocol. Purchased goods and services Purchased goods and services includes emissions related to all spend from external suppliers except for investment spend and travel categories. Purchased goods and services contribute to the greatest share of Scope 3 emissions and mainly comprise of raw materials for products, marketing, packaging materials as well as consumables for laboratory and IT office equipment. Direct spend is converted using the average data method into CO2e emissions. Material weights are matched with CO2e factors depending on data availability. A spend-based factor is applied for direct spend data where no weight can be obtained. Indirect spend is converted into CO2e using a spend-based method. Capital goods Capital goods includes emissions related to all indirect investment spend from external suppliers, specifically production utilities and equipment. Indirect spend is converted via the average spend-based method into CO2e emissions using emission factors. Fuel and energy related activities not included in Scope 1 and 2 Fuel and energy related activities includes all upstream CO2e emissions of purchased fuels and energy (beyond Scope 1 and 2 emissions). Energy consumption is converted from GJ to kWh and multiplied by DEFRA's country- specific emissions’ factors to assess CO2e tonnes. The category comprises upstream emissions from electricity, steam and heat, upstream emissions from transportation and distribution of electricity, steam and heat and emissions from upstream fuel. CO2e emissions from product distribution are calculated by an external supplier managing the transportation and distribution processes on behalf of Novo Nordisk and using the industry standard EcoTransit solution. CO2e 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. CO2e 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. CO2e emissions from tier 1 suppliers to Novo Nordisk facilities are calculated based on the assumption that all purchased direct materials are transported 1,000 km by a diesel truck. Waste generated in operations Waste generated in own operations includes CO2e emissions associated with third-party disposal and treatment of waste generated from production sites, offices and labs. Currently, waste data is available for production sites and offices as well as labs within Denmark. Waste data is not available for offices and labs outside of Denmark, for which CO2e emissions are therefore extrapolated using waste-type-specific method. Business travel Business travel includes CO2 emissions from business flights and other travel, such as hotel stays and taxis. CO2 emissions from business flights are estimated based on mileage and passenger class details obtained from travel agencies. These are multiplied by emission factors for short-, medium- and long-haul flights. EPA emission factors are used to perform the calculations. Currently, 90% of emissions from flights are calculated based on data provided by travel agencies and the remaining 10% are extrapolated based on the average CO2 emissions per employee. CO2 emissions from other travel-related activities are calculated using a spend-based approach. Employee commuting Employee commuting includes CO2e emissions associated with commuting by all employees except those with company cars, since these emissions are reported as Scope 1 emissions. CO2e emissions are estimated using the average data method and based on assumptions for the top six countries (Denmark, USA, India, China, France and Brazil) in terms of number of employees, which account for 85% of the employee base. Average distance and mode of transportation are used to calculate the CO2e emissions for the remaining 15% of employees. Downstream transportation and distribution Downstream transportation and distribution includes CO2e emissions that occur from transportation and distribution of sold products in vehicles and facilities not owned or controlled by Novo Nordisk. Only transportation emissions are included in the calculations, specifically from the first receiving warehouse to pharmacies, hospitals and wholesalers. A simulation-based approach is applied to calculate downstream emissions, using a distance- based method by simulating route networks for four countries (Denmark, UK, Switzerland and Brazil). Transportation work (tonne-km) and CO2e emissions are estimated by calculating the distance travelled for the weight of distributed products and cool boxes. Moreover, the modelled route networks provide the basis for simulating US and China transportation and distribution. Transportation work per net kg product from the six reference countries (Denmark, UK, Switzerland, Brazil, China and US) is extrapolated to the remaining countries. Emissions per country are calculated based on i) the weight of sold products, ii) reference country transportation work and iii) the emission factor for the region and mode of transportation. End-of-life treatment of sold products End-of-life treatment of sold products includes CO2e from end-of-life treatment of all products sold to the market, including packaging. The amount of sold products is calculated from the realised sales data for specific devices and markets. It is assumed that devices are discarded in the markets where they are sold and that the end-of-life treatment follows the general treatment of the household waste for each market. Scenarios have been developed for end-of-life treatment for various Novo Nordisk products (FlexPen®, FlexTouch®, NovoFine® needle etc.). The scenarios cover the US, EU and Japan. The remaining CO2e emissions from other products are extrapolated by unit sales based on average end-of-life emissions from the products. