Novo Resources
Annual Report 2023

Plain-text annual report

Annual Report 2023 Novo Nordisk A/S – Novo Alle 1, 2880 Bagsværd, Denmark – CVR no. 24256790 Juan Pablo Villaseñor lives with obesity and cardiovascular disease. Until recently, Juan struggled with stigma and often blamed himself for not being able to lose weight. Today, he exercises regularly and spends quality time with his son. Watch Juan’s full story here Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 2 Management review Consolidated statements and additional information 3 4 6 Introducing Novo Nordisk Letter from the Chair and the CEO Novo Nordisk at a glance 7 Our value creation 8 Performance highlights 10 Strategic Aspirations 11 Purpose and sustainability 23 Innovation and therapeutic focus 30 Commercial execution 34 Financials 40 Risks 41 Risk management 42 Key operational risks 43 Management 44 Board of Directors 47 Executive Management 50 Consolidated financial statements Income statement and Statement 50 of comprehensive income 51 Cash flow statement 52 Balance sheet 53 Equity statement 54 Notes to the consolidated financial statements 86 86 87 Consolidated ESG statement Statement of ESG performance Notes to the consolidated ESG statement 95 95 Statements and Auditor’s Reports Statement by the Board of Directors and Executive Management Independent Auditor’s Report Independent Assurance Report 96 98 on the ESG statement Additional information 99 100 More information 101 Product overview 102 ESG initiatives 104 Sustainability frameworks and performance Participants at the Future Scientists Summer Camp, organised by Novo Nordisk and the LIFE Foundation to celebrate Novo Nordisk’s 100-year anniversary in 2023. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 3 Introducing Novo Nordisk 4 Letter from the Chair and the CEO 6 Novo Nordisk at a glance 7 Our value creation 8 Performance highlights Quresha Nur comes from a village near Mombasa, Kenya. She was diagnosed with type 1 diabetes aged seven and was discriminated against because of it. People in her community said she could not go to school or be active, and expectations of what she would achieve in life were low. She decided to prove them wrong. After graduating, Quresha co-founded a start-up developing a non-invasive blood sugar monitoring device. She also launched ‘Diabetes Champions’, an organisation that empowers young girls with diabetes. When you educate a girl, she says, you educate a whole community. Watch Quresha’s full story here Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 4 LETTER FROM THE CHAIR AND THE CEO An extraordinary year of innovation, growth and impact It is a rare privilege for any company to reach its centenary; and even more so to arrive at this milestone in a position of strength. As we reflect on 100 years of driving change to defeat serious chronic diseases, we nevertheless acknowledge that what got us here will not be enough to take us where we want to go. The choices we make at this pivotal moment for our company are key to shaping our long-term vision – one that extends beyond strengthening leadership positions in our core therapy areas to becoming a driving force for improving human health worldwide. As our business continues to grow, so does our role in society. The global burden of serious chronic diseases casts a long shadow, and demands innovative, disruptive solutions that are as sustainable as they are impactful. Our core contribution to this fight remains our industry- leading therapeutic innovations, which benefited more than 40 million people living with serious chronic diseases in 2023. Yet we are also increasingly focused on prevention as we seek to understand and address the root causes of the diseases we treat. The unmet needs in type 2 diabetes and obesity are growing by the day, and the rising prevalence of these closely related threats to global health has created surging demand for our GLP-1-based therapies. This has enabled us to reach more patients than at any point in our 100-year history, contributing to strong sales growth across North America and International Operations. However, it has also increased pressure on our supply chain, resulting in periodic constraints across our portfolio as we strive to keep pace with demand. We have responded by investing heavily in expanding our production capacity with the aim of serving millions more patients worldwide. In 2023 alone, we announced investments totalling more than DKK 75 billion President and CEO, Lars Fruergaard Jørgensen (left) and Chair of the Board of Directors, Helge Lund (right). Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 5 in the expansion of our production sites across the globe. With The past year has seen us make significant progress on our pipeline. supporting a similar transition among our 60,000-plus network of construction now underway on these projects, we strive to operate our The SELECT trial showed that semaglutide 2.4 mg reduces the risk of suppliers, with the aim of significantly cutting carbon emissions across existing facilities 24 hours a day, seven days a week, as we produce more of our life-changing medicines than ever before. major adverse cardiovascular events by 20% in people with obesity compared to placebo, prompting us to seek label updates for Wegovy®, while the FLOW kidney outcomes trial for semaglutide closed early our supply chain. The resilience and dedication of our growing global workforce Our response to supply challenges does not stop there. We are also following a positive analysis of interim data. Novel combination therapy have been instrumental in scaling our operations in the face of changing the way we launch and distribute our products, making sure CagriSema entered phase 3 development in both type 2 diabetes and unprecedented demand. As we onboard more colleagues than ever we do this in a responsible manner with a clear focus on safeguarding obesity, and insulin icodec, potentially the world’s first once-weekly before, we are focusing on making Novo Nordisk a more diverse access to appropriate treatment options for our existing patients. basal insulin, is pending regulatory approval. We have also expanded and inclusive place to work, nurturing a culture built on openness, Recent examples of this refined approach include the launches of Wegovy® in the UK and Germany, where we are collaborating with health authorities to ensure that some of those in greatest need of our footprint in cardiovascular disease with the acquisition of accountability and respect. Above all, we remain a purpose-driven ocedurenone for uncontrolled hypertension, and bolstered our company, guided by a clear ambition to drive change to defeat serious late-stage pipeline in rare blood disorders with phase 3 trials of Mim8 chronic diseases, building on our heritage in diabetes. Our position medical intervention can access our flagship obesity therapy. in haemophilia and etavopivat in sickle cell disease. today in the vanguard of progressive global businesses is a testament to the strength and longevity of that purpose – and to the drive and Improving health equity remains a cornerstone of our commitment to Furthermore, we continue to reap the rewards of recent partnerships motivation it provides for our people all over the world. patients, and we are working hard to enhance access to care worldwide. and investments in novel technology platforms, with our first-ever RNA Our new production partnership with manufacturer Aspen interference-derived therapy, Rivfloza™, now approved in the US. The We would like to extend our gratitude to all colleagues for their Pharmaceuticals in South Africa will significantly increase the supply recent expansion of our R&D presence in the Greater Boston area – a unwavering commitment and invaluable contributions during a of affordable insulin to the African continent, while long-established initiatives, including Changing Diabetes® in Children and our Access to Insulin Commitment, continue to support vulnerable patients in low- and middle-income countries. In the US, a growing number of world-renowned life sciences cluster – will potentially open the door to particularly demanding year, and to our shareholders for their even more collaboration opportunities as we seek to accelerate our continued support of our company. drug discovery and development efforts. people living with serious chronic diseases have been able to access Nevertheless, we understand that it will take more than medicine our expanded range of affordability offerings, which include unbranded to transition from a disease-focused company to one that prioritises biologics, low-cost human insulin and our Patient Assistance Program. broader human health to the benefit of society at large. Leveraging Despite these efforts, the burden of chronic diseases on healthcare Diabetes programme, we are enhancing our prevention efforts, Chair of the Board President and CEO a decade’s worth of insights from our pioneering Cities Changing Helge Lund Lars Fruergaard Jørgensen systems is only set to grow, pushing us to break new ground in our pursuit of innovative treatments. To this end, we are building a pipeline expanding our partnership with UNICEF to address childhood obesity, and establishing a Transformational Prevention Unit to deliver scalable, of Directors of considerable breadth and depth, powered by the interplay between preventive solutions to the obesity pandemic. our world-class in-house R&D capabilities and an increasing focus on external innovation and business development. Our distinct ownership Innovation plays an equally important role in our ambition to reach net structure, with the Novo Nordisk Foundation retaining the majority vote, gives us the security we need to take a long-term perspective on our zero emissions across our entire value chain by 2045 – particularly with our manufacturing output at an all-time high. Having already switched investments and strategies. our production sites to sourcing 100% renewable power, we are now Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 6 Our purpose and strategy Our business is built around the Novo Nordisk Way, our commitment to be a sustainable business and our clear patient-centric purpose: driving change to defeat serious chronic diseases. Our key contribution is to discover and develop innovative medicines and make them accessible to patients throughout the world. We will strengthen our leadership in diabetes and obesity, secure a leading position within rare disease and establish ourselves in cardiovascular disease (CVD). We also aim to build a presence in emerging therapy areas, such as metabolic dysfunction-associated steatohepatitis (MASH), chronic kidney disease (CKD) and Alzheimer’s disease (AD), and to move toward disease-modifying and curative therapies. Novo Nordisk at a glance Novo Nordisk is a leading global healthcare company, founded in 1923 and headquartered in Denmark. 41.6 million people living with diabetes and obesity reached Diabetes Strengthen leadership by offering innovative medicines and driving patient outcomes o N v o N ordisk W a y 232,261 DKK million in net sales 102,574 DKK million in operating profit 64,319 employees worldwide 80 countries with affiliates 68,326 DKK million in free cash flow 5 countries with R&D facilities Driving change to defeat serious chronic diseases S u stainable b u s i e ss n Rare Disease Secure a leading position by leveraging full portfolio and expanding into adjacent areas Obesity Strengthen leadership through market development and by offering innovative medicines and driving patient outcomes Cardiovascular & Emerging Therapy Areas1 Establish position in cardiovascular disease and build a presence in emerging therapy areas 1. Other Serious Chronic Disease (OSCD) has been renamed to Cardiovascular & Emerging Therapy Areas (CETA) to reflect that cardiovascular disease has been the main strategic priority within OSCD. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 7 Our value creation We strive to be a sustainable company, creating value for society and for our future endeavours. 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 people with chronic diseases, employees, partners, shareholders and society. Resources Research and development Manufacturing Distribution Patients Creating long-term value Insights from patients, healthcare experts and partners Raw materials Diverse talent Financial resources Reached an all-time high 41.6 million people living with diabetes and obesity Reached 6.7 million vulnerable patients with our insulin medicines through access and affordability initiatives Invested over DKK 45 billion in R&D – a 35% increase vs 2022 Invested more than DKK 25 billion to meet demand for current and future products Added more than 9 thousand employees bringing Novo Nordisk’s total workforce to over 64 thousand, while supporting job-creation amongst our suppliers Reduced our CO2 equivalent emissions from operations and transportation by 34% vs 2019, while supporting our 60,000-plus suppliers with the transition to 100% renewable power A total tax contribution of DKK 51 billion Paid out DKK 61.7 billion via dividends and share buybacks to shareholders, including Novo Holdings A/S The Novo Nordisk Foundation holds 77.1% of votes and 28.1% of shares in Novo Nordisk A/S through Novo Holdings A/S The Novo Nordisk Foundation awards grants in three strategic areas: Health, Sustainability and Life Science Ecosystem. In 2023, more than DKK 9 billion were awarded in grants. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 8 PERFORMANCE HIGHLIGHTS Our strategy execution progress Strategic Aspirations 2025 Progress Purpose and sustainability Progress towards zero environmental impact Being respected for adding value to society • Carbon emissions from operations and transportation decreased by 34% compared to 2019 (decreased by 8% compared to 2022) • Medical treatment provided to 40.5 million people living with diabetes • Reached more than 52,000 children in Changing Diabetes® in Children programme • Human insulin with more flexible storage without refrigeration now approved in 29 countries • Partnership with Aspen to produce human insulin for people living with diabetes in Africa Being recognised as a sustainable employer • Share of women in senior leadership positions has increased to 41% from 39% in 2022 Innovation and therapeutic focus Further raise the innovation-bar for diabetes treatment Develop a leading portfolio of superior treatment solutions for obesity • Regulatory submission of once-weekly insulin icodec in the EU, the US and China • Successful completion of phase 3 trial with higher doses of oral semaglutide • Initiation of phase 3a trial with CagriSema in type 2 diabetes • FLOW kidney outcomes trial stopped based on interim analysis due to efficacy • Successful completion of phase 3 trial with IcoSema • Successful completion of phase 3 trial with 50 mg of oral semaglutide • Successful completion of SELECT cardiovascular outcomes trial • Successful completion of STEP HFpEF phase 3 trials • Acquisition of Inversago Pharma and phase 2 trial initiated with INV-202 and phase 1 trial initiated with INV-347 • Successful completion of phase 1 trial with oral amycretin Commercial execution Financials Strengthen and progress the Rare Disease pipeline • Somapacitan approved in the US, EU and Japan for the treatment of growth hormone deficiency in children Establish presence in Cardiovascular & Emerging Therapy Areas focusing on CVD, MASH and CKD • Phase 1 trials initiated with cell therapy treatment in heart failure and Parkinson’s disease • Acquisition of ocedurenone for the treatment of hypertension • Phase 1 trial initiated with ANGPTL3i mAb • Phase 1 trial initiated with VAP-1i in MASH Strengthen diabetes leadership – aim at global value market share of more than 1/3 • Diabetes value market share increased by 1.9 percentage points to 33.8% (MAT) More than DKK 25 billion in Obesity sales by 2025 • Obesity care sales increased by 154% (CER) to DKK 41.6 billion Secure a sustained growth outlook for Rare Disease • Rare disease sales decreased by 15% (CER) to DKK 17.2 billion Deliver solid sales and operating profit growth • Sales growth of 36% (CER) • Operating profit growth of 44% (CER) Drive operational efficiencies across the value chain to enable investments in future growth assets • Operational leverage reflecting sales growth Deliver free cash flow to enable attractive capital allocation to shareholders • Free cash flow of DKK 68.3 billion • DKK 61.7 billion returned to shareholders Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 9 PERFORMANCE HIGHLIGHTS Financial highlights DKK million Financial performance Net sales Sales growth as reported Sales growth in constant exchange rates1 2019 2020 2021 2022 2023 2022-23 DKK million 2019 2020 2021 2022 2023 2022-23 Change Financial ratios Change 122,021 126,946 140,800 176,954 232,261 31% Gross margin3 83.5% 83.5% 83.2% 83.9% 84.6% 9.1% 5.6% 4.0% 10.9% 25.7% 31.3% Sales and distribution costs in percentage of sales 26.1% 25.9% 26.3% 26.1% 24.4% 6.7% 13.8% 16.4% 35.6% Research and development costs in percentage of sales 11.7% 12.2% 12.6% 13.6% 14.0% Operating profit 52,483 54,126 58,644 74,809 102,574 37% Operating margin3 Operating profit growth as reported 11.1% 3.1% 8.3% 27.6% 37.1% Operating profit growth in constant exchange rates1 5.6% 6.8% 12.7% 14.6% 43.7% Depreciation, amortisation and impairment losses 5,661 5,753 6,025 7,362 9,413 58,144 59,879 64,669 82,171 111,987 Net profit margin3 Cash to earnings1 Return on invested capital1 Share performance and capital allocation 28% 36% EBITDA1,2,3 Net financials Profit before income taxes Effective tax rate3 Net profit (3,930) (996) 436 (5,747) 2,100 Basic earnings per share/ADR in DKK3,5 48,553 53,130 59,080 69,062 104,674 52% Diluted earnings per share/ADR in DKK3,5 8.21 8.19 9.03 9.01 10.40 12.26 10.37 12.22 19.8% 20.7% 19.2% 19.6% 20.1% Total number of shares (million), end of year3,5 4,800 4,700 4,620 4,560 38,951 42,138 47,757 55,525 83,683 Purchase of property, plant and equipment3 8,932 5,825 6,335 12,146 25,806 Purchase of intangible assets3 2,299 16,256 1,050 2,607 13,090 Cash used for acquisition of businesses — — 18,283 7,075 — Free cash flow1 Total assets Equity 34,451 28,565 29,319 57,362 68,326 125,612 144,922 194,508 241,257 314,486 57,593 63,325 70,746 83,486 106,561 Dividend per share in DKK3,4,5 Total dividend (DKK million)4 Dividend payout ratio3,5 Share repurchases (DKK million) Closing share price (DKK)3,5 51% 112% 402% 19% 30% 28% 43.0% 42.6% 41.7% 42.3% 44.2% 31.9% 33.2% 33.9% 31.4% 36.0% 88.4% 67.8% 61.4% 103.3% 81.6% 98.0% 82.8% 69.0% 73.6% 88.5% 4.18 4.55 5.20 6.20 19,651 21,066 23,711 27,950 41,987 50.5% 50.0% 49.6% 50.3% 50.2% 15,334 16,855 19,447 24,086 29,924 194 214 368 469 698 18.67 18.62 4,510 9.40 52% 52% (1%) 52% 50% 24% 49% 1. See Non-IFRS financial measures. 2. EBITDA is defined as ’net profit’, adjusted for 'income taxes', 'financial items', 'depreciation and amortisation' and 'impairment losses'. 3. See Financial definitions. 4. Total dividend for the year including interim dividend of DKK 3.00 per share, corresponding to DKK 13,430 million, which was paid in August 2023. The remaining DKK 6.40 per share, corresponding to DKK 28,557 million, will be paid subject to approval at the Annual General Meeting in March, 2024. 5. As of 13 September 2023, the trading unit of the Novo Nordisk B shares listed on NASDAQ Copenhagen and ADRs listed on the New York Stock Exchange (NYSE) was changed from DKK 0.20 to DKK 0.10. Comparative figures have been restated to reflect the change in trading unit from DKK 0.20 to DKK 0.10. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 10 Strategic Aspirations 11 Purpose and sustainability 23 Innovation and therapeutic focus 30 Commercial execution 34 Financials Jenica Leah lives with sickle cell disease. It is a condition most cannot see, yet it leads to excruciating pain and countless complications. Aged 13, Jenica had a stroke; three years later, her lungs collapsed. This was a turning point, where she decided to tell the untold story of living with sickle cell disease. Jenica wrote a children’s book and now hosts a podcast where she gives this condition the attention it deserves. Her quest is one of making the invisible visible. Watch Jenica’s full story here Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 11 PURPOSE AND SUSTAINABILITY Driving change for a sustainable future In a world facing urgent societal and environmental challenges, Novo Nordisk is playing a proactive role in the fight against health inequity and climate change. Guided by our purpose of driving change to defeat serious chronic diseases and a steadfast commitment to social, environmental and financial responsibility, we are raising the bar to stay at the forefront of progressive global businesses. Human health is under threat from a perfect storm of health inequity, climate change and biodiversity loss. As a leading like Wegovy® must be supplemented with prevention measures to head off a global pandemic that threatens to overwhelm healthcare company committed to serving patients across the healthcare systems. To this end, we have strengthened our globe, we have an important role to play in addressing these focus on public-private partnerships and established a STRATEGIC ASPIRATIONS 2025 1. Progress towards zero environmental impact challenges. Our commitment to social responsibility and dedicated Transformational Prevention Unit tasked with 2. Being respected for adding minimising our environmental impact are key to achieving our delivering scalable commercial solutions that can help predict value to society purpose and sustainability goals – and essential for our and pre-empt obesity. long-term success. We are also stepping up efforts to reduce our environmental That is why we are striving to improve access to affordable care impact by focusing on our supply chain emissions. Having already for vulnerable patients across the globe. More than three switched our production sites to sourcing 100% renewable power quarters of people with diabetes, for example, live in low- and in 2020, we are now focused on supporting our 60,000-plus middle-income countries, and that proportion is likely to grow suppliers through a similar transition, with the aim of reaching as global prevalence rises from an estimated 537 million adults net zero emissions across our full value chain by 2045. today to a predicted 643 million by 2030. Although we are now serving more people with diabetes than ever before, expanding To ensure that sustainability is integrated into Novo Nordisk’s core our reach by more than four million patients to a total of 40.5 business, we have a series of governance measures in place that million last year, we recognise the need to do more. supplement the incorporation of environmental, social and financial responsibility in our Articles of Association. These include 3. Being recognised as a sustainable employer Our key contribution to society remains our therapeutic innovation. However, we realise it will take more than medicine our Sustainability Advisory Council, established in 2022, which provides external input on our goals from experts in academia, For an overview of our purpose and sustainability initiatives, frameworks to defeat serious chronic diseases. This need is particularly public policy and patient advocacy, and an executive remuneration and performance, see the tables on acute in obesity, where medical intervention with treatments package directly linked to our progress on sustainability targets. pages 102-104. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 12 Double materiality assessment Novo Nordisk conducted an initial double materiality The preliminary, material environmental topics reflect Novo assessment in 2023 to determine which environmental, social Nordisk’s environmental initiatives to reduce carbon emissions and governance (ESG) topics are material for the company. and promote a circular economy, for example on plastic. ESG This assessment considers both the impact of Novo Nordisk’s topics such as biodiversity and water reflect the company’s business on society and the environment (impact materiality) dependence on nature-based resources. To this end, Novo and how ESG matters affect the company (financial materiality). Nordisk is already increasing sustainability efforts directly The assessment involved experts and leaders from within Novo related to nature and biodiversity. Moreover, the company Nordisk, as well as input from external stakeholders, such as strives to limit any negative effects resulting from its business patient organisations, suppliers and investors. operations, including pollution. The purpose of the assessment is to prepare for the Business conduct reflects our efforts to adhere to the highest implementation of the Corporate Sustainability Reporting ethical standards, including bioethics. Overall, Novo Nordisk Directive (CSRD) in 2024. It covers all topics defined in the CSRD, aims to be respected for its contributions to society and to along with other ESG topics relevant to Novo Nordisk. The table build trust through its sustainability efforts. on the right shows the preliminary, aggregated results of the assessment, and includes both current and potential ESG topics from a short-, medium- and long-term perspective. The ESG topics will help guide the preparation of the company’s ESG reporting from 2024 onwards. Many of the preliminary, material ESG topics reflect Novo Nordisk’s strategic sustainability focus. For social topics, this includes our efforts to provide access to life-saving medicines without compromising safety or quality, improve patients’ quality of life and support resilient healthcare systems. Workers’ wellbeing, both within and outside of our operations, reflects the importance of remaining a relevant and attractive workplace while respecting adequate working conditions. We also consider our local impact in the communities we operate in and pay tax where value is created. Preliminary assessment of material ESG topics Climate change Patient protection1 and quality of life Business conduct Resource use and Own workers Bioethics circular economy Water and marine Workers in the resources value chain Biodiversity and Sustainable ecosystems tax Pollution Affected communities 1. Includes topics related to consumers and end-users. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 13 Cutting emissions in collaboration with our suppliers According to the World Health Organization, climate change is However, focusing solely on our own activities is not enough. the single biggest health threat facing humanity. We recognise We must also ensure our 60,000-plus suppliers play their part that caring for our patients also means caring for our planet, and with the healthcare sector as a whole accounting for approximately 5% of global emissions, we take our environmental in this transformation, since their activities account for the majority of our total CO2e emissions – amounting to 98% in 2023. Our target is that all goods and services from suppliers impact seriously. We are determined to play our part in creating will be based on 100% sourced renewable power by 2030. a sustainable, healthy environment for the long term, and our ambition is bold and simple: to have zero environmental impact. We are engaging with suppliers in high-impact areas to To achieve this, one of our key tasks is to decouple the growth in our business from our CO2 equivalent (CO2e) emissions; otherwise, our carbon footprint will continue to climb as we understand how we can collectively reduce emissions using novel approaches to decarbonisation. This involves working on innovative Power-to-X solutions that use renewable electricity to produce green fuels and low-carbon chemicals, or using serve increasing numbers of patients. organic waste materials to produce biofuels. “Focusing solely on our own activities is not enough. We must also ensure our 60,000-plus suppliers play their part in this transformation.” Recent examples include our membership of the Sustainable Aviation Buyers Alliance (SABA) to support the expansion of sustainable aviation fuel facilities, and our partnership with global logistics firm Maersk on low-emission fuels for ocean freight. Both these investments are contributing to the global uptake of innovative green technologies. On this front, we have made significant progress in curbing our company’s emissions. Since 2020, all our production sites have sourced 100% renewable power and we aim to reach zero CO2e emissions from operations and transportation by 2030. SCOPE 1, 2 AND 3 EMISSIONS IN 2023 (1,000 tonnes CO2e) Scope 1: Direct emissions from owned or controlled sources Scope 2: Indirect emissions from the generation of energy purchased from an utility provider Scope 3: All indirect emissions – not included in scope 2 – that occur upstream and downstream in our value chain Target 2045: net zero CO2e emissions across our full value chain 15 78 3,738 EMISSIONS FROM OPERATIONS AND TRANSPORTATION (1,000 tonnes CO2)1 309 221 203 170 174 2019 2020 2021 2022 2023 Company cars (scope 1) Business flights (scope 3) Product distribution (scope 3) Office buildings and laboratories (scope 1, 2) Production (scope 1, 2) Target 2030: zero CO2e emissions from operations and transportation 1. Emissions in 2023 are measured in CO2e. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 14 Reducing our plastic footprint Minimising the use of plastic derived from fossil fuels is a of pioneering take-back programmes across Denmark, the UK, priority for Novo Nordisk – and a significant challenge given the France and Brazil, and in 2023 we established the world’s first rapid growth in demand for our medical injection devices. We industry solution for recycling injection pens in Denmark. currently manufacture more than 800 million pre-filled plastic Pharmaceutical companies Lilly, Sanofi and Merck have all pens every year, equivalent to some 14,000 tonnes of plastic. joined the initiative, and we now share a goal of recycling 25% As the number of patients we serve continues to grow, those of the pens distributed by all four companies in Denmark within numbers will rise markedly unless we take decisive action. the first 12 months. We are tackling our plastic challenge on multiple fronts, with Another important initiative involves rethinking medicine a threefold ‘reduce-change-avoid’ approach. This includes delivery by switching from disposable to reusable devices – reducing plastic consumption by converting to reusable some with an expected lifespan of up to 5 years. Over the past devices, changing to the use of non-virgin-fossil plastics in our year, we have converted selected products in a number of device production and harnessing recycling to avoid plastic countries and we expect to switch more in 2024. We are also ending up in landfill. “In 2023 we established the world’s first industry solution for recycling injection pens in Denmark.” steadily building device durability into the development of new medicines and expect that a trend from daily to once-weekly administration for many products will contribute to reduced plastic use per patient in the long term. In addition, we are exploring more sustainable ways to produce plastic. A good example is a new agreement signed by Novo Nordisk, alongside the LEGO Group, to buy e-methanol from The task is not simple. When it comes to recycling, for example, European Energy when the world’s first large-scale production used injection pens cannot be dealt with in the same way as plant for the commodity starts up in Denmark in 2024. The other household recycling because they are classified as medical waste, which most countries are not equipped to handle. To address this challenge, we have expanded a series e-methanol – made from renewable electricity, water and captured biogenic CO2 – will help us to create lower-carbon plastics for use in our medical devices. Injection pens’ components that have been discarded from our production lines in Hillerød, Denmark. