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
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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
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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.
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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
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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
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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
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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.
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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
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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.
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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
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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
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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.
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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
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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.
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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.
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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
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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).
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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.
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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.
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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.
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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).
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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
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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.
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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.
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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
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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
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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.
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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.
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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.
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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
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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.
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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
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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.
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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.
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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
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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.
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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
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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.
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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.
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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
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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
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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
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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
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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).
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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.
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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).
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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.
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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
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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
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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
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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)
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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
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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
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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
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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,
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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
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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
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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.
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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.
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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
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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.
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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
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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.
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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
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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.
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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.
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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.
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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).
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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:
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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.
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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)
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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.
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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.
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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
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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
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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.
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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
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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.
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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.
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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.
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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
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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.
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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
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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.
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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
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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.
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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