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 93 7.5 Waste from production sites Waste from production sites Tonnes Organic residues 2022 2021 2020 166,183 143,254 107,739 Other (paper, cardboard, metals, etc.) 12,820 7,990 8,259 Total recycling Ethanol waste 179,003 151,244 115,998 14,913 13,232 9,335 Other (various combustible waste) 8,007 8,239 5,816 Total waste with energy recovery 22,920 21,471 15,151 Water waste with no energy recovery Other Total waste with no energy recovery Water waste with resource recovery Other Total waste with resource recovery Total waste to landfill 356 827 1,183 7,379 2,114 9,493 906 5,499 5,394 1,660 3,334 7,159 8,728 N/A N/A N/A 932 N/A N/A N/A 906 Total waste 213,505 180,806 140,783 In 2022, waste from production sites increased by 18% compared to 2021 due to an increase in production volumes, expansion and ramp-up activities within production sites. 95% 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 18% from 151,244 to 179,003 tonnes, primarily due to an increase in production volumes. The amount of waste sent for energy recovery increased by 7% from 21,471 to 22,920 tonnes, primarily also due to an increase in production volumes. Less than 1% of total waste was sent to landfill. In 2022, 16% of the waste was categorised as hazardous waste. 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. 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 the WHO. 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 34.6 million in 2021 to 36.3 million in 2022. The 5% increase was primarily driven by growth in the GLP-1 franchise, which increased by 2.4 million patients, followed by the new-generation insulin franchise, which grew by 0.8 million patients. In 2022, the estimated number of patients with diabetes reached with Novo Nordisk's human insulin vials through the Access to Insulin Commitment was 1.8 million, compared to 1.7 million in 2021. Novo Nordisk also sold human insulin vials below the ceiling price of USD 3 in countries outside the commitment, reaching an estimated additional 2.5 million patients in 2022. This represents a total of 4.3 million patients with diabetes reached with human insulin in vials below USD 3 per vial globally. 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, 41,033 vulnerable children were reached by the end of 2022, compared to 31,846 in 2021. More than half of the 9,187 newly enrolled children were reached through expansion of the programme in Ethiopia, Sudan, Kenya and Uganda. 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 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 Year-end number 2022 2021 2020 North America Operations 7,250 6,106 6,213 International Operations 47,935 42,372 39,110 – EMEA (Europe, the Middle East and Africa) 30,870 26,680 24,600 – of which in Denmark 22,916 19,150 17,538 – China (Mainland China, Hong Kong, Taiwan) 6,148 5,833 5,548 – Rest of World (all other countries) 10,917 9,859 8,962 Total employees Full-time employees 55,185 48,478 45,323 54,393 47,792 44,723 The number of employees increased in most areas with the highest growth in EMEA, notably in Product Supply, Quality & IT, and North America Operations. The employee turnover rate decreased from 11.0% in 2021 to 8.2% in 2022. The highest decline in turnover incurred in China and the US. 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 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 WHO. 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. Novo Nordisk Annual Report 2022 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 94 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 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 off are not counted as having left the Group. 8.3 Sustainable employer score A global employee survey called "Evolve" supports Novo Nordisk’s ambition to be a sustainable employer, underpinning the broader sustainable business agenda. The Evolve survey was repeated in 2022 with an additional question, meant to measure follow-throughs of the previous year’s survey results and an open text question on how to improve the equality of opportunity for a successful career at Novo Nordisk. This year’s Evolve revealed an increase in the already high overall engagement, bringing it to 85% favourable compared to 84% favourable in 2021. Novo Nordisk continues to score in the top decile against external organisations when it comes to providing a purpose-driven workplace. Improvements were seen on most questions, with a large improvement of 9 percentage points favourable on “Equal opportunities for a successful career”. Nevertheless, opportunities for improvement remain on equality of career opportunities, clearer performance evaluations and, in particular, improving follow-throughs of survey results. 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 administered by an external vendor. 8.4 Frequency of occupational accidents In 2022, Novo Nordisk had 128 accidents with absence (99 in 2021). This increase was partly due to an increase in the number of employees. The average lost time injury frequency rate was 1.5 in 2022 (1.3 in 2021). The gender diversity in leadership positions overall at Novo Nordisk meets the Danish gender diversity requirements. Gender diversity in leadership positions increased from 43% in 2021 to 44% in 2022. Within senior leadership positions, there was an increase from 36% in 2021 to 39% in 2022. Among employees as a whole, the gender split was 49% women and 51% men in 2022. Sadly, Novo Nordisk had two work-related fatalities compared to zero in 2021. Two employees of Novo Nordisk on a business trip, travelling with a driver, had a car accident resulting in all three passengers being killed immediately. Novo Nordisk will continue to train and motivate employees and contractors on good road safety behaviour to reduce the risk of recurrences. 