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 15 Dr. Karaireho Silver Bahendeka is a physician for diabetes and endocrinology at St Francis Nsambya Hospital in Kampala, Uganda. Supporting more people with diabetes With the number of adults living with diabetes across the globe of around four million people – a significant increase on the predicted to grow from 537 million today to 643 million by 2030, 500,000 we currently serve. Sub-Saharan Africa is currently home it is those in the most vulnerable settings who struggle the most to an estimated 24 million adults living with diabetes. to access the treatment they need. Last year, we reached more than 40.5 million people with our diabetes medicines – an The human insulin produced by the collaboration will be increase of 4.2 million on 2022 – but we recognise the need to distributed at low-cost as part of Novo Nordisk’s Access to do more. For that reason, we are committed to improving Insulin commitment, which reached 2.4 million people in 2023. affordability for vulnerable populations, increasing availability The programme guarantees a ceiling price of USD 3 per vial in by strengthening supply chains and expanding the capacity to 77 low- and middle-income countries around the world. diagnose and manage diabetes worldwide. However, increasing the availability of insulin alone is not enough. Over the past year, we reached 6.7 million people living with To enhance access to equitable care in Sub-Saharan Africa, we diabetes globally with our insulin medicines through access and have built a business integrated model – iCARE – which is now affordability initiatives, and we extended support to more than active in 49 countries. Through public-private partnerships we 52,000 children with type 1 diabetes through our Changing Diabetes® in Children programme. In the US, we provided access to affordable insulin for 1.4 million people and supported a further aim to improve capacity to treat diabetes, increase affordability of insulin and enhance patient empowerment. Our ambition is to reach more than two million vulnerable people living with 2.8 million with initiatives relating to our GLP-1-based therapies. diabetes in Sub-Saharan Africa by 2030. On the African continent, we doubled down on our commitment to improve access to insulin, establishing a new partnership with PEOPLE REACHED WITH OUR DIABETES MEDICINES (million) South African pharmaceutical manufacturer Aspen Pharmaceuticals to increase production for distribution across the region. The partnership acknowledges the World Health Organization’s call for sustainable access to quality-assured and affordable medicine through local manufacture and aims to produce more than 60 million vials by 2026. This is equivalent to the annual requirements 30.0 2019 32.8 2020 34.6 2021 40.5 36.3 2023 2022 Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 16 Preventing obesity, starting with children The obesity epidemic is one of the greatest threats to global the globe – zeroes in on exactly these key issues through health, currently impacting more than 813 million adults policies, programmes and practices that directly impact the worldwide and responsible for five million deaths each year. nutrition, wellbeing and development of children. In addition, obesity impacts the sustainability of health systems and economic productivity. While Novo Nordisk’s core Since its launch in 2019, the partnership has positively contribution to the fight remains our therapeutic innovations, impacted the lives of more than 2.7 million children and which reached more than 1.1 million people worldwide in caregivers across Latin America and the Caribbean. Now it is 2023, we recognise that medicine alone will never be enough expanding its reach, bringing its proven approach to new to defeat obesity. We are therefore committed to addressing geographies with an increased focus on driving policy change the disease holistically by scaling up our focus on prevention at national level and action at city level. – and nowhere is this more urgent than in childhood. More than 310 million children and adolescents are expected to are focusing on interventions with demonstrable track records. be living with obesity by 2030, with those in vulnerable settings These include advocating for healthy school food regulations more at risk. These individuals are more likely to develop early- in Brazil, addressing unhealthy food marketing directed at onset type 2 diabetes, and their weight in early life can also be a children online in Mexico and trialling innovative measures to strong predictor of adult obesity and cardiometabolic disease. improve urban food retail environments in Indonesia. Through local engagement and cross-sector collaboration, we We believe that preventing childhood obesity is a shared societal responsibility that requires systemic change. Many The partnership will draw upon insights from our Cities Changing Diabetes programme, now active in 47 cities globally, which over of the risk factors driving the epidemic are outside of an the past decade has addressed the systemic issues underpinning individual’s control, reflecting rapid urbanisation and the the rise in type 2 diabetes and obesity in urban environments. health challenges that come in its wake, from physical Our broader obesity prevention efforts will be boosted by our inactivity to the prevalence of foods high in fats, sugar and salt. recently-established Transformational Prevention Unit, a semi-autonomous team of multi-disciplinary experts tasked with Our childhood obesity partnership with UNICEF – which was delivering high-impact, scalable and accessible solutions that can expanded in 2023 and aims to reach 10 million children across predict and pre-empt obesity and its consequences. Girls playing in the Mexican state of Chiapas. Mexico was among the launch countries for our partnership with UNICEF, and Mexico City was the first metropolis to join Cities Changing Diabetes. Photo: UNICEF. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 17 Empowering colleagues through diversity and inclusion Diversity and inclusion are central to our business and In the context of the rapid growth of our global organisation, purpose. In our rapidly growing organisation, we aim to create this is no small feat. We added more than nine thousand an inclusive culture where all employees feel valued and are employees to Novo Nordisk in 2023, and have gone to great given equal opportunities to realise their potential and where, lengths to sharpen our focus on onboarding and upskilling together, we better reflect the diversity of the patients and our new colleagues into their new roles, nurturing a workplace communities we serve. Encouraging diverse perspectives and culture built upon foundational values of openness, promoting inclusive leadership adds value to Novo Nordisk by accountability and respect. We measure our success in this bringing out the best in our people, fostering new ideas and regard by tracking employee engagement via a yearly sparking innovation. all-company Evolve survey, recording an overall engagement score of 86% in 2023 – up from 85% in 2022 and placing us in Our aim is to achieve balanced gender representation across the top quartile of Most Engaged Companies for the first time. all managerial levels, with a minimum of 45% women and 45% men in senior leadership roles by the end of 2025. There is still work to be done but we are making significant progress. At the end of 2023, 41% of senior leadership positions were filled by women, compared to 39% one year earlier. Gender is only one element of diversity, and we want to build a more representative workforce across all dimensions, including ethnicity, race, age, nationality, disability status WOMEN IN LEADERSHIP (%) EVP/SVP CVP VP Senior leadership and sexual orientation – not to mention diversity of thought. Director We are committed to including these important parameters globally as we embed them into our people processes and the employee experience, from initial attraction and recruitment through to talent development and leadership training. Manager and team lead All leaders 2019 2020 2021 2022 2023 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 36 41 42 41 47 46 46 Michele De Gier Gustafsson heads a clinical digital systems team in Søborg, Denmark. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 18 Statutory gender reporting under Danish law inclusion brings value to the company, by enabling a diverse line of To ensure alignment between tax authorities regarding the allocation of thought, increasing innovation and leading to better decision-making. profit between our entities, we aim to have Advance Pricing Agreements and similar tax rulings in place for geographies representing around 70% The policy focuses on three primary drivers: mitigating bias, creating an of our revenue worldwide. inclusive workplace and having leaders serve as role models. Its most significant activities include yearly equal pay reviews, a global gender- Our tax policy has been approved by the Board of Directors. Read more Listed companies not having equal representation of genders on the neutral parental leave policy, tracking of gender representation across about this at: www.novonordisk.com/sustainable-business/esg-portal/ Board of Directors are required to set a target for the share of the all managerial levels and aspirational gender diversity targets. principles-positions-and-policies/tax-policy.html. underrepresented gender. As of 1 January 2023, listed companies are also required to set a target and a policy for the share of the underrepresented gender in upper management1. SHARE OF THE UNDERREPRESENTED GENDER (2023)2 Share of the underrepresented gender Target for the share of the under represented gender 2022 2023 Board of Directors3 33% (3/9) 38% (3/8) Not required Upper management4 38% (19/50) 42% (19/45) Min. 45% by 2025 Further reporting on diversity and inclusion is included in note 8.3 on In addition to corporate income taxes, we also pay other taxes. Please Gender diversity, and for the Board of Directors, also in the Corporate refer to note 8.7 on Total tax contribution for further information. Governance Report. Novo Nordisk’s diversity and inclusion policy is available at: www.novonordisk.com/sustainable-business/esg-portal/ principles-positions-and-policies/diversity-inclusion-policy.html. TAXES BY REGION (THREE-YEAR AVERAGE 2021-2023) Region rights6 Production7 Sales8 Intellectual property Corporate income taxes (DKK billion) Total tax contribution (DKK billion) Sustainable tax approach International Operations Denmark Our overall guiding principle within taxation is to have a sustainable tax EMEA (excluding Denmark) As of 31 December 2023, the Board of Directors is regarded as having operating our business in a responsible and transparent manner. Our legal approach, emphasising our business-anchored approach to managing the impact of taxes while remaining true to the Novo Nordisk values of China Rest of the world equal gender representation and is therefore not legally required to set a gender target5. Since diversity remains important for the Board, it has maintained a voluntary 2025 target of having at least three shareholder- structures are based on business-anchored considerations and substance. North America Operations US Consequently, we pay tax where value is generated and always respect Total three-year average 15.3 39.9 elected Board members who are men and three who are women. international and domestic tax rules. As a global business, we conduct As of 31 December 2023, the share of the underrepresented gender in cross-border trading, which is subject to transfer pricing regulations. We apply a ‘Principal structure’ in line with OECD principles, meaning all legal upper management at Novo Nordisk A/S is 42%. Accordingly, we have entities, except for the principals, perform their functions under contract on achieved equal gender representation as defined under the Danish behalf of the principals. As a result, entities contracted by the principals are companies act. However, we have not yet achieved the targeted level of being allocated an activity-based profit according to a benchmarked profit 45% and therefore maintain our diversity and inclusion policy to keep making progress. This policy states our strong belief that diversity and margin. The tax outcome of this operational model is reflected in the overview to the right, which shows our corporate income taxes by region. Minor or no activities Share of category Significant activities 1. Cf. the Danish Companies Act, section 139 (c). 2. Cf. the Danish Financial Statements Act. section 99(b). 3. Shareholder-elected Board members of Novo Nordisk A/S. 4. 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. 5. Cf. the Danish Companies Act, section 139(c)(1)(1). 6. Intellectual property rights based on sales from where intellectual property rights are located. 7. Production based on number of production employees in the region. 8. Sales based on location of the customer. 14.2 12.2 1.0 0.6 0.4 1.1 1.0 32.8 21.6 5.4 2.6 3.2 7.1 7.0 Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 19 Setting high standards for how we do business Our business has come under increasing scrutiny over the past compliance committees, and we are ready to step up our year – particularly with regard to our GLP-1-based products – as monitoring efforts by significantly increasing the number the level of public interest in our company has grown significantly. of internal checks and reviews in 2024. Against this backdrop, we have remained steadfast in our More broadly, our new global code of conduct sets out the commitment to uphold high ethical standards and adhere to fundamental principles and required behaviours for our employees the regulatory requirements of different authorities. In the face and collaborators and is rooted firmly in the Novo Nordisk Way of unprecedented demand for our medicines – particularly our Essentials – a foundational set of guiding principles that shape and GLP-1-based therapies – we have also strengthened our focus inform everything we do. We use a unique, systematic approach on ensuring that only the approved indications of our products known as facilitation to ensure everyone lives up to these are promoted. Essentials. In 2023, 42 units and approximately 2,300 employees were facilitated, compared to 36 units and 1,700 employees in At times, however, we were challenged in our aspirations. In the 2022. Any issues are addressed locally, and a consolidated report UK, for example, we received a two-year suspension from The is shared with the Board of Directors and Executive Management. Association of the British Pharmaceutical Industry (ABPI) in 2023 after the trade body found Novo Nordisk to be in breach of the We also measure the extent to which we live up to societies’ industry’s self-regulatory code of practice. The breach related expectations through several other governing processes. These to the provision of insufficient information regarding our include our company reputation score among key stakeholders sponsorship of a weight management course offered by a third-party clinical training provider for healthcare professionals. (see pages 41-42 for more information), regular product quality and supplier audits, and an enduring commitment to ensuring the accuracy of our financial and ESG reporting via both When mistakes are made, we learn from them. Over the past internal and external audit processes. Our financial reporting year, we invested substantial resources in robust training for and associated processes are audited according to the colleagues with the aim of ensuring we always deliver the right message, whether we are addressing the general public Sarbanes-Oxley Act by an independent audit firm elected at the Annual General Meeting, and we voluntarily include an or healthcare professionals. We have also strengthened our Assurance Report from an independent external auditor for governance processes in key affiliates via local ethics and ESG reporting in the Annual Report. 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 are empowered to achieve them. We are accountable for our financial, environmental and social performance. We are curious and innovate for the benefit of patients and society at large. We build and maintain good relations with our stakeholders. We value diversity and treat everyone with respect. We focus on performance and personal 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 ethics. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 20 Corporate Governance Corporate Governance reporting Novo Nordisk reports in accordance with the Danish Corporate Data ethics Novo Nordisk has adopted a set of data ethics principles to support ethical Governance Recommendations designated by Nasdaq Copenhagen as decision-making when using data. In 2023, we trained employees in our well as the Corporate Governance Standards of the New York Stock Data Ethics Principles, which were expanded to identify and address risks Exchange applicable to foreign private issuers. related to artificial intelligence. You can read more about these principles, Governance structure The shareholders of Novo Nordisk exercise their rights at the Annual In 2023, Novo Nordisk complied with the Danish Corporate Governance www.novonordisk.com/data-privacy-and-user-rights/data-ethics.html. in accordance with the Danish Financial Statements Act Section 99d, at: General Meeting, which is the supreme governing body of the company. Recommendations as we either complied with or explained our approach The general meeting inter alia adopts the company’s Articles of to the recommendations. You can find further information about our Association, approves the Annual Report and elects the Board of Directors. corporate governance practices in our 2023 Corporate Governance Report, Any shareholder has the right to raise questions at general meetings. available at: www.novonordisk.com/about/corporate-governance.html. in accordance with section 107b of the Danish Financial Statements Act, Resolutions can generally be passed by a simple majority. However, resolutions to amend the Articles of Association require two-thirds of the Remuneration votes cast and capital represented, unless other adoption requirements Executive remuneration is linked to performance on financials as well as are imposed by the Danish Companies Act. non-financials (e.g. innovation, sustainability). Novo Nordisk has prepared a separate Remuneration Report describing the remuneration Novo Nordisk has a two-tier management structure consisting of the Board awarded or due during 2023 to the Board of Directors and Executives of Directors and Executive Management. The governance structure and registered with the Danish Business Authority. The Remuneration Report rules of Novo Nordisk are further described in our Articles of Association and is submitted to the Annual General Meeting for an advisory vote. The our Corporate Governance Report, both available at: www.novonordisk.com. Remuneration Policy and the Remuneration Report are available at: www.novonordisk.com/about/corporate-governance.html. Foundation ownership Novo Holdings A/S, a Danish company wholly owned by the Novo Nordisk Foundation, holds the majority of votes at Novo Nordisk A/S’ general meetings. The combination of foundation ownership and stock listing Disclosure regarding change of control provisions The EU Takeover Bids Directive1, as partially implemented by the Danish Financial Statements Act, requires listed companies to disclose enables Novo Nordisk to embark on long-term sustainable strategies information that may be of interest to the market and potential while maintaining short-term transparency on performance. Our foundation ownership supports the overarching imperative to be both take-over bidders, in particular in relation to disclosure of change-of- control provisions in material contracts. commercially successful and responsive to the wider needs of society. The objectives of the Novo Nordisk Foundation are to provide a stable effect, alter or terminate upon a change of control of Novo Nordisk following basis for the commercial and research activities of Novo Nordisk and Novozymes, and to support scientific, humanitarian and social causes. implementation of a takeover bid. In relation to the registered management of Novo Nordisk A/S, the current employment contracts allow for severance Please refer to the section about value creation on page 7. For more payments of up to 24 months’ fixed base salary plus pension contributions information about the ownership structure of Novo Nordisk, see page 38. in the event of a merger, acquisition or takeover of Novo Nordisk. It is disclosed that Novo Nordisk does not have any material contracts that take 1. Directive 2004/25/EC. In 1924, August Krogh announced that profits from the sale of insulin would be used for the public good. This year, the Novo Nordisk Foundation celebrates its 100-year anniversary. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 21 ESG Governance We strive to conduct our activities in a financially, environmentally and socially responsible way. To achieve this objective and integrate sustainability considerations in Novo Nordisk’s strategy and core business, ESG is anchored and discussed in relevant governance bodies across the organisation. Our ESG Governance model includes the Board of Directors’ and Board Committees’ oversight and advice on ESG matters such as strategic direction and ambition level, as set by Executive Management. Their oversight also includes approval of our ESG reporting, variable remuneration components and more. Operational decisions are anchored at the executive level in the Sustainable Business Execution Steering Group. It is composed of our Commercial Strategy & Corporate Affairs executive vice president and other senior sustainability leaders, including representatives of North America and International Operations. Supported by the underlying steering groups, the Sustainable Business Execution Steering Group provides guidance on implementation related to our social and environmental initiatives. To ensure a well-rounded governance setup, we actively seek external input through our Sustainability Advisory Council. Comprised of experts from various fields, this independent body offers invaluable perspectives that challenge us to continuously improve our sustainability efforts. They provide constructive feedback on our current initiatives and help us explore innovative opportunities for the future. You can learn more about the council and its members at: www.novonordisk.com/sustainable-business/ esg-portal.html. Audit Committee Oversees financial and ESG reporting. Remuneration Committee Determines executive remuneration, including based on sustainability targets. Nomination Committee Assesses the competencies of the Board of Directors, including within ESG. Board of Directors Oversees strategic direction and advises on ambition level. Executive Management Decides on strategic direction, ambition level, targets, roadmaps and central funding, as well as financial and ESG reporting. Sustainability Advisory Council Provides non-binding recommendations on our Strategic Aspirations regarding purpose and sustainability. Composed of external experts. Sustainable Business Execution Steering Group Takes operational decisions to implement Executive Management’s decisions regarding core sustainable business priorities. ESG Reporting Steering Group1 Provides guidance on ESG reporting, including implementation of new regulatory requirements. Environmental steering groups Drive environmental initiatives, particularly with regards to circularity. Social steering groups Drive social initiatives, related to global health equity, business ethics and others. 1. The responsibility of the consolidated ESG statement resides in Finance. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 22 EU Taxonomy Eligibility and alignment We followed a two-step process to arrive at our Taxonomy disclosures. Firstly, Accounting policies Total Turnover consists of total revenue from sale of goods, as defined we screened the economic activities defined in the EU Taxonomy to identify under IFRS. The Turnover KPI is defined as Taxonomy-eligible Turnover those relevant under the Novo Nordisk business model. Based on our review divided by total Turnover. and materiality considerations, we identified one new economic activity The EU Taxonomy is a European sustainability classification framework. It to report on in 2023: ‘1.2 Manufacture of medicinal products’ under the Total CapEx consists of additions to fixed assets (including financial enables corporates to communicate to stakeholders which of their business environmental objective of ‘Pollution prevention and control’. Furthermore, lease) and intangible assets. Additions resulting from business activities have the potential to be considered sustainable (i.e. are Taxonomy- like in 2022, we report Taxonomy-eligible CapEx for the economic activities combinations are also included. Goodwill is not included in CapEx as eligible) and report to which extent eligible activities fulfil EU requirements ‘7.1 Construction of new buildings’ and ‘7.2 Renovation of existing buildings’ it is not defined as an intangible asset in accordance with IAS 38. The to be considered sustainable (i.e. are Taxonomy-aligned). For each relevant under the environmental objective ‘Climate change mitigation’. CapEx KPI is defined as Taxonomy-eligible CapEx divided by total CapEx. business activity, the company has to disclose how much of its Turnover, Operating Expenditures (OpEx) and Capital Expenditures (CapEx) can be Secondly, we evaluated whether we could classify any of our Taxonomy-eligible Total OpEx consists of direct non-capitalised costs that relate to research considered eligible and aligned, respectively. CapEx for economic activity 7.1 and 7.2 as Taxonomy-aligned. Although we and development, building renovation, short-term lease, maintenance In 2023 we identified eligible economic activities based on the six published requirements in the design phase of the projects have not been fully met. servicing of property, plant and equipment assets. OpEx excludes environmental objectives . Each of the economic activities was assessed on its Consequently, the existing projects do not meet the criteria for alignment in amortisations and impairments. The OpEx KPI is defined as Taxonomy- have made progress in fulfilling the technical screening criteria, certain and repair and any other direct expenditures relating to the day-to-day percentage of Taxonomy-eligibility and, for those related to the environmental 2023. We strive for alignment of certain projects in 2024. Furthermore, we have eligible OpEx divided by total OpEx. objectives of ‘Climate change mitigation’ and ‘Climate change adaptation’, also started investigating the requirements, including CapEx plans, for reporting on their percentage of Taxonomy-alignment. As a result, we report 100%, 60% alignment of the activity ‘Manufacture of medicinal products’ with the aspiration None of our activities contribute to multiple objectives and hence do not and 5% Taxonomy-eligible Turnover, CapEx and OpEx in 2023, respectively. of reporting alignment for part of the activities in 2024. require disaggregation of KPI’s. For the CapEx and OpEx allocations, we have identified the relevant purchases and measures as well as the primary related economic activity. Thereby, we ensure that no CapEx or EU TAXONOMY ELIGIBILITY AND ALIGNMENT1 Turnover CapEx OpEx OpEx is double counted. We are adjusting the R&D cost for 2022 (DKK 2023 (DKK 2022 (DKK 2023 (DKK 2022 (DKK 2023 (DKK amortisations to not double count these costs, as the amortisation would also have been part of CapEx in prior years. Environmental objective Economic activity2 million) (%) million) (%) million) (%) million) (%) million) (%) million) (%) Total Turnover, CapEx, OpEx 176,954 100% 232,261 100% 23,961 100% 44,498 100% 23,348 100% 31,115 100% Taxonomy-non-eligible activities (B.) Climate change mitigation 7.1. Construction of new buildings 7.2. Renovation of existing buildings N/A N/A 0 0 0% 0% 0 0 0 0% 20,788 87% 17,996 40% 23,348 100% 29,646 95% 0% 0% 1,166 5% 6,010 14% 2,007 8% 2,406 5% 0 0 0% 0% 0 0 Pollution prevention and control 1.2. Manufacture of medicinal products N/A N/A 232,261 100% N/A N/A 18,086 41% N/A N/A 1,469 Eligible not aligned (A.2. / A.1.+ A.2.)3 Eligible and aligned (A.1.) 0 0 0% 232,261 100% 3,173 13% 26,502 60% 0% 0 0% 0 0% 0 0% 0 0 0% 1,469 0% 0 0% 1. A.1., A.2., A.1.+A.2. and B. refer to Annex V to the Commission Delegated Regulation (EU) 2023/2486 of 27 June 2023. Not disclosed data are all either 0 (zero) or not applicable. 2. None of the reported economic activities are Enabling or Transitional and we do not have any economic activities substantially contributing to ‘Climate Change Adaption’, ‘Water’, ‘Circular Economy’ or ‘Biodiversity’. 3. When allocating CapEx and OpEx to economic activities, we prioritise those that directly contribute to an environmental objective and for which specific technical screening criteria are set. Secondly, we link CapEx and OpEx associated with our primary economic activity, ‘1.2. Manufacture of medicinal products’. 0% 0% 5% 5% Contextual information about the KPIs We consider all Novo Nordisk’s revenue related to Manufacture of medicinal products. As Taxonomy-eligible, we only include CapEx directly associated with the manufacturing process or related to construction or renovation of buildings, hence intangible assets are excluded. This is the main reason for reported eligibility being less than 100%. Eligible CapEx mainly relates to the expansion of production capacity and consist of additions to property, plant and equipment, cf. note 3.2 to the Consolidated financial statements. Eligible OpEx mainly relates to research and development directly linked to manufacturing processes. The narrow EU Taxonomy OpEx definition is the main reason for a reported low eligibility. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 23 INNOVATION AND THERAPEUTIC FOCUS Broadening our pipeline for long-term innovation As the world grapples with the increasing impact of serious chronic diseases, Novo Nordisk is amplifying its research and development efforts to tackle these global health challenges head-on. Diseases like diabetes, obesity, cardiovascular disease and rare blood disorders pose significant threats to human health and society, demanding urgent action. Guided by our purpose to drive change to defeat serious chronic emphasis on business development has resulted in the STRATEGIC ASPIRATIONS 2025 diseases, we are broadening our pipeline of potential new acquisition of biotechs including Inversago Pharma and Embark, treatments with an approach that is as comprehensive as it is two companies developing novel therapies with a potential innovative. Building on our 100-year heritage in protein and application across a range of cardiometabolic diseases. peptide engineering, we are harnessing the power of novel 1. Further raise the innovation-bar for diabetes treatment 2. Develop a leading portfolio of superior research technology platforms, leveraging cutting-edge data To further expand our capabilities, we have established a treatment solutions for obesity science tools and forging new strategic partnerships. This significant presence in the Greater Boston area, a world- multi-faceted approach is enabling us to accelerate our research renowned hub for innovation and cutting-edge science and efforts and expand our footprint across multiple disease areas. technology. Through strategic partnerships, such as those with technology firm Valo Health and the Broad Institute of As our evolution from a diabetes-focused organisation to a MIT and Harvard, we aim to accelerate our drug discovery and 3. Strengthen and progress the Rare Disease pipeline 4. Establish presence in Cardiovascular & Emerging Therapy Areas focusing broader cardiometabolic-focused company continues, our development efforts, expanding our use of human data, artificial on CVD, MASH and CKD attention remains on areas with the highest unmet needs – and intelligence and machine learning and tapping into our partners’ those where we are best positioned to compete. Strengthening innovative genetics and genomics tools. our leadership position in both diabetes and obesity remains our top priority, while expanding our presence in cardiovascular These extensive, wide-ranging efforts are already yielding disease and rare blood disorders is also a key focus. positive results, including the initiation of clinical testing for cutting-edge cell therapy and siRNA (small interfering ribonucleic We are stepping up our investment in these areas to build and acid) treatments. Armed with an increasing array of novel maintain industry-leading pipelines, while at the same time seeking new opportunities to complement our in-house research and development tools, we aim to move a greater number of projects into clinical testing at a faster pace, reducing expertise with external innovation. Over the past year, this the cost per project without compromising safety or quality. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 24 Once-weekly insulin to set new standard in treatment Taking diabetes treatment to the next level with CagriSema Our company was founded on the discovery and Insulin icodec has been filed for regulatory Our determination to raise the bar in diabetes production of insulin, and we remain committed approval in the US, EU and China, following phase treatment is exemplified by CagriSema, our new to pushing the envelope when it comes to insulin 3a trials that demonstrated superior reductions investigational therapy for type 2 diabetes that has innovation. Our investigational once-weekly in blood glucose levels and reduced incidence of now entered large-scale phase 3 clinical development. insulin icodec represents the latest major step severe hypoglycaemia compared to once-daily This two-in-one medicine combines semaglutide with forward in insulin care, potentially changing basal insulin degludec and insulin glargine U100 the amylin analogue cagrilintide, offering a novel the basal insulin experience for people living in insulin-naïve people with type 2 diabetes. If with diabetes. approved, insulin icodec will become the first mechanism to influence the gut-brain axis with the aim of improving glycaemic control in people living Rebecca Commanda lives with type 2 diabetes in Ontario, Canada. “If approved, insulin icodec will become the first once-weekly basal insulin option for adults with diabetes, reducing the number of weekly basal insulin injections from seven to just one.” once-weekly basal insulin option for adults with with type 2 diabetes. Cagrilintide works by reducing diabetes, reducing the number of weekly injections from seven to just one. hunger and increasing satiety signals to the brain, providing an additive effect to semaglutide. In the longer term, we are working on further The decision to move into phase 3 development improvements in insulin technology. This includes follows phase 2 results that showed a once-weekly continuing to pursue the development of subcutaneous injection of CagriSema reduced glucose-sensitive insulin, which only becomes active when the body’s glucose levels start to rise. long-term blood glucose levels by 2.2 percentage points and outperformed its individual components in reducing body weight. CagriSema, which appears to have a safe and well-tolerated profile, previously commenced large-scale phase 3 trials in obesity in 2022, reflecting its broad potential across multiple therapy areas. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 25 Landmark trial underscores cardiovascular benefits of semaglutide The success of our ground-breaking SELECT cardiovascular decades, obesity-related cardiovascular deaths have increased outcomes trial was a powerful endorsement of the efficacy and significantly. Obesity leads to cardiovascular morbidity and clinical importance of semaglutide as a treatment for people mortality and is associated with risk factors such as high blood living with obesity and established cardiovascular disease (CVD). pressure and inflammation. The study was the largest ever completed by our company, involving more than 17,500 adults aged 45 and above with obesity and established CVD but no prior history of diabetes. The findings demonstrated a 20% reduction in major adverse cardiovascular events (MACE) for trial participants treated with semaglutide 2.4 mg compared to placebo – showing that semaglutide not only helps patients lose weight but can also improve cardiovascular outcomes. The trial data showed this effect is consistent regardless of “It is the first time that an approved weight management medicine has been shown to reduce the risk of heart attacks, strokes and cardiovascular death.” patient age, gender, ethnicity and starting BMI (body mass It is the first time that an approved weight management index), with risk reductions evident across heart attack, medicine has been shown to reduce the risk of heart attacks, cardiovascular death and stroke. Importantly, the effect is seen soon after treatment initiation, suggesting that weight loss alone may not fully explain the benefits of semaglutide 2.4 mg strokes and cardiovascular death. Novo Nordisk has filed for a label update of Wegovy® in the US and EU based on these findings, and a decision is expected in 2024. The US Food in reducing the risk of MACE. and Drug Administration has granted our submission a priority review. Every year almost 21 million people die from CVD, which is the leading cause of disability and death worldwide. While cardiovascular mortality has decreased over the past two Juan Pablo Villaseñor lives with obesity and cardiovascular disease in Ciudad de Mexico, Mexico. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 26 CARDIOVASCULAR & EMERGING THERAPY AREAS Expanding our footprint in cardiovascular disease Next-generation treatments for rare blood disorders Cardiovascular disease (CVD) represents one To date, ocedurenone has been investigated in of the greatest health challenges of our time. nine clinical trials, and is currently in phase 3 Our Rare Disease unit – comprising treatments for rare blood and endocrine disorders – has a Affecting an estimated 620 million people across development for the treatment of uncontrolled growing pipeline of exciting products, including two the globe, it takes a major toll on quality of life hypertension in people with CKD. We expect to potential medicines for rare blood disorders with and is currently the leading cause of death initiate further phase 3 trials in the coming years large unmet medical needs. worldwide. as we seek to maximise its full potential. Mim8, our next-generation bispecific antibody for At Novo Nordisk, we are determined to reduce Meanwhile, our first standalone CVD compound, haemophilia A, is now in phase 3 development. the risk and burden of living with CVD, and over ziltivekimab, is currently in phase 3 development Administered subcutaneously, it works by the past year we have taken significant steps for the treatment of atherosclerotic cardiovascular mimicking the function of the missing clotting to increase our footprint in this area of huge disease in people living with CKD. The ZEUS trial factor VIII and is being tested as a treatment to unmet need. will include more than 6,000 patients in 38 prevent bleeds. countries, with completion expected in late-2025. In October 2023, we strengthened our CVD pipeline with the acquisition of ocedurenone in a deal worth up to USD 1.3 billion. This mature clinical candidate targets uncontrolled hypertension – a leading risk factor for cardiovascular events, heart failure, chronic kidney disease (CKD) and premature death. The experimental once-daily oral medicine etavopivat, also in phase 3 evaluation, offers potential benefits for people with sickle cell disease (SCD), a crippling and life-threatening condition caused by misshapen red blood cells. Acquired as part of the business development deal that brought US-based Forma Therapeutics in-house in 2022, the investigational therapy is designed to modulate red blood cell health to reduce anaemia, pain, transfusions and strokes in people living with SCD. Masahiro Umehara (left) lives with haemophilia A in Tokyo, Japan. Pictured here with his son Masatsugu and his dog. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 27 Pipeline overview DIABETES OBESITY RARE DISEASE CARDIOVASCULAR & EMERGING THERAPY AREAS Project Indication Description Phase Project Indication Description Phase Project Indication Description Phase Project Indication Description Phase Oral Semaglutide HD1 NN9924 T2D2 A long-acting GLP-13 analogue, 25.0 and 50.0 mg, intended for once-daily oral treatment. Oral Semaglutide NN9932 Obesity A long acting GLP-1 analogue intended for once-daily oral treatment. Icodec NN1436 IcoSema NN1535 CagriSema NN9388 GELA NN9506 T1D4 and T2D A long-acting basal insulin analogue intended for once-weekly subcutaneous treatment. CagriSema NN9838 Obesity T2D T2D T2D A combination of GLP-1 analogue semaglutide and insulin icodec intended for once-weekly subcutaneous treatment. A combination of amylin analogue cagrilintide and GLP-1 analogue semaglutide intended for once-weekly subcutaneous treatment. A collaboration with GE Healthcare, using ultrasound for once-monthly treatment. GELA NN9505 INV-202 NN9440 Amycretin NN9487 Obesity Obesity Obesity A combination of amylin analogue cagrilintide and GLP-1 analogue semaglutide intended for once-weekly subcutaneous treatment. A collaboration with GE Healthcare, using ultrasound for once-monthly treatment. A CB-16 receptor inverse agonist intended for once-daily oral treatment. A long-acting co-agonist of GLP-1 and amylin intended for once-weekly subcutaneous treatment or once-daily oral treatment. Glucose-sensitive insulin NN1845 T1D and T2D A glucose-sensitive insulin analogue intended for once-daily subcutaneous treatment. OW GLP-1 GIP NN9541 Obesity A combination of GLP-1 and GIP co-agonist intended for once-weekly subcutaneous treatment. Pumpsulin NN1471 DNA Immuno therapy NN9041 T1D T1D OW GLP-1 GIP5 NN9541 T2D A novel insulin analogue ideal for use in closed loop pump systems. A novel plasmid encoding pre- and pro-insulin intended for preservation of beta cell function. A combination of GLP-1 and GIP co-agonist intended for once-weekly subcutaneous treatment. OW Oral Semaglutide NN9904 T2D An oral version of semaglutide intended for once-weekly treatment. Concizumab NN7415 Haemophilia A or B w/wo inhibitors A monoclonal antibody against tissue factor pathway inhibitor (TFPI) intended for subcutaneous prophylaxis treatment. Nedosiran NN7022 Mim8 NN7769 Primary hyperoxaluria type 1 An siRNA targeting lactate dehydrogenase A (LDHA) intended for once-monthly subcutaneous treatment. Haemophilia A w/wo inhibitors A next generation FVIIIa mimetic bispecific antibody intended for subcutaneous prophylaxis of haemophilia A. Etavopivat NN7535 Sickle cell disease A second-generation small molecule PKR-activator intended for once-daily oral treatment. Etavopivat NN7536 Thalassemia A second-generation small molecule PKR-activator intended for once-daily oral treatment. Ziltivekimab NN6018 CKD8+ ASCVD9 A once-monthly monoclonal antibody intended for inhibition of IL-610 activity. Ziltivekimab NN6018 HFpEF11 A once-monthly monoclonal antibody intended for inhibition of IL-6 activity. Ocedurenone NN6023 CVD12 A small molecule, non-steroidal mineralocorticoid receptor antagonist (nsMRA) intended for oral treatment. ATTR-CM NN6019 CM4HF NN9003 Anti-ANGPTL3 mAb NN6491 CVD CVD CVD An anti-amyloid immunotherapy intended for intravenous treatment. An investigational cell therapy intended for restoring heart function in people with chronic heart failure. An ANGPTL3 neutralising sweeping antibody intended for once-monthly subcutaneous treatment. Etavopivat NN7537 MDS7 A second-generation small molecule PKR-activator intended for once-daily oral treatment. Semaglutide NN6535 Alzheimer’s A long-acting GLP-1 analogue intended for once-daily subcutaneous treatment. NDec NN7533 Sickle cell disease An oral combination of decitabine and tetrahydrouridine. Project is developed in collaboration with EpiDestiny. Semaglutide NN9931 MASH13 A long-acting GLP-1 analogue intended for once-weekly subcutaneous treatment. CagriSema NN9588 MASH A combination of amylin analogue cagrilintide and GLP-1 analogue semaglutide intended for once-weekly subcutaneous treatment. A long-acting FGF21 analogue intended for once-weekly subcutaneous treatment. An siRNA targeting LXRa intended for once-monthly subcutaneous treatment. An siRNA targeting MARC1 intended for once-monthly subcutaneous treatment. A VAP-1 inhibitor intended for once-daily oral treatment. MASH MASH MASH MASH Parkinson’s A cryopreserved cell therapy intended for disease modifying treatment. Oncology A GalXC-derived lipid conjugate one-time subcutaneous treatment. FGF21 NN9500 LXRa NN6582 MARC1 NN6581 VAP-1i NN6561 SC4PD NN9001 STAT3 NN4002 2022 2023 Phase 1 Phase 2 Phase 3 Submission and/or approval 1. HD: High Dose. 2. T2D: Type 2 diabetes. 3. GLP-1: Glucagon-like peptide-1. 4. T1D: Type 1 diabetes. 5. GIP: Gastric inhibitory polypeptide. 6. CB-1: Cannabinoid receptor-1. 7. MDS: Myelodysplastic syndromes. 8. CKD: Chronic kidney disease. 9. ASCVD: Atherosclerotic cardiovascular disease. 10. IL-6: Interleukin-6. 11. HFpEF: Heart failure with preserved ejection fraction. 12. CVD: Cardiovascular disease. 13. MASH: Metabolic dysfunction-associated steatohepatitis. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 28 Research and development progress DIABETES Regulatory events OBESITY Regulatory events RARE DISEASE Regulatory events CARDIOVASCULAR & EMERGING THERAPY AREAS Clinical progress • Rybelsus® (oral semaglutide) was approved as first-line • Wegovy® (semaglutide 2.4 mg) was approved for treatment • Marketing authorisation application was submitted to the • Phase 3a trial, HERMES, investigating ziltivekimab in treatment option by the FDA. of obesity in adolescents by the EMA. • Results from Rybelsus® (oral semaglutide) formulation change and PIONEER PLUS were submitted to the EMA. • Marketing authorisation application was submitted to the EMA, FDA, CDE and PMDA for approval of insulin icodec for treatment of both type 1 diabetes (T1D) and type 2 diabetes (T2D). • Marketing authorisation application was submitted to the EMA for the approval of dasiglucagon for treatment of severe hypoglycaemia. Clinical progress • Phase 3b trial, PIONEER PLUS, investigating 25.0 and 50.0 mg oral semaglutide in patients with T2D was completed. • Wegovy® (semaglutide 2.4 mg) was approved as an adjunct to diet and exercise for the use of weight management in adults with obesity by the PMDA. • Results from the phase 3b cardiovascular outcomes trial (CVOT) SELECT were submitted to the FDA and the EMA. Clinical progress • Phase 3b CVOT trial, SELECT, investigating subcutaneous • Phase 3a trial, STEP HFpEF, investigating subcutaneous once-weekly semaglutide 2.4 mg in people with HFpEF was completed. • Phase 3b trial, ASCEND PLUS, investigating oral semaglutide • Phase 3a trial, OASIS 1, investigating oral semaglutide in EMA for the approval of concizumab for treatment of haemophilia A or B with inhibitors. • A Complete Response Letter requesting further information was received from the FDA as a response to the concizumab marketing authorisation application. • Alhemo® (concizumab) was approved for the treatment of haemophilia A or B with inhibitors by the PMDA. • Sogroya® (somapacitan) was approved for treatment of growth hormone deficiency in children by the FDA, EMA and PMDA. people with HfpEF was initiated. • Novo Nordisk acquired ocedurenone, a phase 3 oral administrated small molecule, non-steroidal mineralocorticoid receptor antagonist for treatment of patients with uncontrolled hypertension and advanced CKD. • Phase 1/2 trial investigating the ability of cell therapy HS-001 to restore heart function in people with advanced heart failure was initiated in collaboration with Heartseed. • Phase 1 trial investigating ANGPTL3 mAb in people with cardiovascular disease was initiated. primary hyperoxaluria type 1 by the FDA. Clinical progress STEM-PD to restore dopamine nerve cells lost in the brain of people with Parkinson’s was initiated in collaboration with Lund University. • Phase 1 trial investigating STAT3 in people with tumour- once-weekly semaglutide 2.4 mg was completed. • RivflozaTM (nedosiran) was approved for the treatment of • Phase 1 trial investigating the ability of cell therapy people with obesity was completed. • Etavopivat transitioned from phase 2 to phase 3 trial in the associated immune cells was initiated. • Phase 1/2 investigating NNC0165-1875 in combination with semaglutide in people with obesity was completed. The project was terminated. • Novo Nordisk acquired Inversago Pharma, with lead assets INV-202 (a phase 2 ready asset for treatment of obesity) and INV-347 (a phase 1 ready asset for treatment of obesity). ongoing seamless phase 2/3 HIBISCUS trial, investigating the safety and efficacy of etavopivat in adults and adolescents with sickle cell disease. • Phase 1 trial investigating VAPi-1 in people with MASH was initiated. in patients with T2D and no history of prior myocardial infarction (MI) or stroke was initiated. • Phase 3b kidney outcomes trial, FLOW, investigating subcutaneous once-weekly semaglutide 2.4 mg in people with T2D and chronic kidney disease (CKD) was stopped early based on interim analysis due to efficacy. • Phase 3a programme, REIMAGINE, investigating once-weekly combination of semaglutide and cagrilintide in people with T2D was initiated. • Phase 2 trial investigating the combination of semaglutide and GIP in people with diabetes was completed. The project was terminated. • Phase 1 trial investigating the effects of the combination of semaglutide and SGLT2i inhibitor dapagliflozin in people with T2D was completed. The project was terminated. • Phase 1 trial investigating the SOMA device for oral treatment was completed. • Phase 1 trial investigating oral GLP-1/GIP co-agonist for treatment of T2D was completed. Novo Nordisk is planning to initiate a phase 2 trial with a subcutaneous formulation of the GLP-1/GIP co-agonist. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 29 Patent status for products with marketing authorisation The patent expiry dates for products marketed by Novo Nordisk1 are shown in the tables on the right. The dates provided are for expiry in the US, China, Japan and Europe of patents on the active ingredient, Human insulin and Modern insulins3 Expired Expired Expired Expired Saxenda® Expired Expired Expired Expired Wegovy® 2032 2026 2031 2031 Product US China Japan Europe2 Product US China Japan Europe2 Product US China Japan Europe2 unless otherwise indicated, and include actual Victoza®4 Expired Expired Expired Expired 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 Tresiba® 2029 2024 2027 2028 Ryzodeg® 2029 2024 20245 2028 or uses that may be relevant for exclusivity beyond Xultophy® 2029 2024 20245 2028 the expiration of the active ingredient patent. Furthermore, regulatory data protection and/or orphan exclusivity may apply. Fiasp® 20306 20306 20306 20306 Ozempic® 2032 2026 2031 2031 Rybelsus® 2032 2026 2031 2031 Norditropin® (SimpleXx®) Expired Expired Expired Expired NovoSeven® Expired Expired Expired Expired NovoEight® Refixia® (REBINYN®) No patent No patent No patent No patent 2028 2027 2032 2027 Esperoct® 2032 2029 2034 2034 Vagifem® 10 mcg Expired No patent Expired Expired 1. This overview does not include products whose sales represent less than 0.5% of Novo Nordisk’s total sales. 2. Patent status varies from country to country. The figures in the table are based on Germany. 3. Modern insulins are NovoRapid® (NovoLog®), NovoMix® 30 (NovoLog® Mix 70/30), Levemir®. 4. 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. 5. Patent term extension until 2027 may apply. 6. Formulation patent; active ingredient patent has expired. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 30 COMMERCIAL EXECUTION Stepping up to serve more patients in the face of unprecedented demand Demand for Novo Nordisk medicines is soaring, driven by a global obesity epidemic and exceptional growth in the GLP-1 market. This has resulted in a record number of people being treated with our medicines, but also supply constraints. In response, we are significantly ramping up production capacity and have introduced clear prioritisation principles to ensure broad and equitable distribution of our products. Our centenary year has been characterised by extraordinary with our unwavering commitment to deliver innovation to as STRATEGIC ASPIRATIONS 2025 growth, driven by surging global demand for our medicines. many patients across the globe as possible. Faced with these unprecedented circumstances, we have reshaped our commercial execution strategy to best serve At the same time, we are investing heavily in new and upgraded the record number of patients who rely on our medicines. production facilities in Denmark and other countries, increasing our 1. Strengthen diabetes leadership – aim at global value market share of more than 1/3 By ensuring supply for patients in the greatest need while capacity to meet current and future demand for our treatments and 2. More than DKK 25 billion in continuing to bring innovation to people living with serious laying the foundation for sustainable long-term growth. Obesity sales by 2025 chronic diseases all over the world, we aim to balance our financial and societal responsibilities. These investments include a record DKK 42 billion expansion of our flagship production site in Kalundborg, Denmark, which is Finding parity between the value we create and the values already producing half of the world’s entire supply of insulin. we aspire to has required some radical changes to normal Outside of Denmark, we are more than doubling the production commercial practices, along with a different mindset among footprint of our long-established facilities in Chartres, France, sales staff. In many ways, we have rewritten the traditional with investments totalling DKK 17 billion. Both projects will rulebook for product launches by placing greater focus on the equitable distribution of limited supplies between different include state-of-the-art, multi-product facilities to accommodate current and future products and processes. geographies and patient groups. Our top priority is that patients currently on Novo Nordisk we strive to operate our facilities across the globe 24/7. In the medicines continue to have uninterrupted access to an appropriate treatment option. We are also focusing on introducing past year, we have delivered more products to more patients than ever before, but such is the scale of demand that we expect new treatments to new markets in a more measured way, aligned periodic supply constraints to continue into 2024. With construction under way on these major expansion projects, 3. Secure a sustained growth outlook for Rare Disease Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 31 DIABETES VALUE MARKET SHARE (%) GLP-1 Insulin Total diabetes 50.4% 52.7% 54.9% 54.8% 44.3% 43.8% 44.6% 43.9% 29.3% 30.1% 31.9% 33.8% 60 50 40 30 20 2020 2021 2022 2023 Source: IQVIA MAT, Nov 2023. DIABETES SALES (DKK billion) Sales as reported Growth at CER Strengthening diabetes leadership with strong GLP-1-based product growth We have extended our leadership in diabetes care and This includes a recognition that certain GLP-1-based therapies increased our value market share by 1.9 percentage points are not only highly effective options for controlling blood to 33.8% in 2023, fuelled by strong uptake of the GLP-1-based products Ozempic® and Rybelsus® in both North America and International Operations. sugar levels, but may also offer significant benefits in terms of reducing weight and cardiovascular risks – positive effects now reflected in international treatment guidelines. Ozempic® is now the world’s biggest-selling diabetes medicine. Available as a once-weekly injection, it is contributing to a major shift in treatment for type 2 diabetes. At the same time, our oral GLP-1-based therapy, Rybelsus®, is gaining ground by offering patients with type 2 diabetes an intervention without injections. Demand for these two products has grown to Despite declining sales of insulin in key markets, reflecting both pricing pressures and lower volumes in some geographies, Novo Nordisk’s insulin value market share remains little changed from 12 months earlier, at 43.9%, compared to 44.6% in 2022. unprecedented levels, helping to generate record sales growth Across International Operations, insulin is still an important despite supply constraints and a decline in demand for the first-generation GLP-1-based product Victoza®. and growing segment, although insulin sales in China have been adversely impacted since the introduction of Volume 200 160 120 80 40 0 29% Although competition is increasing, Novo Nordisk remains a decline in overall volumes and a decrease in realised prices Based Procurement in mid-2022. The US has also experienced 14% the market leader in the GLP-1 market with a value share of due to channel / payer mix and higher rebates. 8% 13% 54.8%, broadly steady compared to 2022 where our value share stood at 54.9%. Nevertheless, in a global diabetes market driven by high GLP-1 growth, we are uniquely positioned to maintain and The high demand for our GLP-1-based medicines is partly strengthen our leadership in this sector and have already fuelled by a growing understanding of the importance of the met our target of securing value market share of at least class among healthcare professionals, patients and payers. one-third by 2025. 2020 2021 2022 2023 Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 32 Controlled launches for market-leading obesity therapy Surging demand, limited supply and unprecedented global media attention on our ground-breaking obesity treatment, Wegovy®, have brought significant challenges – as well as exciting long-term opportunities. The success of Wegovy®, which builds on our experience with our first-generation GLP-1-based obesity product Saxenda®, means that Novo Nordisk has captured most of the growth and gained a clear leadership position in the obesity market. The sector remains extremely dynamic, with new players lining up to Demand for Wegovy® is still growing strongly in the US, its first launch market, and we have taken proactive steps to conduct enter the space amid a growing appreciation that medicines tackling obesity have the potential to boost public health and controlled and limited roll-outs in other major markets, with the cut long-term healthcare costs. goal of reaching the patients in greatest need of the therapy despite ongoing supply constraints. “Novo Nordisk is also reserving a share of Wegovy® supply in each new launch market for patients who cannot afford to pay for the product out of pocket.” In the UK, for example, Wegovy® is now available in specialist National Health Service weight management services for people Globally, the number of people living with obesity has almost tripled since 1975 and is set to reach over 1.2 billion adults by 2030. The causes of obesity are complex and its consequences far-reaching because, so often, it puts people on a path to other diseases – not only diabetes, but also heart and liver diseases, cancers and many more. Today, only one in 10 people living with obesity seek professional medical help – and only one in five of those receive treatment with a weight management medication. But attitudes are changing fast. The past two years have been characterised by a growing understanding among both the medical who meet strict criteria, or else privately through a registered community and the public of the critical need to treat obesity, healthcare professional. UK physicians are being urged to while an increasing number of people living with the disease are prescribe responsibly and Novo Nordisk is also reserving a share of Wegovy® supply in each new launch market for patients who cannot afford to pay for the product out of pocket. actively seeking support. We want to understand more about their journey and how we can continue to help them maintain their long-term progress towards better health. GLOBAL PREVALENCE OF OBESITY IN ADULTS (millions) Obesity 1,532 1,246 1,007 813 2,000 1,600 1,200 800 400 0 2020 2025 2030 2035 Source: Obesity Atlas, 2023. OBESITY SALES (DKK billion) Sales as reported Growth at CER 50 40 30 20 10 0 154% 84% 3% 55% 2020 2021 2022 2023 Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 33 Targeting sustainable growth in Rare Disease PRODUCTION Expanding our production capacity to meet demand Our Rare Disease unit had a challenging year, with sales decreasing by 15% as Norditropin®, our long-established treatment for growth In the rare endocrine space, our once-weekly treatment Sogroya® offers a new opportunity for people living with growth hormone deficiency by Tackling the supply problems that prevent us We are also thinking strategically about ways to from meeting the growing demand for our remove bottlenecks in the supply chain. For products is a top priority for Novo Nordisk. We example, we are seeking to alleviate pressure on disorders, was impacted by supply constraints removing the burden of daily injections and know we must do more to ramp up capacity, and device supplies by introducing our medicines in due to a temporary reduction in manufacturing offering demonstrated efficacy. our colleagues in production are working around once-weekly rather than daily formulations, and output. Sales of rare blood disorder products, meanwhile, were up 1% as a decline in NovoSeven® and NovoEight® sales was offset by growing demand for our newer haemophilia A and B therapies, Esperoct® and Refixia®. RARE DISEASE SALES (DKK billion) Sales as reported Growth at CER In the past year we have announced investments totalling more than DKK 75 billion into expanding CAPEX INVESTMENTS (DKK billion) capacity across our global network of production CapEx CapEx to sales ratio the clock to get additional supplies onto we are exploring ways to reduce the reliance on pharmacy shelves and into the hands of patients. single-use injection devices. 1% 4% 1% -15% Despite the challenges encountered this year, we remain confident that our rich pipeline in rare disease can bring growth back on track. The line-up of new therapies includes significant advances in both rare blood and endocrine disorders. Next-generation treatments – including Mim8 and Alhemo® in haemophilia – will add to growth in the medium term, while accelerated internal innovation and external business development will help us to build our presence in other rare disease areas of high unmet need, such as sickle cell disease. 25 20 15 10 5 0 sites – including major expansions of our facilities in Kalundborg, Denmark, and Chartres, France, and the acquisition of a brownfield development and production site in Athlone, Ireland. There are, however, limits to how rapidly we can translate these investments into making more medicines that are ready for shipment. Pharmaceutical production must adhere to the highest possible standards, and we will never compromise on safety and quality for the sake of speed. In the meantime, we strive to operate our global manufacturing facilities 24/7 to maximise output 30 24 18 12 6 0 11% 7% 5% 4% 2020 2021 2022 2023 from the current production base. 2020 2021 2022 2023 Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 34 FINANCIALS 2023 performance and 2024 outlook STRATEGIC ASPIRATIONS 2025 1. Deliver solid sales and operating profit growth 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 Financial performance Geographic sales development Diabetes care Sales in Diabetes care increased by 24% measured in Danish kroner and Sales increased by 31% measured in Danish kroner and by 36% at CER Sales in North America Operations increased by 50% measured in by 29% at CER to DKK 173,466 million driven by growth of GLP-1-based to DKK 232,261 million in 2023. Novo Nordisk’s 2023 sales and operating Danish kroner and by 54% at CER. products. Novo Nordisk has improved the global diabetes value market profit performance measured at CER were within the ranges provided in share over the last 12 months to 33.8% from 31.9%. November 2023. The free cash flow, effective tax rate, capital expenditure Sales in International Operations increased by 11% measured in Danish as well as depreciation, amortisation and impairment losses were all in kroner and by 16% at CER. Sales in EMEA increased by 15% measured in The market share increase was driven by market share gains in both line with the guidance. Danish kroner and by 17% at CER. Sales in Region China increased by 3% North America Operations and International Operations. FINANCIAL PERFORMANCE (DKK billion) North America Operations net sales International Operations net sales measured in Danish kroner and by 11% at CER. Sales in Rest of World increased by 11% measured in Danish kroner and by 15% at CER. Growth at CER Sales development across therapeutic areas 7% 14% 36% 16% Sales in Diabetes care increased by 24% measured in Danish kroner and by 29% at CER. Sales of Obesity care products, Wegovy® and Saxenda®, increased by 147% measured in Danish kroner and by 154% at CER. Sales of Rare disease products decreased by 16% measured in Danish kroner and by 15% at CER. GLP-1-based therapy for type 2 diabetes Sales of GLP-1-based products for type 2 diabetes (Rybelsus®, Ozempic® and Victoza®) increased by 48% measured in Danish kroner and by 52% at CER to DKK 123,132 million. The estimated global GLP-1 share of total diabetes prescriptions has increased to 6.0% compared with 4.5% 12 months ago. Novo Nordisk continues to be the global market leader in the GLP-1 segment with a 54.8% value market share. Rybelsus® sales increased by 66% measured in Danish kroner and by 71% at CER to DKK 18,750 million. Sales growth was driven by North 2020 2021 2022 2023 In the following sections, unless otherwise noted, market data are based America Operations as well as EMEA and Rest of World. on moving annual total (MAT) from November 2022 and November 2023 provided by the independent data provider IQVIA. Ozempic® sales increased by 60% measured in Danish kroner and by 66% at CER to DKK 95,718 million. Sales growth was driven by both North America Operations and International Operations. Sales growth 300 250 200 150 100 50 0 Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 35 has resulted in periodic supply constraints and related drug shortage notifications across geographies. Rare Disease Sales of Rare Disease products decreased by 16% measured in Danish Rybelsus® as well as Obesity care market development activities. The increase in sales and distribution costs is impacted by adjustments kroner and by 15% at CER to DKK 17,163 million. to legal provisions. Victoza® sales decreased by 30% measured in Danish kroner and by 28% at CER to DKK 8,664 million as the GLP-1 market is moving towards once- weekly and tablet-based treatments. The sales decline was mainly driven Rare blood disorders Sales of Rare blood disorder products increased by 1% measured in Research and development costs increased by 35% measured in Danish kroner and by 37% at CER to DKK 32,443 million reflecting increased by North America Operations. Danish kroner and by 3% at CER to DKK 11,776 million driven by the late-stage clinical trial activity and increased early research activities Insulin sales Sales of insulin decreased by 9% measured in Danish kroner and by 6% at CER to DKK 48,022 million. Sales decline at CER was driven by declining sales in the US and Region China. extended half-life products in haemophilia B and A, partially countered by NovoSeven®. compared to 2022. The acquisition of Forma Therapeutics Inc. in 2022 and Inversago Pharma also increased R&D spending. Rare endocrine disorders Sales of Rare endocrine disorder products decreased by 46% measured in Danish kroner and by 47% at CER to DKK 3,836 million reflecting Administration costs increased by 9% measured in Danish kroner and by 11% at CER to DKK 4,855 million. Obesity care Sales of Obesity care products, Wegovy® and Saxenda®, increased by 147% measured in Danish kroner and by 154% at CER to DKK 41,632 million. Sales a reduction in manufacturing output. Novo Nordisk is working on re-establishing supply of rare endocrine disorder products. Sogroya® has now been launched in five countries, and the initial feedback from Other operating income and expenses (net) was DKK 119 million compared with DKK 1,034 million in 2022, mainly driven by lower income from partnerships related to Dicerna Pharmaceuticals Inc. growth was driven by both North America Operations and International Operations. Wegovy® has now been launched in the US, Denmark, Norway, Germany, the UK, Iceland, Switzerland and the United Arab Emirates. The patients and physicians is encouraging. Novo Nordisk has a value market share of 19.3% (MAT) in the global human growth disorder market. Operating profit increased by 37% measured in Danish kroner and by 44% at CER to DKK 102,574 million reflecting the sales growth. volume growth of the global branded obesity market was 116% in 2023. Development in costs and operating profit SALES BY THERAPEUTIC AREA (DKK billion) Diabetes care Obesity care Rare Disease Growth at CER The cost of goods sold increased by 26% measured in Danish kroner OPERATING PROFIT AND MARGIN (DKK billion) and by 28% at CER to DKK 35,765 million, resulting in a gross margin Operating profit (left axis) Operating profit margin (right axis) of 84.6% measured in Danish kroner compared with 83.9% in 2022. Growth at CER 7% 14% 300 250 200 150 100 50 0 The increase in gross margin reflects a positive product mix, driven by 36% increased sales of GLP-1-based treatments. This is partially countered by costs related to ongoing capacity expansions, a negative currency 16% impact and lower realised prices mainly in the US and Region China. Sales and distribution costs increased by 23% measured in Danish kroner and by 26% at CER to DKK 56,743 million. The increase in costs is driven by both North America Operations and International Operations. In North America Operations, the cost increase is driven by the relaunch of Wegovy® and promotional activities for Ozempic®. In International Operations, the increase is mainly related to promotional activities for 125 100 75 50 25 0 7% 13% 15% 44% 100% 80% 60% 40% 20% 0% 2020 2021 2022 2023 2020 2021 2022 2023 Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 36 Financial items (net) and tax CASH FLOW AND CAPITAL ALLOCATION (DKK billion) Operating profit growth is expected to be 21% to 29% at CER. Given the Dividend for prior year Interim dividend Share repurchases current exchange rates versus the Danish krone, growth reported in DKK Financial items (net) showed a net gain of DKK 2,100 million compared with a net loss of DKK 5,747 million in 2022, reflecting gains on hedged currencies, primarily in US dollar. In line with Novo Nordisk’s treasury policy, the most significant foreign exchange risks for Novo Nordisk have been hedged, primarily through foreign exchange forward contracts. The foreign exchange result was a gain of DKK 1,652 million compared with a net loss of DKK 4,651 million in 2022. As per the end of December 2023, a positive market value of financial contracts of approximately DKK 1.6 billion has been deferred for 70 60 50 40 30 20 10 0 is now expected to be around 2 percentage points lower than at CER. The expectation for operating profit growth primarily reflects the sales growth outlook and continued investments in future and current growth drivers within Research, Development and Commercial. Within R&D, investments are related to the continued expansion and progression of the early and late-stage pipeline. Commercial investments are mainly related to Obesity care market development activities as well as increased spend related to GLP-1 diabetes care. Novo Nordisk now expects financial items (net) to amount to a gain of around DKK 1.3 billion, mainly reflecting gains associated with foreign recognition in 2024. 