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, Novo Nordisk introduced 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. Novo Nordisk is currently implementing a new global incident reporting system to ensure standardised reporting, and will continue ongoing preventive health and safety activities, such as focusing on high-risk incidents and ergonomic programmes. For a full overview of Novo Nordisk's Health and Safety framework, please refer to Novo Nordisk's ESG Portal at novonordisk.com. Accounting policies The frequency of occupational accidents is measured as the internally reported number of accidents with absence per million nominal working hours, or Lost Time Injury Frequency (LTIF). Contractors, visitors, employees on unpaid leave, interns, and bachelor and 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. As of 31 December 2022, three shareholder-elected Board members were women and six were men. The 2024 target of having at least three shareholder-elected Board members of each gender was thus met; however, the Board considers that diversity in the broadest sense of the word remains a focus area, including in Board member searches. Further information about the Board members is disclosed in the Corporate Governance Report. 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 on the Board of Directors is reported as the percentage split by gender among all members, including employee-elected members. 8.5 Gender diversity Gender in leadership positions Ratio men:women CEO, EVP, SVP CVP, VP Director, Manager, Team Leader 2022 71:29 60:40 55:45 2021 2020 72:28 76:24 63:37 64:36 57:43 58:42 Gender in leadership positions (overall) 56:44 57:43 59:41 Gender in senior leadership positions 61:39 64:36 65:35 Gender in the Board of Directors 54:46 67:33 62:38 Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 95 8.6 US pricing 8.7 Total tax contribution Indirect taxes Indirect taxes consist of non-refundable VAT, net VAT collections, customs duties, environmental taxes and property taxes. Novo Nordisk has a long history of making products accessible and affordable through responsible pricing practices and industry-leading patient access programmes. In 2022, the average net price of both the US product portfolio and the US insulin portfolio decreased by 10.5% and 19.5%, respectively, compared to 12.3% and 10.9% in 2021, as a result of enhancements to secure formulary access for insured patients as well as the evolution of channel and payer mix. Novo Nordisk has provided sales discounts and rebates amounting to 75% of US gross sales in 2022, which is in line with 2021. This resulted in the average annual list price across the US product portfolio increasing by 2.4% compared to 1.6% in 2021. The average list price across the US insulin portfolio remained consistent with 2021. Total tax contribution DKK million Corporate income taxes paid Taxes borne Taxes collected 2022 2021 2020 Other taxes Other taxes consist of country-specific taxes not linked to one of the categories above, e.g., the US branded prescription drug fee. 14,515 4,582 19,097 18,390 13,577 Employment taxes 2,279 10,727 13,006 10,840 9,588 Indirect taxes Other taxes 2,273 873 754 — 3,027 2,612 2,497 873 751 714 8.8 Donations and other contributions Total 19,940 16,063 36,003 32,593 26,376 Donations and other contributions US product portfolio % change vs prior year 2022 2021 2020 The total tax contribution in 2022 amounted to DKK 36,003 million split across 55% of taxes borne and 45% of taxes collected. In 2021, the split was 57% of taxes borne and 43% of taxes collected. List price change - Avg. 2.4% 1.6% 2.3% Net price change - Avg. (10.5%) (12.3%) (16.9%) Total US insulin portfolio % change vs prior year List price change - Avg. 0% 0% 0.5% Net price change - Avg. (19.5%) (10.9%) (26.9%) Accounting policies The US product portfolio is inclusive of Diabetes, Obesity and Rare Disease products. Percentage 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. The net price represents the average list price minus rebates, discounts and returns for the specific product for the year in which it is being calculated. In 2021, corporate income tax was unusually high as additional corporate income tax had been paid in Denmark relating to both the prior year and the prepayment for 2021. The prepayment exceeded the actual payable tax and was partially refunded in 2022. Furthermore, profit before tax has increased for 2022, resulting in an overall increase in corporate income taxes paid. The overall increase in total tax contribution from 2021 to 2022 is primarily related to an increase in employment taxes primarily due to the hiring of new employees globally, as production and sales have been increasing. 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 employee salaries and paid 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 employees on behalf of the government and social security costs (part of payroll taxes in some countries). DKK million 2022 2021 World Diabetes Foundation (WDF) Novo Nordisk Haemophilia Foundation (NNHF) Total donations and other contributions 93 33 126 92 — 92 2020 138 20 158 The WDF, an independent trust, supports sustainable partnerships and acts as a catalyst to help others do more. The amount granted to WDF has increased from DKK 92 million in 2021 to DKK 93 million in 2022. The amount granted to WDF covers the amount approved during Novo Nordisk's Annual General Meeting in 2014 for annual contributions and also includes a donation to WDF China. For more information, visit worlddiabetesfoundation.org The NNHF supports programmes in low- and middle-income countries. Initiatives focus on capacity-building, diagnosis and registry, awareness and advocacy. The payment of the agreed donation to the NNHF for the year 2021 was made in 2022, amounting to DKK 20 million. Additionally, in 2022, Novo Nordisk agreed to a donation of DKK 25 million but only DKK 13 million were paid out. Since 2005, the NNHF has provided funding for 296 programmes in 85 countries. See nnhf.org for additional information. Accounting policies Donations and other contributions by Novo Nordisk to the WDF and the NNHF are recognised when the donation or contribution is paid out. Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 96 Section 9 Governance performance 9.1 Business ethics reviews and training Responsible sourcing audits In 2022, Group Internal Audit performed 35 business ethics audits, compared to 37 in 2021, which was in line with the number of planned audits for the year. Annual training on business ethics is mandatory for all employees, including all new hires. In 2022, 99% of employees completed and documented their training compared to 98% in 2021. The increase represents the emphasis of Novo Nordisk in diligently following up on employees to ensure completion of the annual training. The remaining 1% missing is mainly due to employees being on leave. 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. The percentage of employees completing the training is calculated as the percentage of completion of the Code of Conduct test. 9.2 Supplier audits 9.4 Failed inspections Supplier audits Number Quality audits Total supplier audits 2022 2021 2020 14 280 294 16 237 253 7 170 177 In 2022, Novo Nordisk had not failed any inspections among those that were resolved at year-end. During 2022, 150 inspections of Novo Nordisk were conducted. The number of inspections is close to the level it was at before COVID-19. At year-end, 113 inspections were passed and 37 were unresolved, as final inspection reports had not been received or the final authority's acceptance was pending, which is normal. Follow-up on unresolved inspections will continue in 2023. The number of audits concluded in 2022 increased by 16% compared to 2021. The increase in the number of supplier audits represents the general activity level at Novo Nordisk. The travel restrictions related to COVID-19 did not have a significant impact on the ability to conduct audits during 2022, though local restrictions were in effect during the year. In 2022, two critical findings were issued. The first critical finding regarding control of labels was issued during a routine audit. For this, a follow-up audit was conducted, which found that the issue had been closed satisfactorily. The second critical finding regarding environmental monitoring was issued during a qualification audit. The work related to the remediation of this finding is still ongoing. 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. We conduct our audits internally and do not participate in third party audit programs. 9.3 Product recalls In 2022, Novo Nordisk had 3 product recalls. In Belgium, the recall was due to distribution without approved commercialisation. In Finland and Sweden, the recall was due to temporary communication timeouts during dose log transfers. In Algeria, the recall was due to a mix-up of information on the vignette for one of Novo Nordisk's products. None of the recalls were Health Hazard Evaluation (HHE) class I. 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. Accounting policies In 2022, we expanded the scope of reporting on failed inspections to include all inspections, as opposed to 2021, when only inspections from specific health authorities were reported. The change of methodology did not result in a restatement of the comparative periods. 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 Complete Response 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 2022, a total of 36 units were facilitated and more than 1,700 employees were individually interviewed. In addition, feedback on those units was collected from approximately 400 stakeholders. Overall, the 2022 process continues to show a good level of adherence to the Novo Nordisk Way. Five units were found to be in breach of one or more of the Novo Nordisk Essentials. Many positive observations were made in facilitations regarding elements of the Novo Nordisk Way. Facilitations found that patient-centricity (Essential 1- We create value by having a patient-centred business approach) was both a strong motivator for staff engagement and a critical contributor to business success, especially in managing periodic supply constraints across the globe. A high standard of Business Ethics (Essential 10 – We never compromise on quality and business ethics) was reported in most units. Leaders and staff remained committed to the company’s sustainability focus and looked Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 97 forward to renewing initiatives in the areas of environmental and social responsibility (Essential 3 – We are accountable for financial, environmental and social performance) that were paused in many units during COVID-19 lockdown years. In 2022, partly driven by the focus on strengthening the cultural journey, most findings were related to Essential 2 (We set ambitious goals and strive for excellence) and Essential 5 (We build and maintain good relations with our stakeholders). Accounting policies Facilitations of the Novo Nordisk Way are 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 a 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. For more information on the Novo Nordisk Way, please refer to page 22 in the Management review. 9.6 Company reputation Company reputation Scale 0-100 People with diabetes People with obesity General practitioners Diabetes specialists Informed general public Total score (average) 2022 20211 2020 81.3 79.4 84.0 90.3 76.3 82.3 81.5 79.4 84.8 90.3 77.1 82.6 N/A N/A N/A N/A N/A N/A 1. 2021 figures have been corrected due to inaccurate allocation in the Annual Report 2021. Company reputation is a comprehensive approach to analysing reputational intelligence and covers more markets and stakeholders compared to the previous "Company trust". Novo Nordisk’s reputational strength was identified to be the highest in products and service offerings, rated as excellent among three stakeholder groups, i.e., diabetes patients, diabetes specialists and general practitioners. 