2021 2022 2023 2024E1 exchange hedging contracts as well as interest gains from cash and The effective tax rate was 20.1% in 2023 compared with an effective tax rate of 19.6% in 2022. 1. Expectations for 2024. 2024 outlook marketable securities. The effective tax rate for 2024 is expected to be in the range of 19-21%. Net profit increased by 51% to DKK 83,683 million and diluted earnings Sales growth is expected to be 18% to 26% at CER. Given the current Capital expenditure is expected to be around DKK 45 billion in 2024 per share increased by 52% to DKK 18.62. exchange rates versus the Danish krone, sales growth reported in reflecting the expansion of the supply chain, including the previously Cash flow and capital allocation The guidance reflects expectations for sales growth in both North and Hillerød, Denmark, and Chartres, France. The investments in DKK is expected to be around 1 percentage point lower than at CER. communicated expansions of the manufacturing facilities in Kalundborg America Operations and International Operations, mainly driven by Kalundborg will create additional capacity across the entire global value Free cash flow realised in 2023 was DKK 68.3 billion compared with volume growth of GLP-1-based treatments for Obesity and Diabetes chain from manufacturing of active pharmaceutical ingredients (API) to DKK 57.4 billion in 2022 supporting the strategic aspiration to deliver care. Intensifying competition and continued pricing pressure within packaging, with the majority invested in API capacity. The API facility will attractive capital allocation to shareholders. The cash conversion in Diabetes and Obesity Care are included in the guidance. be designed as a multi-product facility with flexibility to accommodate 2023 is positively impacted by timing of payment of rebates in the US, including provisions related to the revised 340B distribution policy in the US. Income under the 340B Program has been partially recognised. Following higher than expected volume growth in recent years, including GLP-1-based products such as Ozempic® and Wegovy®, combined with the expectation of continued volume growth and capacity limitations at some current and future processes. In Hillerød, the investments will create additional production capacity of API within Cardiovascular & Emerging Therapy Areas. The expansion of the production facilities in Chartres are related to additional aseptic production and finished production Capital expenditure for property, plant and equipment was DKK 25.8 manufacturing sites, the outlook also reflects expected continued periodic processes. In the coming years, the capital expenditure to sales ratio is billion compared with DKK 12.1 billion in 2022, primarily reflecting supply constraints and related drug shortage notifications across a still expected to be low double digit. investments in additional capacity for active pharmaceutical ingredient (API) production and fill-finish capacity for both current and future number of products and geographies. Novo Nordisk is investing in internal and external capacity to increase supply both short and long term. Novo injectable and oral products. Capital expenditures for intangible assets was DKK 13.1 billion in 2023 compared with DKK 2.6 billion in 2022 reflecting business development activities. Nordisk started gradually increasing the supply of the lower dose strengths of Wegovy® in the US in January 2024. A gradual roll-out of Wegovy® with capped volumes in International Operations is included in the guidance. Depreciation, amortisation and impairment losses are expected to be around DKK 10 billion. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 37 The free cash flow is expected to be DKK 64-74 billion reflecting the sales Novo Nordisk has hedged expected net cash flows in a number of projections. By their very nature, forward-looking statements involve growth, a favourable impact from rebates in the US countered by invoicing currencies and, all other things being equal, movements in inherent risks and uncertainties, both general and specific. Novo Nordisk investments in capital expenditure. key invoicing currencies will impact Novo Nordisk’s operating profit as cautions that a number of important factors, including those described outlined in note 4.4 on Financial risks. in this Annual Report 2023, could cause actual results to differ materially All of the above expectations are based on assumptions that the global from those contemplated in any forward-looking statements. or regional macroeconomic and political environment will not Forward-looking statements significantly change business conditions for Novo Nordisk during 2024, Factors that may affect future results include, but are not limited to, including energy and supply chain disruptions, the potential implications Novo Nordisk’s reports filed with or furnished to the US Securities and global as well as local political and economic conditions, such as interest from major healthcare reforms and legislative changes as well as Exchange Commission (SEC), including this statutory Annual Report 2023 rate and currency exchange rate fluctuations, delay or failure of projects outcome of legal cases including litigations related to the 340B Drug and Form 20-F, which are both expected to be filed with the SEC in related to research and/or development, unplanned loss of patents, Pricing Program in the US, and that the currency exchange rates, January 2024 in continuation of the publication of this Annual Report interruptions of supplies and production, including as a result of especially the US dollar, will remain at the current level versus the 2023, and written information released, or oral statements made, to interruptions or delays affecting supply chains on which Novo Nordisk Danish krone. Neither does the guidance include the financial the public in the future by or on behalf of Novo Nordisk, may contain relies, shortages of supplies, including energy supplies, product recalls, implications of any new significant business development transactions forward-looking statements. Words such as ‘believe’, ‘expect’, ‘may’, unexpected contract breaches or terminations, government-mandated and significant impairments of intangible assets during 2024. ‘will’, ‘plan’, ‘strategy’, ‘prospect’, ‘foresee’, ‘estimate’, ‘project’, ‘anticipate’, or market-driven price decreases for Novo Nordisk’s products, Expectations are as reported, if not otherwise stated Expectations 31 January 2024 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) ‘can’, ‘intend’, ‘target’ and other words and terms of similar meaning introduction of competing products, reliance on information technology in connection with any discussion of future operating or financial including the risk of cybersecurity breaches, Novo Nordisk’s ability to performance identify forward-looking statements. Examples of such successfully market current and new products, exposure to product forward-looking statements include, but are not limited to: liability and legal proceedings and investigations, changes in governmental laws and related interpretation thereof, including on 18% to 26% Around 1 percentage point lower than at CER • statements of targets, plans, objectives or goals for future operations, reimbursement, intellectual property protection and regulatory controls including those related to Novo Nordisk’s products, product research, on testing, approval, manufacturing and marketing, perceived or actual product development, product introductions and product approvals failure to adhere to ethical marketing practices, investments in and as well as cooperation in relation thereto, divestitures of domestic and foreign companies, unexpected growth in • statements containing projections of or targets for revenues, costs, costs and expenses, strikes and other labour market disputes, failure to 21% to 29% income (or loss), earnings per share, capital expenditures, dividends, recruit and retain the right employees, failure to maintain a culture of capital structure, net financials and other financial measures, compliance, epidemics, pandemics or other public health crises, effects Gain of around DKK 1.3 billion and outcome of contingencies, such as legal proceedings, and • statements regarding future economic performance, future actions of domestic or international crises, civil unrest, war or other conflict and factors related to the foregoing matters and other factors not Around 2 percentage points lower than at CER 19% to 21% • statements regarding the assumptions underlying or relating to such specifically identified herein. Around DKK 45 billion statements. Around DKK 10 billion For an overview of some, but not all, of the risks that could adversely DKK 64-74 billion In this Annual Report 2023, examples of forward-looking statements can be found under the section related to our ‘Strategic Aspirations’ and affect Novo Nordisk’s results or the accuracy of forward-looking statements in this Annual Report 2023, reference is made to the overview elsewhere. These statements are based on current plans, estimates and of risk factors in ‘Risk management’ of this Annual Report 2023. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 38 OWNERSHIP STRUCTURE1 Unless required by law, Novo Nordisk has no duty and undertakes shares take priority for dividends between 0.5 and 5%. However, in no obligation to update or revise any forward-looking statement after practice, A and B shares receive the same amount of dividend per share. Novo Nordisk Foundation Institutional and private investors the distribution of this Annual Report 2023, whether as a result of new information, future events, or otherwise. Shares and capital structure As of 31 December 2023, Novo Holdings A/S held a B share capital of a nominal value of DKK 19,018,300. Together with the A shares, Novo Holdings A/S’s total ownership amounted to a nominal value of DKK 126,505,500. Novo Holdings A/S ownership is reflected in the 100% provide the basis for fair and efficient pricing of our shares. Through open and proactive communication, Novo Nordisk aims to ‘Ownership structure’ chart. Novo Holding A/S 77.1% of votes 28.1% of capital 22.9% of votes 71.9% of capital A shares 1,075m shares 23.8% of capital and 75.8% of votes B shares 3,435m shares 76.2% of capital and 24.2% of votes Novo Nordisk A/S Share capital and ownership There is no complete record of all shareholders; however, based on available sources of information, as of 31 December 2023 it is estimated that shares were geographically distributed as shown in the ‘Geographical Novo Nordisk’s share capital of DKK 451 million is divided into A and B share split of shareholders’ chart. As of 31 December 2023, the free float of capital. The A and B shares are calculated in units of DKK 0.10, amounting listed B shares was 92.96% (of which approximately 12.18% are listed as to 4.51 billion shares. The A share capital, consisting of 1,075 million shares, ADRs), excluding Novo Holdings A/S and Novo Nordisk’s holding of shares. has a nominal value of DKK 107,487,200 and the B share capital, consisting As of 31 December 2023, Novo Holdings A/S and Novo Nordisk’s holding of 3,435 million shares, has a nominal value of DKK 343,512,800. Each A of B shares equaled 241,895,054 shares and had a nominal value of DKK share of a nominal value of DKK 0.10 carries 100 votes and each B share of 24,189,505. For details about the share capital, see note 4.2 to the a nominal value of DKK 0.10 carries 10 votes. Novo Nordisk’s B shares are consolidated financial statements. listed on Nasdaq Copenhagen and on the New York Stock Exchange (NYSE) as American Depository Receipts (ADRs). GEOGRAPHICAL SPLIT OF SHAREHOLDERS3 (% of share capital) 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 authorizations granted. Denmark North America UK Other The company’s A shares are not listed and are held by Novo Holdings A/S2, a Danish public limited liability company wholly owned by the Novo Nordisk Foundation. According to the Articles of Association of the Foundation, the A shares cannot be divested. Special rights attached to A shares include pre-emptive subscription rights in the event of an increase in the A share capital and pre-emptive purchase rights in the event of a sale of A shares, while B shares take priority for liquidation proceedings. A shares take priority for dividends below 0.5%, and B 39 32 3 26 1. Treasury shares are included; however, voting rights of treasury shares cannot be exercised. 2. Novo Holdings A/S’s registered address is Tuborg Havnevej 19, DK-2900 Hellerup, Denmark. 3. Split of shareholders is denoted according to the location of legal deposit-owners. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 39 Capital structure Share repurchase programme for 2023/2024 Novo Nordisk’s Board of Directors and Executive Management consider During the twelve-month period beginning 1 February 2023, Novo that the current capital and share structure of Novo Nordisk serve the Nordisk repurchased shares worth DKK 30 billion. The share repurchase interests of the shareholders and the company well. Novo Nordisk’s capital structure strategy offers a balance between long-term programme has primarily been conducted in accordance with the safe harbour rules in the EU Market Abuse Regulation (MAR)4. shareholder value creation and competitive shareholder return in the short term. For the next 12 months, Novo Nordisk has decided to implement a new share repurchase programme. The expected total repurchase value of B In 2021, the capital structure was adjusted following Novo Nordisk’s shares, for the 12 months beginning 2024, amounts to a cash value of Eurobond issuance with an aggregate principal amount of EUR 1.3 billion. up to DKK 20 billion. The total programme may be reduced in size if In 2022, Novo Nordisk issued Eurobonds in the amount of EUR 1.5 billion. significant business development opportunities arise during 2024. Novo The total outstanding Eurobonds in 2023 amounted to EUR 2.8 billion. Nordisk expects to conduct the majority of the new share repurchase Dividend policy programme according to the safe harbour rules in MAR. At the Annual General Meeting in March 2024, the Board of Directors will propose a further reduction in the company’s B share capital, corresponding to SHARE PRICE PERFORMANCE 2023 Novo Nordisk share price and indexed peers5 (%) Novo Nordisk OMXC25 Peer group6 DKK 800 700 600 500 400 300 The company’s dividend policy applies a pharmaceutical industry approximately 1.0% of the total share capital, by cancelling 45 million Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec benchmark to ensure a competitive payout ratio for dividend payments, treasury shares. which are complemented by share repurchase programmes. The final dividend for 2022 paid in March 2023 was equal to DKK 4.08 per A and Share price development B share of DKK 0.10 as well as for ADRs. The total dividend for 2022 was DKK 6.20 per A and B share of DKK 0.10, corresponding to a payout ratio The Novo Nordisk price of the B share of a nominal value of DKK 0.20 was of 50.3%. The 2022 pharma peer group average was 46.5%. end of December 2022 DKK 938.00. Following the two-for-one stock split in September 2023, the B share price of a nominal value of DKK 0.10 was In August 2023, an interim dividend was paid equaling DKK 3.00 per end of December 2023 DKK 698.10. The comparable share prices for B A and B share of DKK 0.10 as well as for ADRs. For 2023, the Board of shares with a nominal value of DKK 0.10 were DKK 469.00 and DKK 698.10 Directors will propose a final dividend of DKK 6.40 to be paid in March at the end of 2022 and 2023 respectively, an increase of 48.8 %. The total 2024, equivalent to a total dividend for 2023 of DKK 9.40 and a payout ratio of 50.19%. The company expects to distribute an interim dividend market value of Novo Nordisk’s B shares, excluding treasury shares and Novo Holdings A/S shares, was DKK 2,229,925,434,103, as of in August 2024. Further information regarding this interim dividend will 29 December 2023. be announced in connection with the financial report for the first six months of 2024. Dividends are paid from distributable reserves. Novo Nordisk does not pay a dividend on its holding of treasury shares. 5. OMXC25 and pharmaceutical industry development have been rebased to Novo Nordisk share price in January 2023. 6. AstraZeneca, Bristol-Meyers, Eli Lilly, GlaxoSmithKline, Lundbeck, Merck, Novartis, Pfizer, Roche and Sanofi. 2024 FINANCIAL CALENDAR Capital Markets Day 2024 Annual General Meeting 2024 Ex-dividend Record date Payment, B-shares Payment, ADRs Financial statement for the first three months of 2024 Financial statement for the first six months of 2024 Ex-dividend, B-shares. Ex-dividend and Record date, ADRs Record date, B-shares Payment, B-shares Payment, ADRs Financial statements for the first nine months of 2024 Financial statement for 2024 and Annual Report 2024 7 Mar 2024 21 Mar 2024 22 Mar 2024 25 Mar 2024 26 Mar 2024 2 Apr 2024 2 May 2024 7 Aug 2024 15 Aug 2024 16 Aug 2024 19 Aug 2024 26 Aug 2024 6 Nov 2024 5 Feb 2025 4. Regulation (EU) 596/2014. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 40 Risks 41 Risk management 42 Key operational risks Orley Andreasson lives with obesity. He was bullied in school because of his size – often being portrayed as lazy, stupid or lacking self-control. He is now more confident about himself and wants to give back. During his freestyle rapping sessions, Orley talks about living with obesity and connects with kids who struggle with stigma and bullying. He believes we can all make a small change in the fight against fat-shaming. Watch Orley’s full story here Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 41 Risk management To be a sustainable business, we must remain responsive to evolving expectations and seize strategic opportunities as they arise. Managing risks rigorously and systematically is crucial to our ability to create and protect value. planning and management of our production capacity and supply chain pricing negotiations. Our values, encapsulated in the Novo Nordisk Way, are key to mitigate this risk. Access and affordability 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 guide every decision we make. OneCode, our code of conduct, further empowers us to conduct our operations responsibly. These guidelines help us to maintain integrity, thereby enabling us to fulfil our purpose effectively. Operational risk management process In the short- to medium-term, we are exposed to risks throughout our We apply a dual-lensed approach to risk management. This means we diseases keeps rising. Ensuring access and affordability is a risk and identify and mitigate both operational risks that pose a threat to our responsibility Novo Nordisk shares with all involved in healthcare. We value chain. Some risks are inherent in the pharmaceutical industry, short- to medium-term plans, as well as strategic risks that could reduce recognise that we cannot defeat chronic diseases alone, but to mitigate such as delays or failures of potential late-stage medicines in the R&D our ability to achieve our corporate strategy over the long term. the risk we can accelerate our actions to find solutions in collaboration pipeline. Other risks, such as geopolitical instability, supply disruptions Addressing risks in our strategic planning Scenario and risk-thinking exercises are part of our strategic planning. They include analyses of market dynamics, as well as impacts from Digital disruption New digital technologies could bring new competitors into the with relevant stakeholders. 
 and competitive threats, are familiar to any manufacturing company with global production. We will not compromise on product quality, patient safety and business ethics: these are front and centre of our enterprise-wide risk management set-up. We assess risks as potential socioeconomic, environmental, geopolitical and political developments pharmaceutical industry. They also provide an opportunity for us to financial loss or reputational damage likelihood. that present risks or opportunities for our business. Annually, Executive deliver more value to our stakeholders and help patients live a life with Management and the Board of Directors review a strategic risk profile. fewer limitations. Digital health solutions bring new risks, particularly Executive Management, the Board of Directors and the Audit Committee The main strategic risks are: regarding data regulation and privacy, as well as potential quality issues. review a risk grid of our biggest operational risks every six months. This Innovation and competition Novo Nordisk faces a concentration risk with multiple brands being relevant partners. and includes all types of risks that could cause significant disruptions to the business over a three-year horizon, including potential ESG risks. An overview dependent on the semaglutide compound as the active pharmaceutical ingredient. To remain competitive in the long term and thereby mitigate the innovation risk, we invest in internal and external pipeline opportunities Environmental impact Novo Nordisk has an impact on the environment and changes to the climate could potentially have an impact on Novo Nordisk’s business. of our key operational risks, along with detailed descriptions, is provided on the next page. For more information, see our Corporate Governance Report available at: www.novonordisk.com/about/corporate-governance.html. We strive to monitor and mitigate these risks in close collaboration with grid is based on insights from management teams across the organisation to ensure patients receive improved treatments. As part of our ‘zero environmental impact’, we assess, monitor and Production capacity and supply chain risks Demand fluctuations, resource shortages, geopolitical instability, trade disputes and local manufacturing requirements are all factors that can mitigate these risks throughout our value chain. Company reputation On the following page we also include the Novo Nordisk reputation score. Ethics and compliance Our commitment to ethics and compliance remains at the forefront of all This is measured among key stakeholders (i.e. the informed general public, people with diabetes, people with obesity, general practitioners pressure global supply chains. Furthermore, expanding production our operations. Any inability to uphold our ethical standards could lead to and diabetes specialists) and is an indicator of the extent to which we live capacity is complex and associated with a long lead time. Therefore, reputational implications, with potential effects on market access and up to society’s expectations. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 42 Key operational risks Risk area Description Impact Mitigating actions KEY OPERATIONAL RISKS (ILLUSTRATIVE) 1 Findings in clinical activities, regulatory processes or • Patients would not benefit from innovative treatments. • Pre-clinical and clinical activities to demonstrate safety Research and Clinical Pipeline Risks misjudging of commercial potential, leading to delays • Could have an adverse impact on sales, profits and market position. and efficacy. High or failure of products in the pipeline. • Consultations with regulators to review pre-clinical and clinical findings and obtain guidance on development path. 2 Higher-than-expected demand or disruption of • Product shortages could have potential implications for patients. • Significantly expanding global production with multiple Product Supply, Quality and Safety Risks product supply due to, e.g. geopolitical instability or • Could jeopardise reputation and license to operate if regulatory facilities and safety stock to reduce supply risk. quality issues may compromise product availability, compliance is not ensured. • Planning and management of supply chain. ultimately impacting patients and representing a lost • Could have an adverse impact on sales, profits and market position. • Regular quality audits of internal units and suppliers to commercial opportunity. In addition, there could be • Compromised patient safety and exposure to product liability document GMP compliance. risks related to safety and product liability. legal proceedings. • Identification and correction of root causes when issues are identified. If necessary, products are recalled. t c a p m I 3 Competitive pressures, as well as market dynamics • Market dynamics could impact price levels and patient access. • Innovation of novel products, clinical trial data and real-world Commercialisation Risks and geopolitical, macroeconomic or healthcare crises • Could have an adverse impact on sales, profits and market position. evidence demonstrate added value of new products. (e.g. pandemics) leading to reduced payer ability and willingness to pay. • Payer negotiations to ensure improved patient access. • Increased and new access and affordability initiatives. 4 IT Security Risks 5 Financial Risks Disruption to IT systems, such as cyber-attacks or • Could limit our ability to produce and safeguard product quality. • Company-wide information security awareness activities. infrastructure failure resulting in business disruption • Could compromise patients’ or other individuals’ privacy. • Continuity plans for non-availability of IT systems. or breach of data confidentiality. • Could limit our ability to maintain operations or limit future business • Company-wide internal audit of IT security controls. opportunities if proprietary information is lost. • Detection and protection mechanisms in IT systems and • Could have an adverse impact on sales, profits and market position. business processes. Exchange rate fluctuations (mainly in USD, CNY, JPY • Could lead to tax adjustments, fines and higher-than-expected • Hedging for selected currencies. and CAD), disputes with tax authorities and changes tax level. • Integrated treasury management. to tax legislation and interpretation. • Could have an adverse impact on sales and profits. • Applicable taxes paid in jurisdictions where business activity generates profits and multi-year Advance Pricing Agreements with tax authorities. 6 Breach of legislation, industry codes or company • Potential exposure to investigations, criminal and civil sanctions • Legal review of key activities. Legal, Patents and Compliance Risks policies. Competitors asserting patents against and other penalties. • Code of Conduct integrated in our business. Novo Nordisk or challenging patents critical for • Could compromise our reputation and the rights and integrity • Compliance Hotline in place. protection of commercial product and of individuals involved. pipeline candidates. • Unexpected loss of exclusivity for, or injunctions against, existing • • Internal Audit of compliance with business ethics standards. Internal controls to minimise vulnerability to patent and pipeline products could have an adverse impact on future sales. infringement and invalidity actions. • Could have an adverse impact on sales, profits and market position. 2 3 4 6 1 5 Low High Likelihood REPUTATION SCORE 82.1 0.2  We achieved a reputation score of 82.1 points in 2023 measured on a scale of 0-100 (0.2 down from 2022). Stable with last year, Novo Nordisk continues to lead our selected industry benchmarks. This excellent reputation score is driven by positive perceptions of our products and services, the most important reputation component, and growing appreciation from the informed general public. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 43 Management 42 Board of Directors 45 Executive Management Banin Mahdi (left) and Anusha Samia (right) met three years ago through Pannahouse, a hub in Copenhagen where young people gather weekly to play ‘panna’ – an increasingly popular type of street football. Before joining Pannahouse, Banin spent most of the time on her phone or watching TV, while Anusha described herself as shy. They are now confident, willing to show their true selves and motivated to help others. The two girls stress how impactful these initiatives are: offering young people alternatives to hanging out on the street, building community and keeping body and mind healthy. As they say, it is always more than just football. Watch Pannahouse’s full story here Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 44 Board of Directors Helge Lund Chair Henrik Poulsen Vice chair Norwegian. Born October 1962. Male. Member since 20171. Term 2024. Chair of the Nomination Committee and the Chair Committee. Positions and management duties: Chair of the board of directors and chair of the people & governance committee of BP p.l.c. Chair of the board of directors of Inkerman AS. Member of the board of directors and member of the remuneration committee of Belron SA. Member 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. Competencies: Global corporate leadership; healthcare and pharma industry; finance and accounting; business development, M&A and external innovation sourcing; human capital management; environmental, social and governance (ESG). Danish. Born September 1967. Male. Member since 2021. Term 2024. Chair of the Remuneration Committee and member of the Audit Committee and the Chair Committee. Positions and management duties: Chair of the supervisory board, chair of the nomination committee and member of the remuneration committee of Carlsberg A/S. Chair of the board of directors and chair of the nomination & remuneration committee at Faerch A/S. Member of the board of directors of Novo Holdings A/S. Member of the supervisory board of Bertelsmann SE & Co. KGaA. Senior advisor to A.P. Møller Holding A/S. Competencies: Global corporate leadership; finance and accounting; business development, M&A and external innovation sourcing; human capital management; environmental, social and governance (ESG). 1. Helge Lund was also a member of the Board of Directors for one one-year term from 2014-2015. Elisabeth Dahl Christensen Laurence Debroux Andreas Fibig Sylvie Grégoire Danish. Born November 1965. Female. Member since 2022. Term 2026. Employee representative. Member of the Remuneration Committee. French. Born July 1969. Female. Member since 2019. Term 2024. Chair of the Audit Committee and member of the Remuneration Committee. German. Born February 1962. Male. Member since 2018. Term 2024. Member of the Research & Development Committee. Positions and management duties: Full-time union representative at Novo Nordisk A/S. Competencies: Not mapped for employee representatives. 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 supervisory board and member of the audit committee of Randstad N.V. Member of the board of directors of HEC Paris Business School and of Kite Insights (The Climate School). Competencies: Global corporate leadership; healthcare and pharma industry; finance and accounting; business development, M&A and external innovation sourcing; human capital management; environmental, social and governance (ESG). Positions and management duties: Member of the board of directors of Indigo Agriculture Inc., Evodiabio ApS and ExlService Holdings, Inc. Honorary director of the German American Chamber of Commerce. Competencies: Global corporate leadership; healthcare and pharma industry; technology, data and digital; finance and accounting; business development, M&A and external innovation sourcing; human capital management; environmental, social and governance (ESG). Canadian and American. Born November 1961. Female. Member since 2015. Term 2024. Member of the Audit Committee, the Research & Development Committee and the Nomination Committee. Positions and management duties: Co-founder and chair of the board of directors of CervoMed, Inc. Member of the board of directors and member of the nominating & corporate governance committee and the compensation & benefits committee of Revvity Inc. Member of the board of directors of F2G Ltd. Advisor to the Soffinova Telethon Fund. Competencies: Global corporate leadership; healthcare and pharma industry; medicine and science; finance and accounting; business development, M&A and external innovation sourcing; human capital management. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 45 Board of Directors (continued) Liselotte Hyveled Mette Bøjer Jensen Kasim Kutay Christina Law Martin Mackay Thomas Rantzau Danish. Born January 1966. Female. Member since 20222. Term 2026. Employee representative. Member of the Research & Development Committee. Danish. Born December 1975. Female. Member since 2018. Term 2026. Employee representative. Member of the Audit Committee. British. Born May 1965. Male. Member since 2017. Term 2024. Member of the Nomination Committee and the Research & Development Committee. Chinese. Born January 1967. Female. Member since 2022. Term 2024. Member of the Audit Committee. Positions and management duties: Chief patient officer and principal vice president of Patient Voice Strategy & Alliances, Novo Nordisk A/S. Positions and management duties: Wash & Sterilisation specialist in Product Supply, Novo Nordisk A/S. Competencies: Not mapped for employee representatives. Competencies: Not mapped for employee representatives. Positions and management duties: CEO of Novo Holdings A/S. Member of the board of directors and member of the nomination and remuneration committee of Novozymes A/S. Competencies: Global corporate leadership; healthcare and pharma industry; finance and accounting; business development, M&A and external innovation sourcing; human capital management. Positions and management duties: Group CEO of Raintree Group of Companies. Member of the board of directors of Raintree Group Limited, Raintree Investment Pte Ltd. and Air Liquide S.A. Member of the board of directors and member of the nomination and compensation committee of INSEAD Business School. Member of the board of directors of La Fondation des Champions. Competencies: Global corporate leadership; technology, data and digital; business development, M&A and external innovation sourcing; human capital management. Danish. Born March 1972. Male. Member since 2018. Term 2026. Employee representative. Member of the Nomination Committee. Positions and management duties: Lead auditor, Internal Audits, Novo Nordisk A/S. Competencies: Not mapped for employee representatives. American and British. Born April 1956. Male. Member since 2018. Term 2024. Chair of the Research & Development Committee and member of the Remuneration Committee. Positions and management duties: Co-founder and executive chairman of Rallybio LLC. Member of the board of directors and member of the science & technology committee and the finance committee of Charles River Laboratories International, Inc. Competencies: Global corporate leadership; healthcare and pharma industry; medicine and science; technology, data and digital; business development, M&A and external innovation sourcing; human capital management. 2. Liselotte Hyveled was also an employee-elected member of the Board of Directors for one four-year term from 2014-2018. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 46 Independence and meeting attendance overview Meeting attendance in 20233 Board of Directors Chair Committee Audit Committee10 Nomination Committee Remuneration Committee R&D Committee Lars Fruergaard Jørgensen and Helge Lund (left) during the Annual General Meeting in March 2023. Name Independence4 Helge Lund Independent Henrik Poulsen Not independent 5, 6, 7, 9 Elisabeth Dahl Christensen Not independent 8 Laurence Debroux Independent 6, 7, 9 Andreas Fibig Sylvie Grégoire Independent Independent6 Liselotte Hyveled Not independent8 Mette Bøjer Jensen Not independent6, 8 Kasim Kutay Christina Law Not independent5 Independent6 Martin Mackay Independent Thomas Rantzau Not independent8 9/9 9/9 9/9 9/9 9/9 9/9 8/9 9/9 8/9 9/9 9/9 9/9 7/7 7/7 5/5 5/5 5/5 5/5 5/5 3/3 3/3 3/3 3/3 Board members who stepped down at the Annual General Meeting in March 2023 Jeppe Christiansen Not independent5 2/2 5/6 6/6 6/6 6/6 1/2 4/4 4/4 4/4 4/4 4/4 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. Designated as financial experts as defined by the US Securities and Exchange Commission (SEC). 10. Collectively, the members have relevant industry expertise. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 47 Executive Management Lars Fruergaard Jørgensen11 Maziar Mike Doustdar Ludovic Helfgott Karsten Munk Knudsen11 Doug Langa Martin Holst Lange President and chief executive officer (CEO). Born November 1966. Male. 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. Executive vice president. North America Operations. Born October 1966. Male. Executive vice president. Development. Born October 1970. Male. Other positions and management duties: President of the European Federation of Pharmaceutical Industries and Associations (EFPIA). Other positions and management duties: Member of the board of directors and the personnel and remuneration committee of Orion Corporation. Other positions and management duties: President of the Novo Nordisk Haemophilia Foundation Council. Other positions and management duties: Member of the board of directors, chair of the audit committee and member of the equity & capital markets committee of Hempel A/S. Member of the board of directors and chair of the audit committee of 3Shape Holding A/S. Other positions and management duties: No other management positions. Other positions and management duties: Member of the board of directors of Pharmacosmos A/S. David Moore Tania Sabroe Marcus Schindler Camilla Sylvest Henrik Wulff Executive vice president. Corporate Development. Born January 1974. Male. Executive vice president. People & Organisation. Born July 1977. Female. 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: Member of the board of directors of Naveris Inc., Radius Health Inc. and Novasenta Inc. Other positions and management duties: No other management positions. Other positions and management duties: Adjunct Professor of Pharmacology at the University of Gothenburg. Other positions and management duties: Vice chair of the board of directors of 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 of Grundfos Holding A/S. 11. Lars Fruergaard Jørgensen and Karsten Munk Knudsen are registered as executives with the Danish Business Authority. The other members of Executive Management are not registered as executives with the Danish Business Authority. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 48 Consolidated statements 50 Consolidated financial statements 86 Consolidated ESG statement 95 Statement and Auditor’s Reports Dr. Shellie Morris AO is an award-winning singer-songwriter from Australia. She is also part of ‘Uncle Jimmy Thumbs Up!’, an organisation dedicated to improving health outcomes of First Nations communities through music workshops, preventative health education and community engagement. Shellie believes in music as a healing and educational tool, one that First Nations people have long used to tell their stories and experiences. When connecting with people, she always starts off with a blank piece of paper. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 49 Consolidated financial statements Income statement and Statement of comprehensive income Cash flow statement Balance sheet Equity statement 50 51 52 53 Section 4 Capital structure and financial items 4.1 Earnings per share 4.2 Distribution to shareholders 4.3 Share capital, Treasury shares and Other reserves 68 Notes to the consolidated financial statements 4.5 Derivative financial instruments 4.6 Borrowings Section 1 Basis of preparation 1.1 Material accounting policies and key accounting estimates 54 4.7 Cash and cash equivalents 4.8 Cash flow statement specifications 4.9 Financial assets and liabilities 1.2 Changes in accounting policies and disclosures 54 4.10 Financial income and expenses 4.4 Financial risks Section 2 Results for the year 2.1 Net sales and rebates 2.2 Segment information 2.3 Research and development costs 2.4 Employee costs 2.5 Other operating income and expenses 2.6 Income taxes and deferred income taxes Section 3 Operating assets and liabilities 3.1 Intangible assets 3.2 Property, plant and equipment 3.3 Inventories 3.4 Trade receivables 3.5 Provisions and contingent liabilities Section 5 Other disclosures 5.1 Share-based payment schemes 5.2 Commitments 5.3 Acquisition of businesses 5.4 Related party transactions 5.5 Fees to statutory auditors 5.6 General accounting policies 5.7 Companies in the Novo Nordisk Group Part of the Management review – not audited Financial definitions Non-IFRS financial measures 55 56 58 58 59 59 61 63 64 65 66 69 71 72 73 73 74 75 76 78 78 79 79 80 81 82 83 Consolidated ESG statement Statement of ESG performance 86 Notes to the consolidated ESG statement 68 68 Section 6 Basis of preparation Section 9 Governance performance 9.1 Business ethics reviews and training 9.2 Compliance Hotline 9.3 Supplier audits 87 9.4 Product recalls 9.5 Failed inspections 93 93 93 93 93 94 94 94 9.6 Facilitations of the Novo Nordisk Way 9.7 Company reputation 9.8 Animals purchased for research Section 7 Environmental performance 7.1 Energy consumption for operations and share of renewable power for production sites 7.2 Scope 1, 2 and 3 emissions 7.3 Water consumption for production sites 7.4 Waste from production sites 7.5 Breaches of environmental regulatory limit values Section 8 Social performance 8.1 Patients reached with Novo Nordisk’s Diabetes and Obesity care products 8.2 Employees 8.3 Gender diversity in leadership positions 8.4 Sustainable employer score 8.5 Health and safety 8.6 US pricing 8.7 Total tax contribution 8.8 Donations and other contributions 88 88 89 89 90 90 90 91 91 91 92 92 92 Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 50 Income statement and Statement of comprehensive income for the year ended 31 December DKK million Income statement Net sales Cost of goods sold Gross profit Sales and distribution costs Research and development costs Administrative costs Note 2023 2022 2021 DKK million Note 2023 2022 2021 Statement of comprehensive income 2.1, 2.2 232,261 176,954 140,800 Net profit 83,683 55,525 47,757 2.2 (35,765) (28,448) (23,658) Other comprehensive income: 196,496 148,506 117,142 Remeasurements of retirement benefit obligations 2.2 (56,743) (46,217) (37,008) 2.2, 2.3 (32,443) (24,047) (17,772) 2.2 (4,855) (4,467) (4,050) Items that will not be reclassified subsequently to the income statement 13 13 615 615 146 146 Exchange rate adjustments of investments in subsidiaries 4.3 (1,404) 2,289 1,624 Cash flow hedges: Realisation of previously deferred (gains)/losses Deferred gains/(losses) incurred during the period 4.3, 4.5 (1,026) 4.3, 4.5 1,612 Other items Income tax related to these items Items that will be reclassified subsequently to the income statement Other comprehensive income Total comprehensive income 4.3 2.6, 4.3 4 (359) (1,173) (1,160) 82,523 1,740 1,026 (3) (889) 4,163 4,778 (1,802) (1,755) 112 1,005 (816) (670) 60,303 47,087 Other operating income and expenses 2.2, 2.5 119 1,034 332 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) 102,574 74,809 58,644 4.10 4.10 2,945 (845) 104,674 239 (5,986) 69,062 2,887 (2,451) 59,080 2.6 (20,991) (13,537) (11,323) 83,683 55,525 47,757 4.1 4.1 18.67 18.62 12.26 12.22 10.40 10.37 Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 51 Cash flow statement for the year ended 31 December DKK million Cash flow statement Net profit Adjustment of non-cash items: Note 2023 2022 2021 DKK million 83,683 55,525 47,757 Dividends paid Proceeds from borrowings Purchase of treasury shares Income taxes in the income statement 2.6 20,991 13,537 11,323 Repayment of borrowings Depreciation, amortisation and impairment losses Other non-cash items Change in working capital Interest received Interest paid Income taxes paid Net cash generated from operating activities Purchase of intangible assets 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 Dividend received from associated companies Net cash used in investing activities 3.1, 3.2 4.8 4.8 9,413 32,382 (12,245) 1,072 (491) 7,362 22,310 (5,336) 276 (272) 13,416 (9,063) 241 (261) 2.6 (25,897) (14,515) (14,438) 3.1 3.2 5.3 5.4 108,908 (13,090) 78,887 (2,607) (25,806) (12,146) 55,000 (1,050) (6,335) — 33 (271) (7,075) (18,283) — (169) — (4) (13,018) (9,566) (7,109) 8,260 — 6,645 1,172 — 4 (43,892) (24,918) (31,605) 6,025 Net cash used in financing activities Net cash generated from activities Cash and cash equivalents at the beginning of the year Exchange gains/(losses) on cash and cash equivalents Cash and cash equivalents at the end of the year 4.7 14,392 12,653 10,719 Note 2023 2022 2021 4.3 4.2 4.6 4.6 (29,924) (24,086) (19,447) (31,767) (25,303) (21,517) — 11,215 (1,467) (13,623) 22,160 (6,689) (63,158) (51,797) (25,493) 1,858 12,653 (119) 2,172 10,719 (238) (2,098) 12,226 591 Novo Nordisk Annual Report 2023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 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 52 Note 2023 2022 DKK million Note 2023 2022 Equity and liabilities 3.1 3.2 60,406 90,961 410 50,939 Share capital 66,671 Treasury shares 327 Retained earnings 2.6 20,380 13,904 Other reserves 1,430 1,253 206 Total equity 1,016 Borrowings 174,840 133,063 Deferred income tax liabilities Retirement benefit obligations Other liabilities 940 Provisions 6,005 Total non-current liabilities 3.3 3.4 4.4 4.5 4.7 31,811 64,770 2,423 8,068 15,838 2,344 14,392 24,388 50,560 10,921 2,727 12,653 139,646 108,194 Borrowings Trade payables Tax payables Other liabilities 314,486 241,257 Derivative financial instruments Provisions Total current liabilities Total liabilities Total equity and liabilities 4.3 4.3 451 (5) 104,839 4.3 1,276 106,561 4.6 2.6 3.5 4.6 4.5 3.5 20,528 10,162 742 189 6,649 38,270 6,478 25,606 7,116 28,705 1,272 100,478 456 (6) 80,587 2,449 83,486 24,318 7,061 762 100 4,590 36,831 1,466 15,587 7,091 23,606 2,903 70,287 169,655 120,940 207,925 157,771 314,486 241,257 Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 53 Equity statement at 31 December DKK million Share capital Treasury shares Retained earnings Other reserves 2023 Total Share capital Treasury shares Retained earnings Other reserves 2022 Total Share capital Treasury shares Retained earnings Other reserves 2021 Total Balance at the beginning of the year 456 (6) 80,587 2,449 83,486 462 (6) 72,004 (1,714) 70,746 470 (8) 63,774 (911) 63,325 Net profit Other comprehensive income Total comprehensive income Transfer of cash flow hedge reserve to intangible assets (note 4.3) 83,683 83,683 13 (1,173) (1,160) 83,696 (1,173) 82,523 — — (4) 5 (5) (31,767) 2,149 (29,920) 94 (31,767) 2,149 (29,924) — 94 (6) 6 (6) 55,525 615 56,140 (25,303) 1,539 (24,080) 287 4,163 4,163 — 55,525 4,778 60,303 — (25,303) 1,539 (24,086) — 287 47,757 146 47,903 (21,517) 1,040 (19,441) 245 (816) (816) 13 47,757 (670) 47,087 13 (21,517) 1,040 (19,447) — 245 (6) 8 (8) 451 (5) 104,839 1,276 106,561 456 (6) 80,587 2,449 83,486 462 (6) 72,004 (1,714) 70,746 Transactions with owners: Dividends (note 4.2) Share-based payments (note 5.1) Purchase of treasury shares (note 4.3) Reduction of the B share capital (note 4.3) Tax related to transactions with owners Balance at the end of the year Refer to note 4.3 for details of movements in Other reserves. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 54 Notes to the consolidated financial statements Section 1 Basis of preparation 1.1 Material accounting policies and key accounting estimates The consolidated financial statements included in this Annual Report have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB) and in accordance with IFRS Accounting Standards as endorsed by the EU and further requirements in the Danish Financial Statements Act. Measurement basis The consolidated financial statements have been prepared on the historical cost basis except for derivative financial instruments, equity investments, marketable securities and trade receivables in a factoring portfolio, which are measured at fair value. Material accounting policies Apart from the general accounting policies, which are described in note 5.6, Novo Nordisk’s accounting policies are described in each of the individual notes to the consolidated financial statements. The accounting policies have been applied consistently in the preparation of the consolidated financial statements for all the years presented. 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. The key accounting estimates identified are those that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities in the following reporting period. An example being the estimation of US sales deductions and provisions for sales rebates. When determining estimates and assumptions, Management has assessed the qualitative and quantitative impact of climate-related matters. It is Management’s assessment that the effect of climate-related matters does not significantly impact estimates and assumptions. 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 may make certain judgements in the process of applying the entity’s accounting policies, for example the classification of a transaction as an asset acquisition or a business combination. Management regards those listed below as the key accounting estimates applied in the preparation of the consolidated financial statements. Refer to the specific notes for further information on the key accounting estimates as well as assumptions applied. Management did not identify material judgements made in the current reporting period apart from those involving estimations. 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. 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. 1.2 Changes in accounting policies and disclosures 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 2023. Management assessed that application of these has not had a material impact on the consolidated financial statements for 2023. Furthermore, Management has assessed the impact of new or amended accounting standards and interpretations (IFRSs) issued by the IASB that have not yet become effective. No new or amended accounting standards or interpretations (IFRSs) have been early adopted. Management does not anticipate any significant impact on the consolidated financial statements in the period of initial application after the adoption of these amendments. Key accounting estimates 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 Risk High Medium Medium Medium Note(s) 2.1, 3.5 3.1 2.6 3.5 Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 55 Section 2 Results for the year 2.1 Net sales and rebates Gross-to-net sales reconciliation DKK million Gross sales 2023 2022 2021 608,645 455,692 340,180 US Managed Care and Medicare (223,191) (161,123) (112,929) US wholesaler charge-backs (74,435) (56,443) (40,354) US Medicaid rebates (31,821) (24,667) (19,810) Other US discounts and sales returns (28,481) (18,300) (14,119) Non-US rebates, discounts and sales returns (18,456) (18,205) (12,168) Total gross-to-net sales adjustments (376,384) (278,738) (199,380) Net sales 232,261 176,954 140,800 Provisions for sales rebates DKK million 2023 2022 2021 At the beginning of the year 69,499 50,822 34,052 Additional provisions, including increases to existing provisions 285,266 206,354 155,602 Amount paid during the year (250,316) (189,580) (141,370) Adjustments, including unused amounts reversed during the year (2,364) (1,141) (284) Effect of exchange rate adjustment At the end of the year (2,207) 99,878 3,044 2,822 69,499 50,822 Sales discounts and sales rebates are predominantly issued in the US. As such, rebates amount to 74% of gross sales in the US (75% in 2022 and 75% in 2021). 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. 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. Rebate provisions 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. Chargeback provisions 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 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. Refer to note 3.5 for a more elaborate description of the ongoing litigation related to the 340B Drug Pricing Program. US Medicaid rebates Medicaid is a government insurance programme. Medicaid rebates have been estimated using a combination of historical experience, product and population growth, price changes and the impact of contracting strategies. The calculation also involves interpretation of relevant regulations that are 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 2023, Novo Nordisk had 3 major wholesalers distributing products in the US, representing 22%, 17% and 15% respectively of global net sales (19%, 14% and 13% in 2022 and 18%, 13% and 13% in 2021). Sales to these 3 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 3,166 million within 12 months (DKK 1,835 million in 2022) and DKK 443 million thereafter (DKK 798 million in 2022). Novo Nordisk's sales are impacted by exchange rate changes. Refer to note 4.4 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, without sufficient historical experience for estimating sales returns, revenue is recorded based on estimated demand and acceptance rates for well-established products with similar market characteristics. If similar market characteristics do not exist, revenue is recorded when there is evidence of consumption or when the right of return has expired. Unsettled rebates are recognised as provisions when the timing or amount is uncertain (note 3.5). Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 56 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 in the income statement is recognised as part of financial items. Refer to notes 4.4, 4.5 and 4.10 for more details on hedging. 2.2 Segment information Business segments – Key figures Diabetes and Obesity care Rare disease Total 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 is considered a key accounting estimate 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 the 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. Significant estimation is required to determine the amount of revenue to recognise. Management has considered interpretations of applicable laws, whether the consideration is highly susceptible to factors outside Novo Nordisk's influence, as well as the experience of historical claims. Refer to note 3.5 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 the information currently available. However, the actual amount of rebates and discounts may differ from the amounts estimated by Management as more detailed information becomes available. DKK million Net sales Cost of goods sold 2023 2022 2021 215,098 156,412 121,597 (30,483) (23,405) (19,363) Sales and distribution costs (52,477) (42,392) (33,791) Research and development costs (28,073) (20,157) (15,600) Administrative costs (4,435) (3,955) (3,504) Other operating income and expenses Segment operating profit Operating margin Depreciation, amortisation and impairment losses expensed (7) 99,623 46.3% 892 199 67,395 49,538 43.1% 40.7% 2023 17,163 (5,282) (4,266) (4,370) (420) 126 2,951 17.2% 2022 20,542 (5,043) (3,825) (3,890) (512) 142 7,414 36.1% 2021 2023 2022 2021 19,203 232,261 176,954 140,800 (4,295) (35,765) (28,448) (23,658) (3,217) (56,743) (46,217) (37,008) (2,172) (32,443) (24,047) (17,772) (546) 133 (4,855) (4,467) (4,050) 119 1,034 332 9,106 102,574 74,809 58,644 47.4% 44.2% 42.3% 41.7% (8,195) (5,701) (4,895) (1,218) (1,661) (1,130) (9,413) (7,362) (6,025) Business segments Novo Nordisk operates in two business segments based on therapies: Diabetes and Obesity care and Rare disease, 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, cardiovascular and emerging therapy areas • 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 2023, 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 2023, the US contributed 10% or more of total net sales. In 2022, the US also contributed 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 99.2% of total net sales are realised outside Denmark (99.8 % in 2022). 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 151,367 million (DKK 117,610 million in 2022), DKK 82,274 million is located in Denmark (DKK 54,492 million in 2022) and DKK 46,609 million is located in the US (DKK 44,267 million in 2022) 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 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 57 Net sales – Business segments and geographical areas DKK million 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 Total IO EMEA China Rest of World Total NAO 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® • of which NovoRapid® Human insulin Total insulin Other Diabetes care Total Diabetes care Wegovy® Saxenda® Total Obesity care 7,389 3,155 524 4,232 1,714 26,378 17,369 8,856 14,327 10,417 4,850 5,672 6,726 2,166 2,724 289 6,393 3,527 38,617 26,196 16,106 20,725 14,855 10,209 11,339 11,403 11,074 5,864 2,887 2,588 6,092 2,400 2,911 5,486 2,135 3,453 9,342 10,023 10,512 3,730 5,612 2,889 7,134 1,711 8,801 10,415 10,826 10,903 1,512 8,903 6,134 1,354 9,472 6,508 1,106 9,797 7,453 7,103 3,435 1,831 1,837 2,570 587 1,983 6,695 1,266 5,429 1,919 7,157 3,485 1,716 1,956 2,622 495 2,127 6,456 1,138 5,318 1,983 6,729 2,979 1,693 2,057 2,879 392 2,487 6,454 965 5,489 2,152 131 4,821 1,256 6,208 1,649 848 409 392 4,441 1,965 2,476 1,545 — 1,545 1,213 63 2,196 1,478 3,737 1,636 1,050 45 541 4,912 1,218 3,694 1,942 — 1,942 1,812 — 303 1,544 3,026 7,230 1,428 1,847 11,684 2,080 1,095 3 982 5,224 283 4,941 2,288 — 2,288 2,692 2,587 1,581 647 359 2,331 1,178 1,153 2,175 246 1,929 3,002 1,378 4,756 1,470 7,604 2,610 1,557 639 414 2,489 1,176 1,313 2,428 216 2,212 2,713 235 11,361 8,144 4,314 11,060 8,011 4,243 18,750 11,299 4,838 2,160 69,340 42,381 24,849 63,010 38,750 23,168 95,718 59,750 33,705 1,655 3,814 6,650 8,328 3,613 6,406 8,031 8,664 12,322 15,054 4,050 84,515 57,175 37,491 77,683 53,167 35,442 123,132 83,371 53,597 2,265 1,412 439 414 2,409 1,036 1,373 2,161 141 2,020 2,609 3,566 1,888 332 5,338 3,261 409 6,990 4,243 522 2,931 1,333 325 4,685 2,723 399 1,346 1,668 2,225 1,273 1,563 2,107 6,412 14,905 16,741 18,064 3,793 512 7,752 3,219 3,934 9,353 2,809 4,579 9,729 2,657 5,678 232 — 232 539 — 539 691 — 691 216 — 216 517 — 517 665 — 665 9,574 10,562 11,203 3,730 5,844 2,889 7,673 1,711 9,492 5,534 6,637 6,784 5,265 6,247 6,357 15,949 17,463 17,687 661 4,873 1,460 649 5,988 1,678 642 6,142 1,599 618 4,647 1,406 606 5,641 1,605 605 2,173 2,003 1,748 5,752 13,776 15,460 15,939 1,515 7,594 8,186 9,052 37,230 38,760 39,942 18,287 18,218 18,214 8,848 10,302 12,284 10,095 10,240 9,444 10,792 14,192 16,064 9,818 13,054 14,949 48,022 52,952 56,006 1,987 2,428 2,644 661 717 713 892 1,181 1,432 434 530 499 325 797 950 267 660 806 2,312 3,225 3,594 77,834 67,384 58,692 39,673 33,790 29,136 15,948 15,220 15,563 22,213 18,374 13,993 95,632 72,164 54,505 87,768 66,881 51,197 173,466 139,548 113,197 1,913 6,402 8,315 54 5,832 5,886 — 3,117 3,117 1,913 3,780 5,693 54 3,561 3,615 — 1,809 1,809 — 146 146 — 133 133 — 61 61 — 2,476 2,476 — 2,138 2,138 — 29,430 1,247 3,887 6,134 4,844 1,386 29,430 3,897 3,306 6,134 4,368 1,386 31,343 6,188 3,526 10,289 10,676 1,247 33,317 10,978 5,283 32,736 10,502 4,912 41,632 16,864 1,386 7,014 8,400 Diabetes and Obesity care total 86,149 73,270 61,809 45,366 37,405 30,945 16,094 15,353 15,624 24,689 20,512 15,240 128,949 83,142 59,788 120,504 77,383 56,109 215,098 156,412 121,597 Rare disease segment: Rare blood disorders • of which Haemophilia A • of which Haemophilia B • of which NovoSeven® Rare endocrine disorders Other Rare disease Rare disease total 6,432 1,939 584 3,789 2,045 1,006 6,671 1,769 479 4,335 4,904 1,002 5,784 1,625 400 3,673 4,880 1,064 4,021 1,271 377 2,285 699 781 3,795 1,137 294 2,311 2,232 804 3,712 1,162 268 2,225 2,212 837 9,483 12,577 11,728 5,501 6,831 6,761 372 223 13 136 216 5 593 604 81 13 510 246 6 856 222 2,039 2,272 1,850 5,344 5,035 4,433 5,070 4,710 4,170 11,776 11,706 10,217 24 4 194 167 6 445 194 1,368 1,130 220 551 172 1,514 2,426 192 439 128 1,254 2,501 221 483 477 4,169 1,791 545 569 280 3,973 2,234 696 487 237 3,548 2,423 619 468 336 4,065 1,757 203 543 152 3,811 2,205 358 460 102 3,461 2,400 330 2,422 1,061 7,958 3,836 1,551 2,338 2,112 759 8,308 7,138 1,698 637 7,221 7,303 1,683 395 3,389 4,890 4,572 7,680 7,965 7,475 7,030 7,273 6,900 17,163 20,542 19,203 Total sales by geographical area 95,632 85,847 73,537 50,867 44,236 37,706 16,687 16,209 16,019 28,078 25,402 19,812 136,629 91,107 67,263 127,534 84,656 63,009 232,261 176,954 140,800 Total sales growth as reported 11.4% 16.7% 11.7% 15.0% 17.3% 9.9% 2.9% 1.2% 13.7% 10.5% 28.2% 13.5% 50.0% 35.4% 10.1% 50.6% 34.4% 9.0% 31.3% 25.7% 10.9% Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 58 2.3 Research and development costs DKK million Employee costs (note 2.4) 2023 12,429 2022 9,952 2021 7,328 Research and development activities are mainly carried out by Novo Nordisk's research and development centres, 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. Amortisation and impairment losses, intangible assets (note 3.1) Depreciation and impairment losses, property, plant and equipment (note 3.2) Clinical trial cost Other research and development costs Total research and development costs As percentage of net sales 1,757 1,364 744 1,313 9,468 7,476 32,443 14.0% 922 6,313 736 4,214 5,496 4,750 24,047 17,772 13.6% 12.6% Other research and development costs mainly comprise external consulting fees, IT services, facilities, consumables and other internal costs. ACCOUNTING POLICIES Novo Nordisk expenses all research costs. Due to significant regulatory uncertainties and other uncertainties inherent in the development of new products, internal and subcontracted development costs are also expensed as they are incurred, in line with industry practice. 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. 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 • • Novel targets within cardiovascular disease focusing on ASCVD and Heart failure Human growth hormone and new modes of action for treatment of growth • disorders and other rare endocrine disorders New indications with existing assets within MASH, Alzheimer’s disease and chronic kidney disease Research technology platforms including cell therapy and RNAi for treatment of MASH, cardiovascular disease, chronic kidney disease and Parkinson's disease, among others • The research activities mainly utilise biotechnological methods based on advanced protein chemistry and protein engineering. These methods have played a key role in the development of the production technology used to manufacture insulin, GLP-1, recombinant blood-clotting factors and human growth hormone. Research activities further utilise new technology platforms including stem cells, gene therapy, small molecules and RNAi therapies. 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, deprecia- tion 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. Royalty expenses paid to partners after regulatory approval are also expensed as cost of goods sold. Contractual research and development obligations to be paid in the future are disclosed separately as commitments in note 5.2. 2.4 Employee costs DKK million Wages and salaries Share-based payment costs (note 5.1) Pensions – defined contribution plans Pensions – defined benefit plans Other social security contributions Other employee costs 2023 42,867 2,149 3,267 126 3,039 4,066 2022 2021 34,575 28,939 1,539 2,472 185 2,713 3,105 1,040 2,022 139 2,203 2,189 Total employee costs for the year 55,514 44,589 36,532 Employee costs capitalised as intangible assets and property, plant and equipment Change in employee costs capitalised as inventories Total employee costs in the income statement Included in the income statement: Cost of goods sold Sales and distribution costs Research and development costs Administrative costs Other operating income and expenses Total employee costs in the income statement Number of employees Number Average number of full-time employees Year-end number of full-time employees Year-end employees (total) (2,337) (1,451) (1,240) (409) (70) (56) 52,768 43,068 35,236 15,490 20,810 12,429 3,962 77 11,766 17,700 9,952 3,517 133 9,611 15,003 7,328 3,098 196 52,768 43,068 35,236 2023 59,552 63,370 64,319 2022 51,046 54,393 55,185 2021 46,171 47,792 48,478 Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 59 Remuneration to Executive Management and Board of Directors 2.6 Income taxes and deferred income taxes DKK million Salary and short-term incentive Pension Benefits Long-term incentive1 Severance payments Executive Management in total2 Fees to Board of Directors3 Total 2023 173 17 19 121 — 330 22 352 2022 141 13 9 97 — 260 20 280 2021 126 12 10 100 29 277 17 294 Income taxes expensed DKK million Current tax on profit for the year Deferred tax on profit for the year Tax on profit for the year Current tax adjustments recognised for prior years Deferred tax adjustments recognised for prior years 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. 2023 25,918 (4,464) 21,454 2022 2021 17,829 13,871 (3,806) (1,528) 14,023 12,343 (916) 339 (603) 453 (825) (417) From 1 January 2024 Novo Nordisk will be subject to Global Minimum Tax (OECD BEPS Pillar 2 rules). The rules are not expected to have a material impact on the tax position of Novo Nordisk in 2024. 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. 1. Refer to note 5.1 for further information on share-based payment schemes. 2. Total remuneration for persons registered as members of Executive Management with the Danish Business Authority amounts to DKK 195 million (DKK 175 million in 2022 and DKK 202 million in 2021). 3. All members of the Board of Directors are registered with the Danish Business Authority. ACCOUNTING POLICIES Wages, salaries, social security contributions, annual leave and sick leave, bonuses and non-monetary benefits are recognised in the year in which the associated services are rendered by employees of Novo Nordisk. Where Novo Nordisk provides long-term employee benefits, the costs are accrued to match the rendering of the services by the employees concerned. 