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: France, Denmark, the US, Canada, Brazil, China, Japan, Germany, Italy and the UK. 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 2022 2021 2020 Mice, rats and other rodents 63,760 35,675 38,850 Pigs Rabbits Dogs Non-human primates 427 606 146 700 759 184 114 495 783 239 91 264 Fish 14,098 10,638 9,804 Other vertebrates 13 14 5 Total animals purchased 79,750 47,879 50,036 The number of animals purchased for research in 2022 increased by 67% compared to 2021. The increase is mainly led by the acquisition of Dicerna Pharmaceuticals, Inc. 80% of the animals purchased were rodents and 18% were fish. Accounting policies 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 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 98 Statement by the Board of Directors and Executive Management The Board of Directors and Executive Management have today considered and approved the Annual Report for Novo Nordisk A/S for the financial year 1 January 2022 - 31 December 2022. 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 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 2022 as well as of the results of their operations and cash flows for the financial year 1 January 2022 - 31 December 2022. 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. In our opinion, the Annual Report of Novo Nordisk A/S for the financial year 1 January 2022 to 31 December 2022 identified as NOVO-2022-12-31.zip is prepared, in all material respects, in compliance with the ESEF Regulation. Novo Nordisk’s Consolidated Environmental, Social and Governance Statements have been prepared in accordance with the reporting principles of materiality, inclusivity, responsiveness and environmental, social and governance accounting policies. They give a true and fair account and a Registered Executive Management Board of Directors 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. Bagsværd, 1 February 2023 Lars Fruergaard Jørgensen President and CEO Karsten Munk Knudsen CFO Helge Lund Chair Henrik Poulsen Vice Chair Elisabeth Dahl Christensen Jeppe Christiansen Monique Carter Martin Holst Lange Laurence Debroux Andreas Fibig Sylvie Grégoire Liselotte Hyveled Marcus Schindler Camilla Sylvest Mette Bøjer Jensen Kasim Kutay Christina Law Martin Mackay Henrik Wulff Thomas Rantzau Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 99 Independent Auditor’s Report 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 2022 – 31 December 2022, 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 2022, and of the results of its operations and cash flows for the financial year 1 January 2022 – 31 December 2022 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 2022, and of the results of its operations for the financial year 1 January 2022 – 31 December 2022 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 2022 – 31 December 2022. 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 How our audit addressed the key audit matter Refer to notes 2.1 and 3.5 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 and managed healthcare plans. In January 2021, the Group 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 has only recognised revenue related to the 340B Drug Pricing Program to the extent that it is highly probable that its inclusion will not result in a significant revenue reversal in the future. When sales are recognised, Novo Nordisk also records provisions for the expected value of the sales deductions (variable consideration) at the time the related sales are recorded. We evaluated the appropriateness of the methodology 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 and data 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. The provision for sales rebates and discounts amounted to DKK 69,499 million as of 31 December 2022, a significant portion of which related to the US business. We evaluated Management’s ability to estimate sales rebates accurately by considering the historical accuracy of the estimates in prior year. 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. Novo Nordisk Annual Report 2022 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 100 Statement on the 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 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 2022 to 31 December 2022 with the file name NOVO-2022-12-31.zip is prepared, in all material respects, in compliance with the Commis- sion 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 including notes. 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; accounting estimates and related disclosures made by Management. – Ensuring consistency between iXBRL tagged data and the consolidated financial – 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 the 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. 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 – Obtain sufficient appropriate audit evidence regarding the financial information statements including notes; 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. – 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; 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. – 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 2022 to 31 December 2022 with the file name NOVO-2022-12-31.zip is prepared, in all material respects, in compliance with the ESEF Regulation. Copenhagen, 1 February 2023 Deloitte Statsautoriseret Revisionspartnerselskab Business Registration No 33 96 35 56 Anders Vad Dons State-Authorised Public Accountant Mne25299 Novo Nordisk Annual Report 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 101 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 consolidated statement of Environmental, Social and Governance (ESG) performance (“the ESG statement”) for the the period 1 January - 31 December 2022, presented on pages 89 to 97 in the Annual Report of Novo Nordisk A/S. 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. Management's responsibility Management of Novo Nordisk A/S is responsible for designing, implementing, and maintaining internal controls over information relevant to the preparation of the ESG data and information in the ESG statement, ensuring they are free from material misstatement, whether due to fraud or error. Furthermore, Management is responsible for establishing objective accounting policies for the preparation of ESG data, for the overall content of the ESG statement, and for measuring and reporting ESG data in accordance with the Basis of preparation and the ESG accounting policies. 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 and ISAE 3410 Assurance Engagements on Greenhouse Gas Statements, and additional requirements under Danish audit regulation, to obtain limited assurance about our conclusion. Greenhouse Gas emissions quantification is subject to inherent uncertainty because of incomplete scientific knowledge used to determine emission factors and the values needed to combine emissions of different gasses. We are responsible for: – planning and performing the engagement to obtain limited assurance about whether the ESG statement is free from material misstatement, whether due to fraud or error, and prepared, in all material respects, in accordance with the accounting policies; – forming an independent conclusion, based on the procedures we performed and the Work performed 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 data owners and internal stakeholders to understand the key processes and control activities for measuring, recording and reporting the ESG data; – performed limited substantive testing on a selective basis to check that data has been appropriately measured, recorded, collated and reported; – performed analysis of data, selected based on risk and materiality; – made inquiries regarding significant developments in the reported data; – considered the presentation and disclosure of the ESG statement; – assessed that the process for reporting greenhouse gas emissions data follows the principles of relevance, completeness, consistency, transparency and accuracy out- lined in The Greenhouse Gas Protocol Corporate Standard Revised edition (2015) and The Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011); and – evaluated the evidence obtained. Our conclusion Based on the procedures performed and the evidence obtained, nothing has come to our attention that causes us not to believe that the ESG data on pages 89 to 97 in the statement of Environmental, Social and Governance (ESG) performance for the period 1 January - 31 December 2022, have been prepared, in all material respects, in accordance with the Basis of preparation and the ESG accounting policies. evidence we obtained; and Copenhagen, 1 February 2023 – reporting our conclusion to the Management and broader stakeholders of Novo Nordisk A/S. Deloitte Statsautoriseret Revisionspartnerselskab applies International Standard on Quality Management 1 (ISQM 1), which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We have complied with the requirements for independence and other 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. Deloitte Statsautoriseret Revisionspartnerselskab Business Registration No 33 96 35 56 Anders Vad Dons State-Authorised Public Accountant Mne25299 Helena Barton Lead Reviewer Novo Nordisk Annual Report 2022 Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 102 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 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 and Dennis Andersen. Photography: Marie Hald, Morten Andersen, Martin Juul, Jesper Edvardsen, Jesper Westley, Oliver Grenaa, Thomas Fink, Sunny Zeng, Benjamin Norman and Gustavo Aranda Hernández. 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., it being 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 Remuneration Report The Remuneration Report describes in accordance with section 139b of the Danish Companies Act the remuneration awarded or due during 2022 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. Annual Report This Annual Report is Novo Nordisk’s full statutory Annual Report pursuant to Section 149(1) of the Danish Financial Statements Act. 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. The statutory Annual Report will be presented and adopted at the Annual General Meeting on 23 March 2023 and will subsequently be submitted to and be available at the Danish Business Authority. 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. 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. For more news from Novo Nordisk, please visit novonordisk.com/investors.html novonordisk.com/news-and-media/latest-news.html Novo Nordisk meets the requirements for Communication on Progress to the UN Global Compact, a voluntary reporting on performance towards its ten principles on human rights, labour rights, environment and anti-corruption and additional progress reporting on corporate sustainability leadership and the UN Sustainable Development Goals. Novo Nordisk also adheres to the UN Guiding Principles Reporting Framework on respect of human rights. For our commitment, please refer to the Novo Nordisk Human Rights Report on our ESG Portal at novonordisk.com. Disclaimer The patients, employees and relatives portrayed in this Annual Report and ancillary reports have participated on 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 2022Contents Introducing Novo Nordisk Strategic Aspirations Key risks Management Consolidated statements Additional information 103 Product overview Diabetes care New-generation insulin and combinations Tresiba®, insulin degludec Ryzodeg®, insulin degludec/insulin aspart Fiasp®, fast-acting insulin aspart Xultophy® 1, insulin degludec/liraglutide Modern insulin Levemir®, insulin detemir NovoRapid® 2, insulin aspart NovoMix® 30, biphasic insulin aspart NovoMix® 50, biphasic insulin aspart NovoMix® 70, biphasic insulin aspart 3 Human insulin lnsulatard® isophane (NPH) insulin Actrapid®, regular human insulin Mixtard® 30, biphasic human insulin Mixtard® 40, biphasic human insulin 3 Mixtard® 50, biphasic human insulin Glucagon-like peptide-1 Victoza®, liraglutide Ozempic®, semaglutide Rybelsus®, oral semaglutide Pre-filled delivery systems FlexTouch®, U100, U200 FlexPen® InnoLet® Ozempic® pen, FlexTouch® 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 Penfill® cartridge Oral antidiabetic agents NovoNorm®, repaglinide Glucagon GlucaGen®, glucagon (vial and Hypokit®) Zegalogue®, dasiglucagon Needles NovoFine® Plus NovoFine® NovoTwist® NovoFine® AutoCover® Obesity care Rare Disease Glucagon-like peptide-1 Saxenda®, liraglutide 3.0 mg Wegovy®, semaglutide 2.4 mg Obesity delivery systems Saxenda® pen, FlexTouch® Wegovy®, Single dose device, FlexTouch® Rare Blood Disorders NovoSeven®, eptacog alfa (recombinant factor VIIa) NovoEight® 4, turoctocog alfa (recombinant factor VIII) NovoThirteen®, catridecacog (recombinant factor XIII) Refixia®5, nonacog beta pegol; N9-GP (recombinant factor IX) Esperoct®, turoctocog alfa pegol, N8-GP (recombinant factor VIII) Rare Endocrine Disorders Norditropin®, somatropin (rDNA origin) Sogroya®, somapacitan (rDNA origin) Macrilen™, macimorelin Pre-filled human growth hormone delivery systems FlexPro® NordiFlex® NordiLet® Durable delivery systems NordiPen® Other delivery systems Norditropin® SimpleXx®, cartridge vial for NordiPen® 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 1. In the US approved under the brand name Xultophy® 100/3.6. 2. In the US called NovoLog®. 3. The global discontinuation of NovoMix 70 and Mixtard 40 has been communicated. 4. In the US spelt Novoeight®. 5. In the US approved under the name of REBINYN®. Novo Nordisk Annual Report 2022104 Financial statements of the parent company 2022 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 Balance sheet For the year ended 31 December At 31 December Note 2022 2021 DKK million Note 2022 2021 DKK million Note 2022 2021 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 2 3 3 3 3 8 4 4 142,656 112,553 Assets (31,060) (26,642) Intangible assets 111,596 85,911 Property, plant and equipment (37,476) (30,021) Financial assets (19,209) (15,244) Deferred income tax assets 6 7 8 5 19,449 34,547 78,306 — 27,007 71,564 228 (2,135) (1,976) Total non-current assets 132,302 107,909 1,012 53,788 19,238 1,032 Raw materials 39,702 Work in progress 16,879 Finished goods 567 2,415 Inventories (2,225) Trade receivables (6,280) 67,313 5,659 3,754 13,657 10,899 2,975 2,131 22,291 16,784 1,877 2,128 56,771 Amounts owed by affiliated companies 18,192 13,200 (11,975) (9,248) Tax receivables 55,338 47,523 Other receivables and prepayments Receivables Marketable securities Derivative financial instruments 10 Cash at bank Total current assets Total assets 7 3,185 23,261 10,921 2,727 9,795 695 2,967 18,990 5,904 1,690 8,870 68,995 52,238 201,297 160,147 Equity and liabilities 9,110 Share capital 9 456 462 Net revaluation reserve according to the equity method 17,785 17,675 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 1,524 1,045 62,091 82,901 21,199 2,967 1,303 25,469 169 2,903 4,782 11 5 12 11 10 1,218 (1,600) 52,714 70,469 10,111 — 1,377 11,488 12,648 2,184 3,048 Amounts owed to affiliated companies 74,059 53,826 Tax payables Other liabilities Total current liabilities Total liabilities 3,115 7,899 92,927 118,396 171 6,313 78,190 89,678 Total equity and liabilities 201,297 160,147 Novo Nordisk Annual Report 2022Financial statements of the parent companyEquity statement DKK million Share capital Net revaluation reserve Reserve for cash flow hedges and exchange rate adjustments Development costs reserve Retained earnings 2022 2021 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. 105 Balance at the beginning of the year 462 17,675 (1,600) 1,218 52,714 70,469 63,036 Appropriated from net profit 29,532 29,532 17,500 Appropriated from net profit to net revaluation reserve Exchange rate adjustments of investments in subsidiaries (2,144) 2,254 Realisation of previously deferred (gains)/losses Deferred gains/(losses) incurred during the period 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 (6) Purchase of treasury shares Share-based payments (note 3) Tax related to restricted stock units 37 1,610 998 (2,144) 2,291 6,312 1,624 1,610 (1,617) 998 — 976 (1,610) — 1,904 306 (306) 976 27,950 27,950 23,711 (9,613) (9,613) (8,021) (15,690) (15,690) (13,496) 6 — — (24,086) (24,086) (19,447) 433 175 433 175 383 190 Balance at the end of the year 456 17,785 1,045 1,524 62,091 82,901 70,469 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 9,613 8,021 18,337 15,690 (2,144) 6,312 29,532 17,500 55,338 47,523 Novo Nordisk Annual Report 2022Financial statements of the parent company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. 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 jointly taxed subsidiaries are included in the joint taxation of the parent company, Novo Holdings A/S. 3 Employee costs DKK million Wages and salaries Share-based payment costs Pensions Other social security contributions Other employee costs 2 Sales DKK million Sales by business segment 2022 2021 Total employee costs in the income statement 17,246 Average number of full-time employees Year-end number of full-time employees 19,201 20,926 Diabetes and Obesity care 142,413 112,347 Rare disease Total sales Sales by geographical segment 243 206 142,656 112,553 For information regarding remuneration to the Board of Directors and Executive Management, please refer to note 2.4 to the consolidated financial statements. 106 2022 2021 14,656 12,485 433 1,281 247 629 383 1,116 207 363 14,554 16,851 17,534 Supplementary accounting policies for the parent company North America Operations 79,953 57,654 Intangible assets Goodwill recognised in subsidiaries is amortised over 10 to 23 years, which reflects the useful life of the underlying assets and activities generating the goodwill. 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. 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. International Operations: 4 Financial income and financial expenses EMEA China Rest of World Total sales 32,789 14,412 15,502 27,124 15,608 12,167 142,656 112,553 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. DKK million Interest income relating to subsidiaries 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) Capital loss from marketable securities Other financial expenses Total financial expenses 2022 365 — 202 567 1,150 4 2,705 1,659 463 299 6,280 2021 238 2,021 156 2,415 13 13 1,978 — 44 177 2,225 Novo Nordisk Annual Report 2022Financial statements of the parent company107 2021 51,983 4,308 (296) — 55,995 26,661 2,520 90 (283) 28,988 27,007 597 2022 55,995 10,223 (526) — 65,692 28,988 2,597 36 (476) 31,145 34,547 580 DKK million Land and buildings Plant and machinery Other equipment Assets under construction Cost at the beginning of the year 22,944 24,741 5 Deferred income tax assets/(liabilities) 7 Property, plant and equipment DKK million 2022 2021 Net deferred tax asset/(liability) at the beginning of the year Income/(charge) to the income statement Income/(charge) to equity 228 (2,629) (566) (523) (330) 1,081 Net deferred tax asset/(liability) at the end of the year (2,967) 228 Additions during the year Disposals during the year Transfer from/(to) other items Cost at the end of the year The Danish corporate tax rate was 22% in 2022 (22% in 2021). Depreciation and impairment losses at the beginning of the year 6 Intangible assets DKK million Cost at the beginning of the year Additions during the year Disposals during the year Depreciation for the year Impairment losses for the year 2022 12,572 11,399 (151) 2021 11,077 1,560 (65) 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 244 (74) 687 23,801 10,312 1,087 2 (73) 11,328 12,473 523 337 (208) 514 25,384 15,916 1,157 7 (162) 16,918 8,466 — 4,385 167 (219) 156 4,489 2,760 353 2 (216) 2,899 1,590 57 3,925 9,475 (25) (1,357) 12,018 — — 25 (25) — 12,018 — Cost at the end of the year 23,820 12,572 Leased property, plant and equipment primarily relates to lease of office buildings, warehouses, laboratories and vehicles. Amortisation at the beginning of the year 3,462 3,139 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 810 250 (151) 4,371 19,449 289 34 — 3,462 9,110 Intangible assets primarily relate to intellectual property rights, internally developed software and costs related to major IT projects. Novo Nordisk Annual Report 2022Financial statements of the parent company108 A share capital B share capital Total share capital 107 — — — — — 393 (10) (10) (10) (8) (6) 500 490 480 470 462 456 456 8 Financial assets 9 Development in share capital 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 Invest- ments in subsi- diaries Amounts owed by affiliated companies Invest- ment in associated company Other securities and invest- ments 2022 48,872 4,313 105 697 53,987 60 — 6,697 (187) 757 60,497 (144) 35,933 19,713 (4) 105 94 (4) DKK million Beginning of 2018 Cancelled in 2018 Cancelled in 2019 Cancelled in 2020 Cancelled in 2021 Cancelled in 2022 2021 34,546 21,020 (1,579) 53,987 25,669 19,635 (13) (1,596) (2,006) (135) (135) 75 10 Derivatives 11 (23,305) (11,054) — 220 1,768 1,927 216 298 2,613 500 5,788 54,660 35,937 19,713 (1,596) (23,305) 1,731 1,927 849 (187) 4,975 46 209 37 Value adjustments at the end of the year 34,407 292 90 (268) 34,521 35,933 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 (18,356) 1,121 523 (18,356) (16,617) 1,121 523 (750) (989) (16,712) — 72,355 5,267 — 195 — (16,712) (18,356) 489 78,306 71,564 For a list of companies in the Novo Nordisk Group, please refer to note 5.7 to the consolidated financial statements. Share capital at the end of the year 107 349 For information on derivative financial instruments, please refer to note 4.4 to the consolidated financial statements. 11 Borrowings DKK million Within 1 year 1-5 years More than 5 years Total borrowings 2022 169 12,627 8,572 2021 12,648 5,282 4,829 21,368 22,759 Borrowings mainly consist of loans from Novo Nordisk Finance (Netherlands) B.V. related to issuance of Eurobonds. Novo Nordisk Annual Report 2022Financial statements of the parent company109 12 Other provisions 15 Commitments and contingencies Provisions for pending litigations are recognised as other provisions. For information on pending litigations, please refer to note 3.5 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. 13 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 578 million (DKK 490 million in 2021). Novo Nordisk A/S is included in the consolidated financial statements of the Novo Nordisk Foundation. 14 Fee to statutory auditors DKK million Statutory audit1 Audit-related services Tax advisory services Other services Total fee to statutory auditors 2022 15 2 1 9 27 2021 8 2 2 2 14 1. 2022 statutory audit fee includes DKK 6 million of additional fee related to 2021. DKK million Commitments Leases1 Potential milestone payments2 Guarantees given for subsidiaries3 Other guarantees 2022 2021 95 14,473 31,858 127 117 11,978 19,141 112 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. 3. Guaranties given for subsidiaries mainly relate to guaranties towards Novo Nordisk Finance (Netherlands) B.V. related to issuance of Eurobonds. 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 3.5 and 5.2 to the consolidated financial statements. Novo Nordisk Annual Report 2022Financial statements of the parent companyNovo Nordisk A/S – Novo Alle 1, 2880 Bagsværd, Denmark – CVR no. 24256790, +45 4444 8888 (switchboard), novonordisk.com 

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