2.5 Other operating income and expenses ACCOUNTING POLICIES Other operating income and expenses, comprises licence income and income of a secondary nature in relation to the main activities of Novo Nordisk. Licence income from royalties on net sales is recognised as the underlying customers' sale occurs and from sales milestones once the contingent sale milestone is achieved in accordance with the terms of the relevant agreement. Operating profit from the wholly owned subsidiary NNE A/S, not related to Novo Nordisk's main activities, is recognised as other operating income and expenses. Other operating income and expenses, also includes income from the sale of intellectual property rights as well as transaction costs incurred in connection with acquisition of businesses. Income taxes in the income statement 20,991 13,537 11,323 Tax on other comprehensive income for the year, (income)/expense Computation of effective tax rate 359 889 (1,005) DKK million 2023 2022 2021 Statutory corporate income tax rate in Denmark Deviation in foreign subsidiaries' tax rates compared to the Danish tax rate (net) Non-taxable income less non-tax- deductible expenses (net) Other adjustments (net) Effective tax rate Income taxes paid DKK million Income taxes paid in Denmark for current year Income taxes paid outside Denmark for current year Income taxes paid/(repayments) relating to prior years 22.0% 22.0% 22.0% (0.9%) (1.1%) (1.5%) (0.7%) (0.3%) 20.1% (0.5%) (0.3%) (0.8%) (1.0%) 19.6% 19.2% 2023 2022 2021 16,242 9,181 9,703 8,906 5,647 3,439 749 (313) 1,296 Income taxes paid 25,897 14,515 14,438 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. 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 1,026 million (DKK 567 million in 2022). The value of future tax deductions in relation to share programmes is recognised as a deferred tax asset until the shares are paid out to the employees. Any estimated excess tax deduction compared to the costs realised in the income statement is charged to equity. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 60 KEY ACCOUNTING ESTIMATES 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 360 million in 2023 (DKK 318 million in 2022). 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 likely 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 2023 Net deferred tax asset/(liability) at the beginning of the year Income/(charge) to the income statement Income/(charge) to other comprehensive income Income/(charge) to equity Additions from acquisitions Effect of exchange rate adjustment Property, plant and equipment Intangible assets Inventories Liabilities Other Offset within countries (2,402) (213) (8,279) (2,106) — — — 54 — — — 144 2,595 (645) (224) — — (9) 11,007 3,973 (6) — — (547) 3,922 3,002 (129) (120) 62 139 Net deferred tax asset/(liability) at the end of the year (2,561) (10,241) 1,717 14,427 6,876 Classified as follows: Deferred tax asset at the end of the year Deferred tax liability at the end of the year 2022 433 245 (2,994) (10,486) Net deferred tax asset/(liability) at the beginning of the year (1,980) (7,375) Income/(charge) to the income statement Income/(charge) to other comprehensive income Income/(charge) to equity Additions from acquisition of businesses (note 5.3)1 Effect of exchange rate adjustment1 (413) — — — (9) 674 — — (1,475) (103) 1,820 (103) 3,195 (465) (130) — — (5) 14,792 (365) 6,932 3,999 (141) — — 217 6,986 (110) 2,629 836 (608) 234 766 65 Net deferred tax asset/(liability) at the end of the year1 (2,402) (8,279) 2,595 11,007 3,922 Classified as follows: Deferred tax asset at the end of the year1 Deferred tax liability at the end of the year 579 195 2,627 11,027 (2,981) (8,474) (32) (20) 4,646 (724) (5,170) 5,170 13,904 (7,061) 1. Comparatives were restated to reflect change in the provisional valuation of net identifiable assets from a business combination completed in 2022. Reference is made to note 5.3. Total 6,843 4,011 (359) (120) 62 (219) 10,218 — — — — — — — (3,896) 20,380 3,896 (10,162) — — — — — — — 3,401 4,631 (879) 234 (709) 165 6,843 Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 61 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 losses Total amortisation Total impairment losses DKK million 2023 Cost at the beginning of the year Additions during the year Disposals during the year Effect of exchange rate adjustment Cost at the end of the year 2023 982 9 1,757 41 459 3,248 1,834 1,414 2022 846 34 1,364 19 96 2,359 1,599 760 2021 844 39 744 11 1 Amortisation and impairment losses at the beginning of the year Amortisation for the year Impairment losses for the year Impairment losses reversed during 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 Carrying amount at the end of the year 1,639 2022 1,066 Cost at the beginning of the year 573 Additions from acquisition of businesses (note 5.3)1 Additions during the year Disposals during the year Effect of exchange rate adjustment1 Cost at the end of the year1 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 Carrying amount at the end of the year1 Intellectual property rights Software and other intangibles Total intangible assets Goodwill 4,615 — — (151) 4,464 — — — — — — — 49,731 12,567 (1,629) 76 60,745 6,737 1,621 1,776 (382) (1,629) 102 8,225 4,464 52,520 4,346 41,802 — — — 269 5,766 1,310 (151) 1,004 4,615 49,731 — — — — — — 4,652 1,404 760 (149) 70 6,737 4,615 42,994 5,281 500 (158) (39) 5,584 1,951 213 20 — (16) (6) 2,162 3,422 3,434 492 1,426 (33) (38) 5,281 1,759 195 — (13) 10 1,951 3,330 59,627 13,067 (1,787) (114) 70,793 8,688 1,834 1,796 (382) (1,645) 96 10,387 60,406 49,582 6,258 2,736 (184) 1,235 59,627 6,411 1,599 760 (162) 80 8,688 50,939 1. Comparatives were restated to reflect change in provisional valuation of net identifiable assets from a business combination completed in 2022. Reference is made to note 5.3. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 62 Description of material additions 2023 additions Novo Nordisk acquired Ocedurenone for uncontrolled hypertension with potential application in cardiovascular and kidney disease from KBP Biosciences PTE., Ltd. Ocedurenone is an orally administered, small molecule, non-steroidal mineralocorticoid receptor antagonist (nsMRA) that is currently being examined in the phase 3 trial CLARION-CKD in patients with uncontrolled hypertension and advanced chronic kidney disease (CKD). The transaction has been accounted for as an asset acquisition, with DKK 5,650 million recognised in intellectual property rights. Novo Nordisk acquired Inversago Pharma Inc. and obtained ownership of the development asset INV-202. INV-202, an oral CB1 inverse agonist, is designed to preferentially block the receptor protein CB1, which plays an important role in metabolism and appetite regulation. The transaction has been accounted for as an asset acquisition, with DKK 4,321 million recognised in intellectual property rights. Novo Nordisk acquired Biocorp Production in a transaction accounted for as an asset acquisition with DKK 1,221 million recognised in intellectual property rights. Of the total additions of intangible assets, DKK 500 million relates to internally generated software and other intangibles (DKK 544 million in 2022). 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; refer to note 5.3 for details on the business combination. Impairment test Intangible assets other than goodwill In 2023, an impairment loss of DKK 1,796 million (DKK 760 million in 2022) was recognised. The entire DKK 1,796 million (DKK 250 million in 2022) of the impairment was related to the Diabetes and Obesity care segment. DKK 382 million was recognised as a reversal of prior impairment related to Rare disease (DKK 510 million impairment loss in 2022). The entire impairment loss in 2023, including the reversal of prior impairment, was recognised in research and development costs (DKK 760 million in research and development costs in 2022). 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 2023 or in 2022. Goodwill As of 31 December 2023, goodwill is allocated to the segments Diabetes and Obesity care DKK 4,018 million (DKK 4,154 million in 2022) and Rare Disease DKK 446 million (DKK 461 million in 2022). No impairment of goodwill was recognised in 2023 or 2022 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. The recoverable amount is estimated using an income-approach and is based 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 flow from the budget and 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. 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; 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. 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. Recognition and measurement Intangible assets are initially measured at cost, and are subsequently measured at cost less any accumulated amortisation and any impairment loss. Other intangible assets disclosures Intangible assets with an indefinite useful life and intangible assets not yet available for use amount to DKK 34,012 million (DKK 27,536 million in 2022), primarily intellectual property rights and goodwill. The carrying amount of internally generated intangible assets amounts to DKK 1,277 million at end of 2023 (DKK 1,017 million in 2022). 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 being achieved is probable. Intangible assets acquired in a business combination are recognised at fair value at the acquisition date. Intellectual property rights include DKK 5,650 million related to Ocedurenone (acquired in 2023), DKK 5,740 million related to Etavopivat (DKK 5,546 million in 2022), DKK 4,648 million related to Ziltivekimab (DKK 4,648 million in 2022), all of which are intangible assets under development. 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. In addition, intellectual property rights contain DKK 6,018 million related to Rybelsus® (DKK 6,584 million in 2022), which has a remaining useful life of 11 years (12 years in 2022), DKK 4,206 million related to Nedosiran (DKK 3,704 million in 2022) with a remaining useful life of 13 years and DKK 9,480 million (DKK 10,251 million in 2022) related to the RNAi technology platform, with a remaining estimated useful life of 21 years (22 years in 2022). Amortisation of software is based on the straight-line method over the estimated useful life of 3-15 years. The amortisation commences when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by Management. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 63 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. However, they are tested at least annually, irrespective of whether there is any indication that they may be impaired. Goodwill is allocated to operating segments based on expected future cash flow from products utilizing the synergies and know-how acquired. Impairment tests are based on Management’s projections and anticipated net present value of estimated future cash flows from marketable products. The discount rate used is based on the Group WACC, adjusted where appropriate, to reflect the risk of the specific asset tested. Fair value is determined using largely unobservable inputs. Accordingly, the valuation technique and inputs used to measure fair value are classified as level 3 in the fair value hierarchy. 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 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 2023 Cost at the beginning of the year 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 2022 Cost at the beginning of the year 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 Land and buildings Plant and machinery Other equipment Assets under construction Property, plant and equipment 43,403 37,548 8,114 22,361 111,426 2,681 (690) 4,246 (650) 48,990 16,781 2,450 6 (664) (248) 18,325 30,665 47 (952) 4,679 (371) 40,951 22,935 1,919 118 (942) (196) 23,834 17,117 873 (624) 731 (115) 8,979 5,039 1,086 24 (597) (89) 5,463 3,516 27,830 (562) (9,656) 31,431 (2,828) — (310) (1,446) 39,663 138,583 — — 562 (562) — — 39,663 44,755 5,455 710 (2,765) (533) 47,622 90,961 41,076 35,944 7,776 11,091 95,887 297 706 (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 Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 64 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 2023 3,968 504 1,313 354 26 6,165 1,251 2022 3,229 424 922 408 20 5,003 1,052 2021 2,836 409 736 386 19 4,386 899 Capital expenditure in the reporting period was primarily related to investments in facility upgrades and new production facilities for active pharmaceutical ingredients (API) for current and future diabetes and obesity care products, mainly in Kalundborg. The investments will establish additional capacity across the entire global value chain from manufacturing of API to assembly and packaging, with the majority being invested in API capacity. 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 life of the assets (buildings: 12-50 years, plant and machinery: 5-25 years and other equipment: 3-10 years. Land is not depreciated). Climate-related matters, including the commitment to reach net zero emissions, were considered when estimating the useful lives of property, plant and equipment. 3.3 Inventories DKK million Raw materials Work in progress Finished goods Total inventories (gross) Write-downs at year-end Total inventories (net) 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 asset's residual value and useful life is 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 develop- ment costs. 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 2023 9,500 17,601 7,224 34,325 (2,514) 31,811 2022 6,392 13,673 6,038 26,103 (1,715) 24,388 13,101 10,640 41% 44% 1,715 1,808 (718) (291) 2,514 2,256 1,110 (1,482) (169) 1,715 Leased property, plant and equipment DKK million Land and buildings Other equipment Total 2023 5,157 768 5,925 2022 3,544 587 4,131 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. 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 2023, the total amount recognised in the income statement related to leases was DKK 1,832 million (DKK 1,491 million in 2022 and DKK 1,303 million DKK 2021). The total cash outflow for leases amounted to DKK 2,022 million (DKK 1,438 million in 2022 and DKK 1,275 million in 2021). As of 31 December 2023, the lease liability of DKK 5,726 million excludes potential lease payments of DKK 4,051 million (undiscounted) related to optional lease term extension rights on properties that were not considered reasonably certain to be exercised (DKK 3,723 million in 2022). Refer to note 4.6 for a maturity analysis of lease payments and 5.2 for commitments not recognised in the balance sheet related to leases. 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, refer to note 4.9. All write-downs in both 2023 and 2022 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 develop- ment costs. Once there is a high probability of regulatory approval being obtained, the write-down is reversed, up to no more than the original cost. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 65 3.4 Trade receivables Movements in allowance for doubtful trade receivables DKK million 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 2023 1,520 (39) 413 (100) 1,794 2022 1,430 (15) 212 (107) 1,520 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. Overall, the country risk ratings in 2023 have remained unchanged from 2022. No loss allowance has been recognised on trade receivables in factoring portfolios in 2023 and 2022. Refer to note 4.4 for more information on the trade receivable programmes. DKK million 2023 Not yet due 1-90 days 91-180 days 181-270 days 271-360 days More than 360 days past due Trade receivables EMEA China Rest of World North America Operations Trade receivables 2022 Not yet due 1-90 days 91-180 days 181-270 days 271-360 days More than 360 days past due Gross carrying amount Loss allowance Net carrying amount 64,327 (1,095) 63,232 1,557 211 111 90 268 66,564 10,183 1,865 6,396 48,120 66,564 50,649 729 194 149 57 302 (160) (100) (81) (90) (268) 1,397 111 30 — — (1,794) 64,770 (859) (9) (843) (83) (1,794) (920) (113) (77) (51) (57) (302) 9,324 1,856 5,553 48,037 64,770 49,729 616 117 98 — — Trade receivables 52,080 (1,520) 50,560 EMEA China Rest of World North America Operations Trade receivables 9,486 1,138 5,297 36,159 52,080 (859) — (632) (29) (1,520) 8,627 1,138 4,665 36,130 50,560 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 requires 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. Refer to note 4.4 for a general description of credit risk. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 66 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 provisions2 2023 Total 2022 Total 69,499 285,266 (250,316) (2,364) (2,207) 99,878 451 99,427 2,376 1,937 (226) (240) (61) 3,786 3,763 23 1,030 1,010 (531) 12 11 1,532 613 919 1,972 74,877 55,894 588 288,801 207,715 (173) (251,246) (190,278) (431) (25) 1,931 1,822 (3,023) (2,282) 107,127 6,649 109 100,478 (1,668) 3,214 74,877 4,590 70,287 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. 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 2024 and 2025. 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 Since January 2021, Novo Nordisk has made a number of 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. On 30 January 2023, the US Court of Appeals for the Third Circuit issued a ruling holding that Novo Nordisk’s drug distribution policy was consistent with the 340B statute. However, rulings in similar cases involving other manufacturers are pending before the US Courts of Appeals for the Seventh and DC Circuits, and such cases may be subject to further discretionary appellate review before the US Supreme Court. Depending on the outcome of any subsequent rulings and appeals in these 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 Federal Court in New York against Novo Nordisk, Eli Lilly and Company, 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. The lawsuit was subsequently dismissed by the Court on 2 September 2022. Plaintiffs have filed 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 several lawsuits, including putative class actions, relating to the pricing of diabetes medicines in the US. The first lawsuit was filed in 2017 and in August 2023 a multi-district litigation was created in the United States District court for the District of New Jersey. Nearly all pending matters also name Eli Lilly and Company and Sanofi as defendants, 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 received a Civil Investigative Demand (CID) from the US Department of Justice (DOJ) 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 employee, who alleged Novo Nordisk 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 May 2023, at the Plaintiffs’ request, the case was transferred to the United States District Court for the Western District of Washington. Following transfer, in July 2023, Plaintiffs filed a motion to revive their nationwide Medicare claims and their Delaware Medicaid claims. Novo Nordisk filed a motion to dismiss these claims. Novo Nordisk does not expect the lawsuits to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow. Novo Nordisk, along with Eli Lilly, are defendants in numerous product liability lawsuits (including in the US) related to the use of GLP-1-based treatments. Plaintiffs have alleged that the use of these treatments, including Ozempic®, Wegovy® and Rybelsus®, have caused various gastrointestinal and other injuries. Novo Nordisk is taking actions to address the lawsuits. Novo Nordisk does not expect these lawsuits to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow. Pending claims against Novo Nordisk and Investigations involving Novo Nordisk Novo Nordisk has received Civil Investigative Demands (CIDs) or subpoenas from several US authorities including Attorneys General from the states of Minnesota, New Mexico, Washington, Colorado, Vermont, Texas 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-based 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 received a CID from the DOJ 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 the DOJ 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. Other contingent liabilities In addition to the above, Novo Nordisk 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. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 67 KEY ACCOUNTING ESTIMATES REGARDING ONGOING LEGAL DISPUTES, LITIGATION AND INVESTIGATIONS Provisions for legal disputes consist of various types of provisions linked to 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. ACCOUNTING POLICIES Provisions for sales rebates and discounts granted to government agencies, wholesal- ers, 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. Refer to note 2.1 for further information on sales rebates and provisions. Provisions for legal disputes are recognised where a legal or constructive obligation has been incurred as a result of past events and it is probable that there will be an outflow of resources that can be reliably estimated. In this case, Novo Nordisk arrives at an estimate based on an evaluation of the most likely outcome. Disputes for which no reliable estimate can be made are disclosed as contingent liabilities. Provisions are measured at the present value of the anticipated expenditure for settlement. This is calculated using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision for interest is recognised as a financial expense. Novo Nordisk issues credit notes for expired goods as a part of normal business. Where there is historical experience or a reasonably accurate estimate of expected future returns can otherwise be made, a provision for estimated product returns is recorded. The provision is measured at gross sales value. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 68 Section 4 Capital structure and financial items 4.1 Earnings per share 4.2 Distribution to shareholders DKK million Interim dividend for the year Dividend for prior year Share repurchases for the year Total distribution for the year 2023 13,430 18,337 29,924 61,691 2022 9,613 15,690 24,086 49,389 2021 8,021 13,496 19,447 40,964 At the end of 2023, the share capital amounted to DKK 107 million in A share capital (DKK 107 million in 2022 and 2021) and DKK 344 million in B share capital (DKK 349 million in 2022 and DKK 355 million in 2021). The A share capital and number of A shares of DKK 0.10 was in 2023 unchanged besides the effect of the split in trading units, and unchanged in 2022 and 2021. In 2023, the B share capital decreased by DKK 5 million (equal to cancellation of 50 million shares of DKK 0.10). The corresponding decrease in 2022 was DKK 6 million (equal to cancellation of 60 million shares of DKK 0.10) and decrease in 2021 of DKK 8 million (equal to cancellation of 80 million shares of DKK 0.10). 2023 2022 2021 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. Each A share of DKK 0.10 per share carries 100 votes and each B share of DKK 0.10 per share carries 10 votes. The net cash distribution to shareholders in the form of dividends and share repurchases amounts to DKK 61,691 million, compared with a free cash flow of DKK 68,326 million. Treasury shares Net profit DKK million 83,683 55,525 47,757 Average number of shares outstanding1 Dilutive effect of average outstanding share pool Average number of shares outstanding, including dilutive effect of outstanding share pool Basic earnings per share Diluted earnings per share in million shares in million shares in million shares 4,482.8 4,530.6 4,593.2 12.0 14.0 13.0 4,494.8 4,544.6 4,606.2 DKK DKK 18.67 18.62 12.26 12.22 10.40 10.37 1. Excluding treasury shares. For further information on the development in treasury shares, refer to note 4.3. The trading unit of the Novo Nordisk B shares listed on NASDAQ Copenhagen was changed from DKK 0.20 to DKK 0.10 as of 13 September 2023. The ADRs listed on the New York Stock Exchange (NYSE) were similarly split as of 20 September 2023. Comparative figures have been restated to reflect the change in trading unit from DKK 0.20 to DKK 0.10. The total dividend for 2023 amounts to DKK 41,987 million (DKK 9.40 per share). A final dividend for 2023 of DKK 28,557 million (DKK 6.40 per share) is expected to be distributed pending approval at the Annual General Meeting. The interim dividend of DKK 13,430 million (DKK 3.00 per share) was declared and paid in August 2023. The total dividend for 2022 was DKK 27,950 million (DKK 6.20 per share), of which the final dividend of DKK 18,337 million (DKK 4.08 per share) was declared and paid in March 2023. No dividend is declared on treasury shares. Novo Nordisk's dividend pay-outs are complemented by share repurchase programmes. 4.3 Share capital, Treasury shares and Other reserves Development in number of shares DKK million A shares B shares 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. Refer to 'Financial definitions' for a description of calculation of the dilutive effect. Shares beginning of 2022 Shares cancelled in 2022 Outstanding shares end of 2022 Shares cancelled in 2023 Outstanding shares end of 2023 1,075 — 1,075 — 1,075 3,545 (60) 3,485 (50) 3,435 2023 2022 Number of B shares of DKK 0.10 (million) Number of B shares of DKK 0.10 (million) Market value (DKK million) 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 28,242 (23,450) (4,433) 29,924 5,817 36,100 60.2 (50.0) (9.5) 51.0 — 51.7 62.2 (60.0) (3.7) 61.7 — 60.2 Total 4,620 (60) 4,560 (50) 4,510 At the end of 2023, the holding of treasury shares amounted to 1.1% of the total outstanding shares (1.3% of the outstanding shares in 2022). 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 0.10 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. The purchase of treasury shares during the year relates to the remaining part of the 2022 share repurchase programme, totalling DKK 1.5 billion and the DKK 30 billion Novo Nordisk B share repurchase programme for 2023, of which DKK 1.6 billion was outstanding at year-end. The programme ended on 29 January 2024. The trading unit of the Novo Nordisk B shares listed on NASDAQ Copenhagen and the ADRs listed on the New York Stock Exchange (NYSE) was split in 2023. Comparative figures have been restated to reflect the split. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 69 Specification of Other reserves 4.4 Financial risks Key currencies DKK million 2021 Exchange rate adjustments Cash flow hedges1 Tax and other items Total Type Reserve at the beginning of the year (2,528) 1,802 Other comprehensive income, net 1,624 (3,557) Transferred to intangible assets — 15 Reserve at the end of the year (904) (1,740) 2022 Other comprehensive income, net Reserve at the end of the year 2,289 1,385 2023 Other comprehensive income, net (1,404) Reserve at the end of the year (19) 1. For information on derivatives refer to note 4.5. 2,766 1,026 586 1,612 (185) 1,117 (2) 930 (892) 38 (355) (317) (911) (816) 13 (1,714) 4,163 2,449 (1,173) 1,276 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 declared and paid from distributable reserves. As of 31 December 2023, distributable reserves total DKK 78,779 million (DKK 63,136 million in 2022), corresponding to the parent company's retained earnings and Reserve for cash flow hedges and exchange rate adjustments. Management has assessed the following key financial risks: Foreign exchange risk Credit risk Interest rate risk Liquidity risk Financial risk High Low Low Low Novo Nordisk has centralised management of the Group's financial risks. The overall objectives and policies for the company's financial risk management are outlined in 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, CAD, JPY 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. 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. USD CNY CAD JPY GBP Average exchange rate applied (DKK per 100) 2023 2022 2021 689 708 629 97 105 97 Year-end exchange rate applied (DKK per 100) 2023 2022 2021 674 697 657 95 101 103 511 543 502 509 515 517 4.91 5.40 5.73 4.77 5.29 5.70 857 873 865 858 838 885 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 2024 2023 USD (5,700) (3,180) CNY (500) (500) CAD (530) (320) JPY (210) (240) GBP (150) (160) 1. An immediate 5% increase would have the opposite impact of the above. As per the end of 2023, a positive market value of financial contracts related to hedging of foreign exchange risk of DKK 1,612 million had been deferred for recognition in 2024 (in 2022 a positive market value of DKK 1,026 million was deferred for recognition in 2023). Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 70 Sensitivity of an immediate 5% decrease in currency rates on 31 December versus DKK2 Credit exposure for cash at bank, marketable securities and derivative financial instruments (fair value) DKK million Sensitivity of all currencies Income statement Other comprehensive income Total Hereof sensitivity of USD Income statement Other comprehensive income Total 2023 2022 (117) 6,058 5,941 70 5,082 5,152 (37) 3,431 3,394 150 2,923 3,073 DKK million 2023 AAA range AA range A range BBB range Not rated or below BBB range 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 2023 2022 USD CNY3 CAD 12 12 12 0 9 9 JPY 12 12 GBP 0 11 3. Chinese yuan traded offshore (CNH) is used to hedge Novo Nordisk's CNY currency exposure. Total 2022 AAA range AA range A range BBB range Not rated or below BBB range Cash at bank Marketable securities Derivative financial instruments — 15,838 6,451 7,292 17 632 — — — — — 912 1,432 — — Total 15,838 7,363 8,724 17 632 14,392 15,838 2,344 32,574 6 10,797 5,507 6,550 124 466 — 124 — — — 963 1,764 — — 10,803 6,470 8,438 124 466 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, because 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 2023 have overall remained unchanged from 2022 to 2023. Trade receivable programmes At year-end, the Group had derecognised receivables without recourse having due dates after 31 December 2023 amounting to: DKK million US Japan 2023 5,059 2,050 2022 1,394 2,273 2021 1,313 2,453 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. Total 12,653 10,921 2,727 26,301 Refer to note 3.4 for the split of allowance for trade receivables by geographical segment. The table above shows financial contracts existing at year-end to cover the expected future cash flow for the disclosed number of months. During 2023, the hedging horizon varied between 9 and 12 months for USD, CAD and JPY. The hedge horizon for CNY has been increased from 0 to 12 months, while GBP has been phased out. Average hedge rate for USD cash flow hedges is 676 at the end of 2023 (696 at the end of 2022). Credit risk exposure to financial counterparties Novo Nordisk considers its maximum credit exposure to financial counterparties to be DKK 32,574 million (DKK 26,301 million in 2022). 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 67,209 million (DKK 52,714 million in 2022). Refer to note 4.9 for details of the Group's total financial assets. 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 15,838 million is considered low due to a low portfolio duration. Credit risk Credit risk arises from the possibility that transactional counterparties may default on their obligations, causing financial losses for the Group. 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 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. 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. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 71 Financial reserves DKK million Cash and cash equivalents (note 4.7) Marketable securities Undrawn committed credit facility4 Borrowings (Note 4.6) Financial reserves 2023 2022 2021 14,392 15,838 11,552 (5,431) 36,351 12,653 10,921 11,527 10,719 6,765 11,526 (480) (12,861) 34,621 16,149 4. The undrawn committed credit facility comprises a facility EUR 1,550 million in 2023 and EUR 1,550 million in 2022 committed by a portfolio of international banks. The facility matures in 2025. 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 Eurobonds and bank overdrafts contractually obliged for repayment within 12 months of the balance sheet date. 4.5 Derivative financial instruments DKK million Forward contracts USD1 Forward contracts CNH, CAD and JPY2 Forward contracts, cash flow hedges Forward contracts USD1 Forward contracts EUR, CNH, CAD and others2 Forward contracts, fair value hedges Total derivative financial instruments Recognised in the income statement Recognised in other comprehensive income 2023 2022 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 104,022 20,246 124,268 65,870 28,520 94,390 1,600 295 1,895 330 119 449 193 90 283 946 43 989 59,292 10,677 69,969 38,432 4,111 42,543 218,658 2,344 1,272 112,512 449 1,895 989 283 1,591 373 1,964 639 124 763 2,727 763 1,964 907 31 938 1,942 23 1,965 2,903 1,965 938 1. Average hedge rate for USD cash flow hedges is 676 at the end of 2023 (696 at the end of 2022) and average hedge rate for USD fair value hedges is 675 at the end of 2023 (714 at the end of 2022). 2. For 2022 the relevant currencies are CAD, JPY and GBP. The fair value of cash flow hedges at year-end 2023, a gain of DKK 1,612 million, has been recognised in other comprehensive income. 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 2023, 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. ACCOUNTING POLICIES On initiation of the contract, Novo Nordisk designates each derivative financial contract that qualifies for hedge accounting as one of: • hedges of the fair value of a recognised asset or liability (fair value hedge) • hedges of the fair value of a forecast financial transaction (cash flow hedge). All contracts are initially recognised at fair value and subsequently remeasured at fair value at the end of the reporting period. Fair value hedges Value adjustments of fair value hedges are recognised in the income statement along with any value adjustments of the hedged asset or liability that are attributable to the hedged risk. Cash flow hedges Value adjustments of the effective part of cash flow hedges are recognised in other comprehensive income. The cumulative value adjustment of these contracts is transferred from other comprehensive income to the income statement when the hedged transaction is recognised in the income statement. For cash flow hedges of foreign currency risk on highly probable non-financial asset purchases, the cumulative value adjustments are transferred directly from the cash flow hedge reserve to the initial cost of the asset when recognised. Discontinuance of cash flow hedging When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the 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 refer to note 4.9. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 72 4.6 Borrowings Reconciliation of liabilities arising from financing activities Non-cash movements DKK million 2023 Lease liabilities Issued Eurobonds Bank overdrafts Total borrowings 2022 Lease liabilities Issued Eurobonds Loans Bank overdrafts Total borrowings 1. 2022 figures include additions from acquisition of business. Beginning of the year Re- payments Proceeds Additions1 Disposals Exchange rates Other End of the year 4,529 (1,448) 20,775 480 — (19) 25,784 (1,467) — — — — — 2,809 — — 2,809 1,358 — — — 4,129 9,654 (998) — 11,120 12,503 (12,623) 359 (3) — 95 26,645 (13,624) 11,215 1,358 (4) — — (4) (1) — — — (1) (170) 46 (4) (128) 43 (2) 120 27 188 10 3 (1) 12 (2) 3 — 2 3 5,726 20,824 456 27,006 4,529 20,775 — 480 25,784 Issuance of Eurobonds 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 Nominal value in millions EUR 650 500 500 650 500 DKK 4,844 3,726 3,726 4,844 3,726 Eurobonds In 2022, three tranches of Eurobonds with an aggregate principal amount of EUR 1.5 billion corresponding to DKK 11.1 billion were launched under the programme. Net proceeds of the issuances were used for general corporate purposes, including refinancing of the bridge loan facility established in connection with Novo Nordisk’s acquisition of Dicerna Pharmaceuticals, Inc. No bonds have been issued in 2023. The total fair value of issued Eurobonds amounts to DKK 19.7 billion (DKK 18.7 billion in 2022). 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 refer to note 4.9. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 73 Contractual undiscounted cash flows 2023 4.7 Cash and cash equivalents 4.8 Cash flow statement specifications Leases Issued Eurobonds Bank overdrafts Total DKK million Cash at bank Borrowings (note 4.6) 2023 14,392 — — (1) 2022 2021 Other non-cash items 12,653 10,720 DKK million 2023 2022 2021 DKK million 2023 Within 1 year 1-3 years 3-5 years More than 5 years Total Carrying amount end of the year Non-current liabilities Current liabilities 2022 Within 1 year 1-3 years 3-5 years More than 5 years Total Carrying amount end of the year Non-current liabilities Current liabilities 1,318 1,902 1,253 1,612 6,085 5,726 4,552 1,174 1,088 1,566 923 1,416 4,993 4,529 3,543 986 4,975 3,948 8,695 3,819 456 — — — 6,749 5,850 9,948 5,431 21,437 456 27,978 20,824 15,976 4,848 127 8,811 3,905 8,672 21,515 20,775 20,775 — 456 — 456 480 — — — 480 480 — 480 27,006 20,528 6,478 1,695 10,377 4,828 10,088 26,988 25,784 24,318 1,466 Cash and cash equivalents 14,392 12,653 10,719 Cash and cash equivalents at 31 December 2023 includes DKK 857 million that is restricted (DKK 458 million in 2022). 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 consist 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. Interest income and interest expenses, net (note 4.10) Capital gain/(loss) on investments, net (note 4.10) Result of associated companies (note 4.10) Other non-current receivables and prepayments Other non-current liabilities Share-based payment costs (note 5.1) Increase/(decrease) in provisions (note 3.5) and retirement benefit obligations Other (527) 106 (81) (1,224) 89 2,149 139 124 189 61 (260) 1,539 58 (340) 24 407 — 1,040 32,243 19,080 16,581 (373) 1,438 (4,354) Total other non-cash items 32,382 22,310 13,416 Change in working capital DKK million Inventories 2023 2022 2021 (7,423) (4,767) (1,085) Trade receivables (14,210) (9,917) (12,909) 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 (2,063) 10,019 5,099 (968) 6,717 4,006 (876) 3,153 2,595 (2,432) (1,567) (15) — (143) (1,409) (11,010) (6,639) (10,546) Exchange rate adjustments (1,235) 1,303 1,483 Cash flow change in working capital (12,245) (5,336) (9,063) Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 74 4.9 Financial assets and liabilities Fair value measurement hierarchy DKK million Financial assets by category Other financial assets Marketable securities Financial assets at fair value through the income statement Derivative financial instruments (note 4.5) Derivatives used as hedging instruments (assets) Other financial assets Trade receivables Other receivables and prepayments (current and non-current) • less prepayments and VAT receivables Cash at bank (note 4.7) 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 4.5) Derivatives used as hedging instruments (liability) Borrowings (non-current) (note 4.6)1 Borrowings (current) (note 4.6)1 Trade payables Other liabilities (non-current) Other liabilities (current) • less VAT and duties payable Financial liabilities measured at amortised cost Total financial liabilities at the end of the year by category 1. Refer to note 4.6 for a maturity analysis for non-current and current borrowings. 2023 2022 DKK million Active market data (level 1) 571 15,838 559 10,921 Directly or indirectly observable market data (level 2) Not based on observable market data (level 3) Total financial assets at fair value 16,409 11,480 Active market data (level 1) 2,344 2,344 682 2,727 2,727 457 31,729 16,593 Directly or indirectly observable market data (level 2) Not based on observable market data (level 3) Total financial liabilities at fair value 2023 16,052 2,344 33,398 51,794 — 1,272 — 1,272 2022 11,288 2,727 34,159 48,174 — 2,903 — 2,903 9,498 (8,312) 14,392 47,989 33,041 6,211 (5,073) 12,653 30,841 33,967 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 2023 or 2022. The fair value of issued Eurobonds, which is disclosed in note 4.6, 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, refer to notes 4.4 and 4.5. 33,041 33,967 99,783 79,015 ACCOUNTING POLICIES Depending on purpose, Novo Nordisk classifies financial instruments into the following categories: 1,272 1,272 20,528 6,478 25,606 189 28,705 (600) 2,903 2,903 24,318 1,466 15,587 100 23,606 (875) 80,906 64,202 82,178 67,105 • Financial assets at fair value through the income statement • Derivatives used as hedging instruments • Financial assets at amortised cost • Financial assets at fair value through other comprehensive income • Financial liabilities at amortised cost Recognition and measurement Financial assets measured at fair value through the income statement consist of other financial assets, which comprise of equity investments, and marketable securities. These financial instruments are initially recognised at fair value. 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, refer to note 4.5. 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, refer to note 3.4. Financial assets at fair value through other comprehensive income are trade receivables that are held to collect or to sell in factoring agreements. Financial 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 assets under construction, sales rebates and deferred income). These are initially recognised at the fair value less transaction costs. Subsequently, they are measured at amortised cost using the effective interest method. For initial recognition of lease liabilities refer to note 4.6. 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 is 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. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 75 4.10 Financial income and expenses Financial impact from forward contracts, specified DKK million Financial income Interest income1 Foreign exchange gain (net) Financial gain from forward contracts (net) Capital gain on investments Capital gain on marketable securities Result of associated companies Total financial income Financial expenses 2023 2022 2021 DKK million 2023 2022 2021 1,069 308 1,344 — 143 81 239 — — — — — 231 — 2,316 340 — — 2,945 239 2,887 Income/(loss) transferred from other comprehensive income Realised fair 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 1,026 (1,740) 1,802 214 (3,772) (1,411) (540) (1,202) 1,246 644 4,948 679 1,344 (1,766) 2,316 Interest expenses on debts and borrowings 542 Foreign exchange loss (net) Financial loss from forward contracts (net) Capital loss on investments Capital loss on marketable securities Result of associated companies Other financial expenses Total financial expenses — — 106 — — 197 845 378 2,885 1,766 124 463 189 181 5,986 289 1,972 — — 44 24 122 2,451 2. Refer to note 4.5 for information on open fair value hedge contracts at 31 December. ACCOUNTING POLICIES As described in note 4.4, 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. 1. Interest income include DKK 370 million from marketable securities at fair value through the income statement (2022: DKK 78 million; 2021: DKK 30 million) while the remaining interest income is derived from financial assets at amortised cost. In addition, value adjustments of fair value hedges are recognised in financial income and financial expenses along with any value adjustments of the hedged asset or liability that are attributable to the hedged risk. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 76 Section 5 Other disclosures 5.1 Share-based payment schemes Share-based payment expensed in the income statement DKK million Restricted stock units to employees Long-term share-based incentive programme (Management Board)1 Long-term share-based incentive programme (Management group below Management Board) Restricted stock units to individual employees Share-based payment expensed in the income statement 2023 365 2022 265 2021 189 304 250 234 1,271 209 819 205 598 19 2,149 1,539 1,040 1. In 2021, Novo Nordisk introduced a new share-based compensation programme with terms, which amortises the grant date valuation over three years (the 2020 programme was amortised over four years). The 2023 expense includes amortisation of the 2020, 2021, 2022 and 2023 programmes. Restricted stock units to employees In connection with Novo Nordisk's 100 year anniversary and in appreciation of the efforts of employees during recent years, as of 1 February 2023, all eligible employees in the company were offered 74 restricted stock units. Each restricted stock unit gives the holder the right to receive one Novo Nordisk B share free of charge in August 2026, subject to continued employment. The cost of the DKK 1,331 million programme is amortised over the vesting period. Long-term share-based incentive programme Management Board During 2023, Management Board participated in four long-term incentive programmes (LTIP) which commenced in 2020, 2021, 2022 and 2023 respectively. The LTIPs commenced in 2021, 2022 and 2023 have a three-year performance period, subject to continued employment, and a subsequent two-year holding period. Targets are set at the beginning of the performance period and include determination of threshold, on-target level of performance and level of performance to achieve maximum allocation of shares. The maximum share allocation at grant 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. Hence the LTIP is capped at a number of shares at the time of grant. Financial targets are set by the Board for a three-year period, and are linked to three-year average growth in sales and operating profit, while every year the Board has set the non-financial targets for a one-year period. All targets are aligned to Novo Nordisk’s Strategic Aspirations 2025: Purpose and sustainability, Innovation and therapeutic focus, Commercial execution and Financials. Target achievement is assessed by the Board. The grant date of the 2023-programme was February 2023, and the share price used for the determining the grant date fair value of the award (DKK 456) was the average share price for Novo Nordisk B shares on Nasdaq Copenhagen in the period 2-16 February 2023, adjusted for the expected dividend. Based on the split of participants at the grant date, 46% of the allocated shares is be allocated to members of Executive Management and 54% to other members of the Management Board. The LTIP which commenced in 2020 is likewise subject to a three-year performance period in which the number of allocated shares may increase or decrease in line with performance, which is linked to financial targets, including sales growth and economic value creation, and non-financial targets, including achievement of clinical trial milestones and market authorisation for specific products. The maximum share allocation is capped in a similar way as the LTIPs described above. All restricted stock units and shares allocated to Management are settled by transfers of treasury shares at the time of vesting. Management group below the Management Board The Management group below the Management Board has a share-based incentive programme with similar performance criteria as Management Board. Financial targets are set by the Board for a three-year period, while the non-financial targets have been set by the Board each year. On 31 December 2023, a total of 18.9 million shares (21.4 million in 2022 and 19.8 million in 2021) were outstanding including all ongoing programmes. ACCOUNTING POLICIES 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 previous years are included in the income statement in the year of adjustment. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 77 General terms and conditions of 2020-2023 programmes1 Employees' 100 year anniversary programme Management Board Management group below Management Board Individual employees Preliminary number of shares to be allocated2 (million) Fair value per restricted stock unit at grant date (DKK) 2023 3.0 446 2023 0.6 456 2022 0.7 320 2021 1.0 212 2020 0.9 206 2023 3.1 456 2022 3.3 320 2021 3.0 212 2020 2.4 206 2023 0.3 544 2022 0.8 371 2021 0.3 269 Performance and vesting period 2023 to 2026 2023 to 2025 2022 to 2024 2021 to 2023 2020 to 2023 2023 to 2025 2022 to 2024 2021 to 2023 2020 to 2023 2023 to 2026 2022 to 2025 2021 to 2024 Allocation date Amortisation period Aug 2026 Feb 2026 Feb 2025 Feb 2024 Feb 2024 Feb 2026 Feb 2025 Feb 2024 Feb 2024 2026 2025 2024 3.5 years 3 years 3 years 3 years 4 years 3 years 3 years 3 years 4 years 3 years 3 years 3 years 1. As of 13 September 2023, the trading unit of the Novo Nordisk B shares listed on NASDAQ Copenhagen and ADRs listed on the New York Stock Exchange (NYSE) was changed from DKK 0.20 to DKK 0.10. Comparative figures have been restated to reflect the change in trading unit from DKK 0.20 to DKK 0.10. 2. The number of shares to be allocated under the LTIPs to Management Board and management group below Management Board, respectively, may potentially be reduced or increased depending on whether Novo Nordisk’s performance during the three-year performance period is higher or lower compared to targets determined by the Board. The maximum number is capped. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 78 5.2 Commitments Contractual obligations not recognised in the balance sheet DKK million (undiscounted) 2023 Leases1 Current Non- current Total 144 2,053 2,197 Research and development obligations 8,678 13,235 21,913 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 commer- cial product launch following regulatory approval. The increase in research and development obligation is driven by the general increase in business activities. Research and development – potential milestone payments2 Commercial product launch – potential milestone payments2 Purchase obligations relating to investments in property, plant and equipment Purchase obligations relating to contract manufacturers Other purchase obligations Total obligations not recognised in the balance sheet 2022 Leases1 Research and development obligations Research and development – potential milestone payments2 Commercial product launch – potential milestone payments2 Purchase obligations relating to investments in property, plant and equipment Purchase obligations relating to contract manufacturers Other purchase obligations Total obligations not recognised in the balance sheet 1,234 27,311 28,545 — 12,952 12,952 Commercial milestones, royalties and other payments based on a percentage of sales generated from sale of goods following marketing approval are excluded from the contractual commitments analysis because of their contingent nature, related to future sales. The purchase obligations 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. Other purchase commitments mainly consist of commitments related to promotional and media activities, professional and consulting activities and strategic sourcing contracts. The contractual obligations not recognised in the balance sheet represent contractual payments and are not discounted and are not risk-adjusted. Other guarantees Other guarantees amount to DKK 1,878 million (DKK 1,222 million in 2022). Other guarantees primarily relate to performance guarantees issued by Novo Nordisk. 4,222 1,693 5,915 6,315 26,792 7,151 5,888 33,107 13,039 27,744 89,924 117,668 205 5,988 1,641 7,582 1,846 13,570 376 5,011 5,387 — 7,598 7,598 1,696 1,427 3,123 3,537 15,225 9,825 4,541 13,362 19,766 27,027 37,625 64,652 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 because they are linked to successful achievements in research activities. 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 Deferred tax assets (liabilities), net Other net assets Net identifiable assets acquired Goodwill Consideration transferred Cash acquired Cash used for acquisition of businesses 2022 Forma Therapeutics 5,766 492 77 1,470 1,027 (709) (21) 8,102 — 8,102 (1,027) 7,075 Business combinations in 2023 No transactions completed during 2023 were classified as acquisitions of businesses. 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 USD 20 per share via a cash tender offer, equal to a total purchase price of DKK 8,102 million. At end of 2022, the initial accounting for goodwill, intellectual property rights, other intangible assets and deferred tax assets and liabilities remained provisional. The valuation of these were finalised in 2023 with the result that net deferred tax liabilities were reduced retrospectively by DKK 524 million to a total of DKK 709 million. The reduction was offset by a corresponding amount to goodwill. The valuation of intellectual property rights and other intangible assets remain unchanged. Novo Nordisk Annual Report 2023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 ESTIMATES IN DETERMINING THE FAIR VALUE OF INTANGIBLE ASSETS The application of the acquisition method involves the use of significant estimates because 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. Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 79 5.4 Related party transactions 5.5 Fees to statutory auditors Material transactions with related parties DKK million Novo Holdings A/S Purchase of Novo Nordisk B shares Dividend payment to Novo Holdings A/S 8,775 9,028 6,984 7,207 6,695 6,144 Audit-related services Tax advisory services 2023 2022 2021 DKK million 2023 2022 Statutory audit1 Other services Total fees to statutory auditors 30 3 8 18 59 38 2 3 12 55 2021 26 3 4 4 37 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 29 million (DKK 17 million in 2022 and DKK 11 million in 2021). In 2023, Deloitte Statsautoriseret Revisionspartnerselskab provided other services than statutory audit in the amount of DKK 18 million (DKK 12 million in 2022 and DKK 6 million in 2021) which relate to tax due diligence and transfer pricing, management consulting for strategic projects, leadership training, review of ESG data and other assurance assessments and opinions. NNIT Group Services provided by NNIT Dividend payment from NNIT Altasciences Group Services provided by Novo Nordisk Services provided by Altasciences Novozymes Group Services provided by Novo Nordisk Services provided by Novozymes 436 — — 229 (48) 112 660 — — 70 (78) 92 593 (4) — 11 (116) 78 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 77.1% 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 Altasciences Company Inc. are considered related parties to Novo Nordisk A/S. As Novo Holdings is 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. In 2023, Novo Nordisk A/S acquired 14,025 B shares, worth DKK 8.8 billion, from Novo Holdings A/S as part of the DKK 30.0 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 first and third quarters in 2023. There were no transactions with the Board of Directors or Executive Management besides remuneration. There were no material unsettled balances with related parties at the end of the year. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 80 5.6 General accounting policies 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. 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 20235.7 Companies in the Novo Nordisk Group Activity: • Sales and marketing • Research and development • Production • Services/investments Percentage of shares owned Activity Novo Nordisk Limited, Ireland Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 81 Company and country Percentage of shares owned Activity Company and country Percentage of shares owned Activity Novo Nordisk Estonia OÜ, Estonia Novo Nordisk Farma OY, Finland Biocorp Production S.A., France Activity Novo Nordisk, France • • • • Novo Nordisk Production SAS, France Novo Nordisk Pharma GmbH, Germany Novo Nordisk Hellas Epe., Greece Novo Nordisk Hungária Kft., Hungary • • • • • • • 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 Ltd, Israel Novo Nordisk S.P.A., Italy Novo Nordisk Kazakhstan LLP, Kazakhstan Novo Nordisk Kenya Ltd., Kenya Novo Nordisk Latvia SIA, Latvia 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 Limited Liability Company, Russia 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 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 • 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 Region China Novo Nordisk (China) Pharmaceuticals Co. Ltd., China Novo Nordisk (Shanghai) Pharma Trading Co., Ltd., China 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 Novo Nordisk Produção Farmacêutica do Brasil Ltda., Brazil 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 • • • • • • 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 • • • Other subsidiaries and associated companies Company and country Percentage of shares owned Activity NNE A/S, Denmark NNIT A/S, Denmark CS Solar Fund XIV, LLC, US 100 18 99 • • • • • Companies without significant activities are not included in the list. NNE A/S subsidiaries are not included in the list. Company and country Parent company Novo Nordisk A/S, Denmark Subsidiaries by geographical area Company and country North America Operations Inversago Pharma Inc., Canada Novo Nordisk Canada Inc., Canada Novo Nordisk North America Operations A/S, Denmark Novo Nordisk Inc., US 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 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 Novo Nordisk Egypt Pharmaceuticals Ltd., Egypt Novo Nordisk Annual Report 202382 Financial definitions (part of the Management 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'. ADR An American Depository Receipt (or ADR) represents ownership of the shares of a non-US company and trades in US financial markets. Operating margin Operating profit as a percentage of net sales. Purchase of intangible assets Cash flow statement amount for the purchase of intangible assets. Purchase of property, plant and equipment Cash flow statement amount for the purchase of property, plant and equipment. Basic earnings per share (EPS) Net profit divided by the average number of shares outstanding. 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. Shares The share capital of Novo Nordisk comprise of A-shares and B-shares, with B-shares listed on Nasdaq Copenhagen in trading units of nominal value DKK 0.10 and ADRs, that equals B-shares of nominal value DKK 0.10, being listed on New York Stock Exchange (NYSE). Key ratios per share, including number of outstanding shares, are aligned with trading units of nominal value DKK 0.10. Working capital Working capital measures the liquid assets Novo Nordisk has available for operations. 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. Total dividends for the year comprise of interim dividend paid during the year and proposed ordinary dividend for the year. EBITDA EBITDA is defined as ’net profit’, adjusted for 'income taxes', 'financial items', 'depreciation and amortisation' and 'impairment losses'. 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. Part of the Management review – not auditedNovo Nordisk Annual Report 202383 Non-IFRS financial measures (part of the Management 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. Net sales in constant exchange rates DKK million Net sales IFRS 2023 2022 2021 232,261 176,954 140,800 Effect of exchange rate 7,658 (13,024) 3,643 Net sales in constant exchange rates 239,919 163,930 144,443 The non-IFRS financial measures presented in the Annual Report are: Net sales previous year 176,954 140,800 126,946 • Net sales and operating profit in constant exchange rates (CER) • 'Net profit’, adjusted for 'income taxes', 'financial items', 'depreciation and amortisation' and 'impairment losses' (EBITDA) % increase/(decrease) in reported currencies 31.3% 25.7% 10.9% % increase/(decrease) in constant exchange rates 35.6% 16.4% 13.8% Earnings before interest, taxes, depreciation, amortisation and impairment losses (EBITDA) EBITDA is defined as ’net profit’, before 'income taxes', 'financial items', 'depreciation and amortisation' and 'impairment losses'. Management believes EBITDA is a useful measure as it helps analyse operating results from core business operations without including the effects of capital structure, tax rates, depreciation, amortisation and impairment losses. The following table shows a reconciliation of EBITDA with operating profit, the most directly comparable IFRS financial measures: • 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. Operating profit in constant exchange rates EBITDA DKK million Operating profit IFRS Effect of exchange rate 2023 102,574 4,898 Operating profit in constant exchange rates 107,472 Operating profit previous year % increase/(decrease) in reported currencies 74,809 37.1% 2022 74,809 (7,578) 67,231 58,644 27.6% 2021 DKK million 58,644 Net profit IFRS 2,332 Income taxes IFRS 60,976 Financial income IFRS 54,126 Financial expenses IFRS 2023 83,683 20,991 (2,945) 845 2022 55,525 13,537 (239) 5,986 2021 47,757 11,323 (2,887) 2,451 8.3% Operating profit (EBIT) IFRS 102,574 74,809 58,644 % increase/(decrease) in constant exchange rates 43.7% 14.6% 12.7% Depreciation and amortisations Impairment losses EBITDA 7,289 2,124 6,553 809 5,311 714 111,987 82,171 64,669 Part of the Management review – not auditedNovo Nordisk Annual Report 2023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 2023 60,406 90,961 20,380 1,430 31,811 64,770 2,423 8,068 (10,162) (742) (189) 2022 50,939 66,671 13,904 206 24,388 50,560 940 6,005 (7,061) (762) (100) (6,649) (4,590) (25,606) (15,587) (7,116) (7,091) 84 Reconciliation of net operating assets to equity: IFRS 2021 DKK million 43,171 Equity IFRS 2023 2022 2021 106,561 83,486 70,746 55,362 Investment in associated companies 8,672 Other financial assets Marketable securities (410) (1,253) (327) (1,016) (15,838) (10,921) Derivative financial instruments (2,344) (2,727) (525) (916) (6,765) (1,690) Cash at bank (14,392) (12,653) (10,720) Borrowings – non-current 20,528 24,318 Borrowings – current Derivative financial instruments 6,478 1,272 1,466 2,903 12,961 13,684 2,184 Net operating assets 100,602 84,529 78,959 267 19,621 40,643 1,119 5,037 (5,271) (1,280) (360) (4,374) (8,870) (3,658) Other liabilities (current) (28,705) (23,606) (19,600) Provisions (current) Net operating assets Average net operating assets (100,478) (70,287) (51,520) 100,602 92,566 84,529 81,744 78,959 68,634 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 Manage- ment 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: Operating profit/equity in % DKK million Operating profit IFRS / Equity IFRS Operating profit/equity in % ROIC DKK million Operating profit after tax / Average net operating assets ROIC in % 2023 102,574 106,561 96.3% 2023 81,957 92,566 88.5% 2022 74,809 83,486 89.6% 2022 60,146 81,744 73.6% 2021 58,644 70,746 82.9% 2021 47,384 68,634 69.0% ROIC numerator Reconciliation of operating profit to operating profit after tax DKK million 2023 2022 2021 Operating profit IFRS 102,574 74,809 58,644 Tax on operating profit (using effective tax rate) (20,617) (14,663) (11,260) Operating profit after tax 81,957 60,146 47,384 Part of the Management review – not auditedNovo Nordisk Annual Report 2023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 within the business to fund future growth. The following table shows a reconciliation of free cash flow with net cash generated from operating activities, the most directly comparable IFRS financial measure: Cash to earnings Cash to earnings is defined as ‘free cash flow as a percentage of net profit’. Management believes that cash to earnings is an important performance metric because it measures the Group’s ability to turn earnings into cash. Since Management wants this measure to capture the ability of the Group’s operations to generate cash, free cash flow is used as the numerator instead of net cash flow. The following table shows the reconciliation of cash to earnings to cash flow from operating activities/net profit in %, the most directly comparable IFRS financial measure: 85 Free cash flow DKK million 2023 2022 2021 Cash flow from operating activities/net profit in % Net cash generated from operating activities IFRS 108,908 78,887 55,000 DKK million Net cash used in investing activities IFRS (43,892) (24,918) (31,605) Net purchase of marketable securities IFRS 4,758 2,921 5,937 Addition on marketable securities through acquisition of business IFRS Repayment on lease liabilities IFRS Free cash flow — (1,448) 68,326 Net cash generated from operating activities IFRS / Net profit IFRS Cash flow from operating activities/net profit in % 1,470 (998) 861 (874) 57,362 29,319 Cash to earnings DKK million Free cash flow / Net profit IFRS Cash to earnings 2023 2022 2021 108,908 83,683 78,887 55,525 55,000 47,757 130.1% 142.1% 115.2% 2023 68,326 83,683 81.6% 2022 57,362 55,525 103.3% 2021 29,319 47,757 61.4% Part of the Management review – not auditedNovo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 86 Statement of ESG performance for the year ended 31 December Note 2023 2022 2021 Note 2023 2022 2021 Environmental performance Energy consumption for operations (1,000 GJ) Share of renewable power for production sites Scope 1 emissions (1,000 tonnes CO2e)1 Scope 2 emissions (1,000 tonnes CO2e)1 Scope 3 emissions (1,000 tonnes CO2e)1,2 Water consumption for production sites (1,000 m3) Waste from production sites (tonnes) Breaches of environmental regulatory limit values3 Social performance Patients Patients reached with Novo Nordisk's Diabetes and Obesity care products (in millions)4 • Hereof reached via the Novo Nordisk Access to Insulin Commitment (in millions) 3,784 100% 78 15 3,738 4,150 3,677 100% 76 16 2,418 3,918 Social performance (continued) 3,387 Societies 100% Change in average net price across US product portfolio (% change to previous year) 77 16 Change in average net price across US insulin portfolio (% change to previous year) Total tax contribution (DKK million) N/A Donations and other contributions (DKK million) 3,488 Governance performance 189,091 213,505 180,806 Business ethics reviews 12 8 8 Employees trained in business ethics Number of substantiated cases reported via the Compliance Hotline Convictions for violation of anti-corruption and anti-bribery laws 41.6 2.4 36.9 1.8 34.9 1.7 Supplier audits Product recalls 7.1 7.1 7.2 7.2 7.2 7.3 7.4 7.5 8.1 8.1 Children reached through the Changing Diabetes® in Children programme (cumulative) 8.1 52,249 41,033 31,846 People and employees Year-end employees (total) Employee turnover Gender in leadership positions (ratio men:women) Gender in senior leadership positions (ratio men:women) Gender in the Board of Directors (ratio men:women) Sustainable employer score Frequency of occupational accidents (number per million working hours) 8.2 8.2 8.3 8.3 8.3 8.4 8.5 64,319 55,185 48,478 5.5% 54:46 59:41 50:50 86% 1.5 8.2% 56:44 61:39 54:46 85% 1.5 11.0% 57:43 64:36 67:33 84% 1.3 Failed inspections Facilitations of the Novo Nordisk Way Company reputation (scale 0-100) Animals purchased for research 8.6 8.6 8.7 8.8 9.1 9.1 9.2 9.2 9.3 9.4 9.5 9.6 9.7 9.8 (8.2%) (10.5%) (12.3%) (24.4%) (19.5%) (10.9%) 51,247 36,003 32,593 138 126 92 40 99% 314 — 382 2 — 42 35 99% 288 — 294 3 — 36 37 98% 236 — 253 1 — 34 82.1 82.3 82.6 56,508 79,750 47,879 1. 2023 is the first year of reporting all emission categories in CO2e. Comparative figures for scope 1, 2 and part of scope 3 emissions are measured in CO2. Refer to section 7.2 for further details. 2. 2022 was the first year of full scope 3 emissions' disclosure, which in 2021 and previously was limited to business flights and product distribution. 3. The methodology for counting number of breaches has changed in 2023. Comparative figures are adjusted accordingly. 4. 2023 is the first year of reporting Obesity as part of number of patients reached. Comparative figures are adjusted accordingly. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 87 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: 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. Materiality The 2023 consolidated ESG statement includes KPIs as guided by Novo Nordisk's ESG strategy and ongoing external stakeholder engagement. When assessing whether a KPI is material to the consolidated ESG statement, Management considers whether the matter is of such relevance and importance that it could substantially influence the assessment of Novo Nordisk's ESG performance by the users of the Annual Report 2023. • Limiting temperature increase to well below 2ºC scenario, preferably 1.5ºC, compared to pre-industrial times in accordance with the Paris Agreement. • A temperature increase of 4ºC scenario as an alternative high-emission scenario. The provisional Double Materiality Assessment described on page 12, performed at the end of 2023, will inform our ESG reporting in 2024 in accordance with the Corporate Sustainability Reporting Directive (CSRD) and will be updated regularly. Scope 1, 2 and 3 emissions have been prepared in accordance with the Greenhouse Gas (GHG) Protocol. Novo Nordisk also 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: www.cdp.net. Principles of consolidation The disclosures of energy consumption and CO2e emissions cover production sites, laboratories and offices. The disclosures of water consumption, environmental breaches and waste cover production sites. Novo Nordisk Engineering A/S is not included in our environmental reporting. 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. Responsiveness The Annual Report reflects how Novo Nordisk manages 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. For most Novo Nordisk stakeholders, the Annual Report is just one element of interaction and communication with the Company. 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 included in our reporting for Sustainable employer score, employees trained in business ethics, failed inspections and facilitations of the Novo Nordisk Way. Novo Nordisk Pharmatech A/S is not included in our reporting on employees trained in business ethics and facilitations of the Novo Nordisk Way. Changes in accounting policies and disclosures 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. The following changes to accounting policies and new KPIs have been considered in the 2023 consolidated ESG statement: Environmental performance In 2022, scope 1 emissions, scope 2 emissions and scope 3 emissions from business travel were calculated as CO2. To further align with the GHG Protocol, in 2023 these KPIs are calculated as CO2e. The remaining scope 3 emissions have been calculated as CO2e in 2022 and 2023. CO2e includes CO2 and all other greenhouse gases; for more information, please refer to section 7.2. Additionally, scope 1 emissions have been expanded to also include refrigerants. Further scope changes may occur in the future as more data becomes available. In 2023, the methodology for counting the number of breaches of regulatory limit values was changed. Breaches related to the same continued exceedance at the same site are counted as one breach for the year. Comparative figures for 2021 and 2022 have been adjusted accordingly. Please refer to section 7.5. Social performance The KPI on patients reached has been expanded to include patients reached with Novo Nordisk's Obesity care products. Comparative figures for 2021 and 2022 have been adjusted accordingly; please refer to section 8.1. New breakdowns including comparative figures for 2021 and 2022 have been included on employees by gender and by age group. Please refer to section 8.2. Governance performance New KPIs including comparative figures for 2021 and 2022 have been included on number of substantiated cases reported via the Compliance Hotline and convictions for violation of anti-corruption and anti-bribery laws. Please refer to section 9.2. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 88 Section 7 Environmental performance 7.1 Energy consumption for operations and share of renewable power for production sites Energy consumption for operations 1,000 GJ Production Office buildings and laboratories Total energy consumption 2023 3,214 570 3,784 2022 3,091 586 3,677 2021 2,859 528 3,387 In 2023, Novo Nordisk continued working with energy-saving, optimisation and stabilisation projects. This included utilising more renewable natural gas and steam, reducing propane, diesel and heavy fuel usage, and implementing new dehumidification systems. Energy-saving projects implemented in 2023 within production sites resulted in annual energy savings of 64 thousand GJ. These efforts could not fully mitigate the increased production volumes, ramp-up activities and impact from adverse local weather conditions, and consequently energy consumption for production increased by 4%. Energy consumption in office buildings and laboratories decreased by 3% due to reduced use of facilities and implementation of energy-saving measures. Since 2020, Novo Nordisk has transitioned to sourcing 100% renewable power for production through a mix of solutions, primarily Renewable Electricity Certificates (REC), Power Purchase Agreements (PPA), Guarantees of Origin (GO) as well as on- site renewable solutions. ACCOUNTING POLICIES Energy consumption for operations is measured as consumption of power, steam, heat and fuel. Fuel is mainly natural gas, wood, diesel oil, gas oil and light fuel oil. Energy consumption is based on metre 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. The market-based method is used to account for renewable power at production sites through procurement of contractual instruments such as Energy Attribute Certificates (EAC), PPAs and GOs from sources such as wind, hydro, solar and biomass. Contractual instruments are procured based on the total consumption of power in each country involved in production. 7.2 Scope 1, 2 and 3 emissions 1,000 tonnes CO2e Scope 11 • Production • Office buildings and laboratories • Company cars Scope 21 • Production • Office buildings and laboratories Scope 32 • Purchased goods and services3 • Capital goods3 • Fuel and energy related activities • Upstream transportation and distribution • Waste generated in operations • Business travel1,3 • Employee commuting • Downstream transportation and distribution • End-of-life treatment of sold products 2023 2022 2021 78 31 1 46 15 12 3 3,738 2,067 1,315 56 113 6 83 43 52 3 76 25 3 48 16 11 5 2,418 1,473 614 55 123 5 73 35 37 3 77 29 2 46 16 10 6 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Total CO2e emissions 3,831 2,510 1. Categories measured in CO2 in comparison periods. 2. The calculation of scope 3 emissions is substantially based on estimations and therefore inherently uncertain. 3. 2022 figures have been restated by adding 222, 137 and 18 thousand tonnes, respectively. In 2023, Novo Nordisk experienced increased production volumes, ramp-up activities and impact from adverse local weather conditions; however, due to energy-saving projects and renewable power initiatives, scope 1 and 2 emissions remained broadly unchanged from 2022. Scope 3 emissions increased by 55% due to substantial investments in production capacity and increase in supply chain activities to support company growth. The two categories Purchased goods and services and Capital goods account for 90% of the scope 3 emissions, and they account for 98% of the overall scope 3 emissions' increase. ACCOUNTING POLICIES Scope 1 emissions Scope 1 emissions comprise direct CO2e emissions from sources that are owned or controlled by the Novo Nordisk Group. CO2e emissions from production, office buildings and laboratories include consumption of fuel oil, propane, wood and natural gas. CO2e emissions from production sites additionally include emissions from leakage of refrigerants from cooling systems. Production sites report on refrigerant quantities when there is leakage of refrigerant over 1 kg. Associated CO2e emissions are calculated based on refrigerant quantities and their respective Global Warming Potential (GWP). CO2e emissions from company cars cover cars leased or owned by Novo Nordisk. Emissions are calculated by multiplying the CO2e emission factors from the Environmental Protection Agency (EPA) by the volumes of diesel and petrol used. Scope 2 emissions Scope 2 emissions comprise CO2e emissions from purchased electricity, heat and steam. Market-based emissions are calculated based on CO2e emission factors from the previous year. For a full overview of location-based emissions, please visit: www.cdp.net. Scope 3 emissions Novo Nordisk has identified 9 categories, out of the 15 categories of scope 3 emissions defined by the GHG protocol, as relevant. The remaining 6 categories are not separately reported on as they are either not applicable to Novo Nordisk or emissions have been included in the other emission categories. Purchased goods and services Purchased goods and services include emissions related to all spend from external suppliers, except for investment spend and travel categories, which are included in other scope 3 categories. Purchased goods and services mainly comprise of raw materials for products, marketing, packaging materials, as well as consumables for laboratory and IT office equipment. Direct spend is converted into CO2e emissions using the average data method. 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 include emissions related to all indirect investment spend from external suppliers, mainly production utilities and equipment. Indirect spend is converted into CO2e emissions via the average spend-based method using emission factors. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 89 Fuel and energy related activities Fuel and energy related activities include 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 emission 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. Upstream transportation and distribution CO2e emissions from upstream transportation and 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. 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 laboratories. Currently, waste data is available for production sites and offices, as well as laboratories within Denmark. Waste data is not available for offices and laboratories outside of Denmark, for which CO2e emissions are therefore extrapolated using the waste-type-specific method. Business travel Business travel includes CO2e emissions from business flights and other travel, such as hotel stays and taxis. CO2e emissions from business flights are estimated based on mileage and passenger class details obtained from travel agencies. These are multiplied by CO2e 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 travel spend. CO2e 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 include CO2e emissions that occur from transportation and distribution of sold products in vehicles and to 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 emissions 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. 7.3 Water consumption for production sites In 2023, production sites consumed 4,150 thousand cubic metres of water; an increase of 6% compared to 2022 due to higher production volumes and ramp up activities for capacity expansion at production sites. Other contributing factors were warmer months in 2023, hence additional water was used for cooling purposes. Additionally, a higher number of employees led to increased on-site activities and extra shifts. Production sites in France, Brazil, China, US, Iran and Algeria are located in areas of high water stress or with high seasonal variations (please refer to the CDP Water Security 2023 Reporting Guidance). These sites consume 18% of the total water for global production. Despite a significant increase in production volumes, water consumption at these facilities was kept at a 2% increase as the implementation of water conservation projects in water-stressed areas led to savings of 14 thousand cubic metres of water. ACCOUNTING POLICIES Water consumption is measured in thousand cubic metres of water and is based on metre readings and invoices. It includes drinking water, industrial water and steam water used at production sites. 7.4 Waste from production sites Tonnes Organic residues 2023 2022 2021 128,116 166,183 143,254 Other (paper, cardboard, metals, etc.) 19,019 12,820 7,990 Total recycling Ethanol waste Other (various combustible waste) Total waste with energy recovery 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 Total waste 147,135 179,003 151,244 12,521 9,390 21,911 141 1,987 2,128 7,949 9,330 17,279 638 14,913 13,232 8,007 8,239 22,920 21,471 356 827 1,183 7,379 2,114 9,493 906 5,499 1,660 7,159 N/A N/A N/A 932 189,091 213,505 180,806 In 2023, waste from production sites decreased by 11% compared to 2022 due to waste reduction initiatives, reuse of waste and implementation of zero landfill waste strategies. The amount of waste recycled decreased by 18%, primarily due to initiatives to avoid waste and efforts to transition from recycling to resource recovery. The amount of waste sent for energy recovery decreased by 4%, primarily due to optimisation projects and changes in the composition of waste, which led to a decrease in the amount of waste being sent to incineration. Less than 0.3% of the total waste was sent to landfill. In 2023, 20% of the waste was categorised as hazardous waste. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 90 ACCOUNTING POLICIES Waste is measured as the sum of all the waste disposed of at production sites based on weight receipts. Organic residues for recycling are waste from the production of the active pharmaceutical ingredients, where the energy is recovered in biogas plants and the digested slurry is used on local farmland as fertiliser. Ethanol is recovered in internal regeneration plants and re-used. Energy recovery is waste disposed of at waste-to-energy plants and at a biogas plant. Waste with no energy recovery covers water waste and other waste not suitable for other disposal methods, such as hazardous waste for incineration and various other types of waste. Section 8 Social performance 8.1 Patients reached with Novo Nordisk's Diabetes and Obesity care products 7.5 Breaches of environmental regulatory limit values Estimate in millions 2023 2022 2021 In 2023 there were 12 breaches compared to 8 in 2022. None of the breaches resulted in any correlated material negative impact on the environment. For all breaches, mitigation actions are in progress. ACCOUNTING POLICIES Breaches of regulatory limit values cover all breaches with limit values reported to the environmental authorities. Breaches related to the same continued exceedance at the same site count as one breach for the year. Patients reached with Novo Nordisk's Diabetes care products Patients reached with Novo Nordisk's Obesity care products Total number of patients reached 40.5 1.1 41.6 36.3 34.6 0.6 36.9 0.3 34.9 ACCOUNTING POLICIES The number of full-year patients reached with Novo Nordisk's Diabetes and Obesity 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 (for Diabetes) and in accordance with the dose strength of the product (for Obesity). The number of full-year patients reached with human insulin vials via the Novo Nordisk Access to Insulin Commitment is estimated by dividing Novo Nordisk's annual sales volume by the annual usage dose per patient reached via the Novo Nordisk Access to Insulin Commitment, as defined by the WHO. 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. The estimated number of full-year patients reached with Novo Nordisk's Diabetes care products increased from 36.3 million in 2022 to 40.5 million in 2023. The 12% increase was primarily driven by the GLP-1 franchise, followed by the new-generation insulin franchise and the human insulin franchise. The increase in number of full-year patients reached with Novo Nordisk's Obesity care products in 2023 was primarily driven by the continued launch of Wegovy® in new markets. 8.2 Employees Number of employees Number Year-end employees (total) In 2023, the estimated number of full-year patients with diabetes reached with Novo Nordisk's human insulin vials through the Access to Insulin Commitment was 2.4 million, compared to 1.8 million in 2022. The 33% growth through the Access to Insulin Commitment was driven by increased sales through both government and private market channels, sold at or below the USD 3 ceiling price. Novo Nordisk also sold human insulin vials at or below the ceiling price of USD 3 in countries outside the Commitment, reaching an estimated additional 2.6 million patients in 2023. This represents a total of 5 million patients with diabetes reached with human insulin at or below USD 3 per vial globally. Through the Changing Diabetes® in Children (CDIC) partnership, 52,249 children and youth were reached in total by the end of 2023, compared to 41,033 by the end of 2022. Almost half of the new enrolled children were reached through expansion in Asian countries, mainly India, Pakistan, Indonesia and Vietnam. The children receive access to diabetes care in clinics (e.g. patient education), as well as medical supplies if needed. Year-end number of full-time employees Employees by geographical area Number International Operations Denmark EMEA (Europe, the Middle East and Africa), excluding Denmark China (Mainland China, Hong Kong, Taiwan) Rest of World (all other countries) North America Operations Year-end employees (total) 2023 64,319 63,370 2023 56,004 28,692 8,808 6,485 12,019 8,315 64,319 2022 55,185 54,393 2022 47,935 22,916 7,954 6,148 10,917 7,250 2021 48,478 47,792 2021 42,372 19,150 7,530 5,833 9,859 6,106 55,185 48,478 Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 91 Employees by gender % Male Female Other Not reported Employees by age group % Under 30 years old 30-50 years old Over 50 years old 8.3 Gender diversity in leadership positions 8.4 Sustainable employer score 2023 51% 49% 0% 0% 2023 17% 64% 19% 2022 51% 49% 0% 0% 2022 15% 65% 20% 2021 51% 49% 0% 0% 2021 14% 66% 20% Ratio men:women CEO, EVP, SVP CVP, VP Director, manager, team leader Gender in leadership positions (overall) Gender in senior leadership positions Gender in the Board of Directors 2023 64:36 59:41 54:46 54:46 59:41 50:50 2022 71:29 60:40 55:45 56:44 61:39 54:46 2021 72:28 63:37 57:43 57:43 64:36 67:33 The gender diversity in leadership positions overall at Novo Nordisk meets the Danish gender diversity requirements. At the end of 2023, 46% of leadership positions were filled by women, compared to 44% at the end of 2022. Within senior leadership, 41% positions were filled by women at the end of 2023, compared to 39% at the end of 2022. This year’s employee survey revealed an increase in the already high overall engagement, bringing it to 86% favourable compared to 85% favourable in 2022. Novo Nordisk continues to score in the top quartile when benchmarked against external organisations when it comes to providing a purpose-driven workplace. Improvements were seen on most questions, with a large improvement on ‘I understand how my performance is evaluated’, which was a focus area for follow up on the 2022 survey results. Opportunities for further improvement were seen in providing equal career opportunities for all and improving following through on committed actions, based on survey results across the organisation. 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. The number of employees increased in most areas with the highest growth in EMEA, notably in Product Supply, Quality and IT. Currently, Novo Nordisk’s HR systems allow employees to select the gender they most identify with. Moving forward, Novo Nordisk is committed to increasing awareness of this self-identification option. The breakdown by age group remained stable in the last three years. 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. The employee turnover rate decreased from 8.2% in 2022 to 5.5% in 2023, with decline in almost all business areas. ACCOUNTING POLICIES The total number of employees is measured as headcount of all employees at year-end, except externals, employees on unpaid leave, interns, Bachelor's and Master's thesis employees and substitutes. All employee data is based on registrations in Novo Nordisk's HR systems. 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 employee turnover rate is measured as the number of employees, excluding temporary employees, who left the Group during the financial year, divided by the average number of employees, excluding temporary employees. Employees working for Group companies that have been disposed of are not counted as having left the Group. ACCOUNTING POLICIES Gender in leadership positions is reported as the percentage split by gender in leadership and senior 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 Health and safety In 2023, Novo Nordisk had 153 accidents with reported absence compared to 128 in 2022, which is in line with the increase in number of employees. The average lost time accident frequency was 1.5 in 2023, in line with 2022. Novo Nordisk had one work-related fatality in 2023 compared to two in 2022, due to a car accident. Novo Nordisk will continue to train and motivate employees on good road safety behaviour to reduce the risk of recurrences. In 2023, Novo Nordisk has harmonised incident reporting into one global reporting system to ensure standardised reporting and systematic prevention, specifically with focus on prevention of high-risk incidents. We offer a healthy and engaging workplace, supported by a comprehensive health and safety programme based on continuous improvements within safety, physical health, mental well-being and employee health promotion. To this end, we have implemented our Health & Safety management system across our entire global organisation. Performance is overseen by Executive management and the Board of Directors. In 2023, 13.8% of Novo Nordisk employees reported symptoms of stress, in line with 2022, and 7.1% reported symptoms of work-related physical pain, compared to 7.8% in 2022. For a full overview of Novo Nordisk's Health and safety framework and for the CEO’s statement on health and safety, please refer to: www.novonordisk.com/sustainable- business/esg-portal/social.html. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 92 8.7 Total tax contribution 8.8 Donations and other contributions ACCOUNTING POLICIES The frequency of occupational accidents is measured as the internally reported number of accidents with absence per million nominal working hours, also referred to as Lost Time Injury Frequency (LTIF). Contractors, visitors, employees on unpaid leave, interns and Bachelor's and Master's 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. DKK million Corporate income taxes paid Taxes borne Taxes collected 2023 2022 2021 25,897 6,080 31,977 19,097 18,390 Employment taxes 2,666 13,510 16,176 13,006 10,840 The percentages of employees reporting symptoms of stress and employees reporting symptoms of work-related physical pain are monitored in the annual employee survey. In the survey, stress is defined as a situation where the employee feels tense, restless, nervous or troubled, or unable to sleep at night due to thoughts about their problems. With reference to symptoms of physical pain, the employee is asked in the survey if generally their work causes them physical pain. Indirect taxes Other taxes Total 2,815 (1,035) 1,314 — 1,780 1,314 3,027 2,612 873 751 32,692 18,555 51,247 36,003 32,593 8.6 US pricing % change vs prior year US product portfolio List price change – Avg. Net price change – Avg. US insulin portfolio List price change – Avg. Net price change – Avg. 2023 2022 2021 2.8% 2.4% 1.6% (8.2%) (10.5%) (12.3%) 0.1% 0.0% 0.0% (24.4%) (19.5%) (10.9%) Novo Nordisk has a long history of making products accessible and affordable through responsible pricing practices and patient access programmes. In 2023, the average net price of both the US product portfolio and the US insulin portfolio decreased by 8.2% and 24.4%, respectively, compared to 10.5% and 19.5% in 2022, as a result of enhancements to secure formulary access for insured patients, as well as the evolution of channel and payer mix. In 2023, the total tax contribution amounted to DKK 51,247 million, split across 64% of taxes borne and 36% of taxes collected. In 2022, the split was 55% of taxes borne and 45% of taxes collected. The overall increase in total tax contribution from 2022 to 2023 is primarily related to higher corporate income taxes paid in Denmark due to an increase in the profit before tax. In addition, the corporate income tax in 2022 reflects the partial refund of tax prepayment made in 2021. Expansion of production and sales worldwide have required more employees which has increased the payment of employment taxes including social security contributions. 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 primarily consist of corporate income taxes and withholding taxes on company dividends paid during the year. Novo Nordisk has provided sales discounts and rebates amounting to 74% of US gross sales in 2023, resulting in the average annual list price across US product portfolio increasing by 2.8% and the US insulin portfolio by 0.1%. 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). ACCOUNTING POLICIES The US product portfolio is inclusive of Diabetes, Obesity and Rare Disease products. The percentage change represents a sales weighted average list and net price for the respective 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. Indirect taxes consist of non-refundable VAT, net VAT collections, customs duties, environmental taxes and property taxes. Other taxes consist of country-specific taxes not linked to one of the categories above, e.g. the US branded prescription drug fee. DKK million World Diabetes Foundation (WDF) Novo Nordisk Haemophilia Foundation (NNHF) Total donations and other contributions 2023 119 19 138 2022 93 33 126 2021 92 — 92 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 to DKK 119 million in 2023 in accordance with the donation agreement. For more information, visit: www.worlddiabetesfoundation.org. The NNHF supports programmes in low- and middle-income countries. Initiatives focus on capacity-building, diagnosis and registry, awareness and advocacy. The residual payment for the agreed donation to the NNHF for the year 2022 was made in 2023, amounting to DKK 13 million. Additionally, in 2023 Novo Nordisk paid DKK 6 million. Since 2005, the NNHF has provided funding for 311 programmes (237 projects and 74 fellowships) in 87 countries. For additional information, visit: www.nnhf.org. ACCOUNTING POLICIES Donations and other contributions by Novo Nordisk to the WDF and the NNHF are recognised when the donation or contribution is paid out. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 93 9.2 Compliance Hotline 9.4 Product recalls Section 9 Governance performance 9.1 Business ethics reviews and training In 2023, Group Internal Audit performed 40 business ethics reviews, compared to 35 in 2022, which was in line with the number of planned reviews for the year. Annual training on business ethics is mandatory for all employees, including all new hires. In 2023, 99% of employees completed and documented their training, in line with 2022. The completion and documentation rate represents the emphasis of Novo Nordisk diligently following up on employees to ensure completion of the annual training. The remaining 1% is mainly due to employees being on leave. We maintain a Compliance Hotline to enable employees, stakeholders and external parties to report potential violations of our policies or applicable laws and regulations. The Compliance Hotline is an important component of our commitment to ethical conduct and transparency. The increase in number of substantiated cases in the period from 2021 to 2023 is driven by the increased business growth, including development in number of employees. ACCOUNTING POLICIES Number of substantiated cases reported via the Compliance Hotline includes the number of cases where reported allegations of suspected misconduct have been substantiated or partially substantiated. When a case has been substantiated or partially substantiated, corrective actions are initiated. Convictions for violation of anti-corruption and anti-bribery laws include convictions where a Novo Nordisk legal entity (parent or any affiliate) has been found in violation by a court of law. 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. 9.3 Supplier audits The mandatory ethics and compliance training is based on the principles for ethics and compliance for employees working at Novo Nordisk. The training is provided in the form of globally applicable e-learning and related tests. The percentage of employees trained in business ethics is calculated as the number of employees that have completed the training divided by the total number of employees at year-end. Number 2023 2022 2021 Responsible sourcing audits Quality audits Total supplier audits 24 358 382 14 280 294 16 237 253 The 30% increase in the number of supplier audits from 2022 to 2023 reflects the general increased activity level in Novo Nordisk. Two critical findings on responsible sourcing were issued during 2023, both related to wages, benefits and working hours. Three critical findings were issued during quality audits, related to reprocessing, certificates of analysis (COAs) and cross-contamination control. Agreements regarding actions to address all critical findings have been made with the affected suppliers. Of the two critical findings issued and reported in 2022, one was addressed in the same year, and remediation for the second critical finding regarding environmental reporting was still ongoing. An agreement with the supplier has subsequently been reached during 2023. 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. In 2023, Novo Nordisk had two product recalls. In Libya, the recall was due to a labelling error on the sales carton. In Spain, the recall was due to cracked cartridges in FlexTouch® pens. ACCOUNTING POLICIES The number of product recalls is recorded as the number of times Novo Nordisk has instituted a recall, and includes recalls in connection with clinical trials. A recall can affect various countries. 9.5 Failed inspections In 2023, Novo Nordisk had not failed any inspection among those that were resolved at year-end. During 2023, 152 inspections were conducted. At year-end, 117 inspections were passed and 35 were unresolved, as final inspection reports had not been received, or the final authority’s acceptance was pending. This is normal practice. Follow-up on unresolved inspections will continue in 2024. ACCOUNTING POLICIES 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. Acquired companies inspections are defined as inspections run by the acquired company. Inspections at acquired companies run by Novo Nordisk are reported as Novo Nordisk inspections. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 94 9.6 Facilitations of the Novo Nordisk Way 9.7 Company reputation 9.8 Animals purchased for research In 2023, a total of 42 units were facilitated and approximately 2,300 employees were individually interviewed. In addition, feedback on those units was collected from approximately 550 stakeholders. Out of the 42 units, one unit was assessed not to be working in accordance with the Novo Nordisk Way, and for five units immediate actions were required, which if not taken would lead to breaches of the Novo Nordisk Way. Across all units facilitated, the accelerated growth and supply-demand challenges are the two main factors which consistently impact the organisation and drive most improvement opportunities from the facilitations conducted. The most frequent observations raised to management teams for action are associated with five out of our ten Essentials: 2) We set ambitious goals and are empowered to achieve them, 5) We build and maintain good relations with our stakeholders, 7) We focus on performance and personal development, 8) We have a healthy and engaging work environment, and 9) We strive for agility and simplicity in everything we do. ACCOUNTING POLICIES Facilitations of the Novo Nordisk Way are measured as the number of facilitations completed. A facilitation 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 the full list of the Novo Nordisk Way Essentials, please refer to page 19 in the Management review. Scale 0-100 People with diabetes People with obesity General practitioners Diabetes specialists Informed general public Total score (average) 2023 2022 2021 Number 81.4 77.9 82.9 88.9 79.6 82.1 81.3 79.4 84.0 90.3 76.3 82.3 81.5 79.4 84.8 90.3 77.1 82.6 Mice, rats and other rodents Pigs Rabbits Dogs Non-human primates Fish Other vertebrates 2023 54,410 2022 2021 63,760 35,675 608 289 356 807 36 2 427 606 146 700 759 184 114 495 14,098 10,638 13 14 Company reputation is a comprehensive approach to analysing reputational intelligence. Novo Nordisk’s excellent reputation score is driven by positive perceptions of products and services, and by growing appreciation from the informed general public. 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 is 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. Total animals purchased 56,508 79,750 47,879 The number of animals purchased for research in 2023 decreased by 29% compared to 2022. 96% of the animals purchased were rodents. The significant decrease in the number of fish and rodents in 2023 is attributable, respectively, to specific research projects using fish larvae that have been discontinued in the year, and to our continuous efforts to reduce the number of animals used for research. ACCOUNTING POLICIES Animals purchased for research comprises the number of animals purchased for all research undertaken by Novo Nordisk either in-house or by external contractors. The number of animals purchased is based on internal registration of purchased animals and yearly reports from external contractors. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 95 Statement by the Board of Directors and Executive Management The Board of Directors and Executive Management have today considered In our opinion, the Management review contains a fair review of the the Greenhouse Gas (GHG) Protocol and the reporting principles of and approved the Annual Report for Novo Nordisk A/S for the financial development of the Group’s and the parent company’s business and materiality, inclusivity, responsiveness and environmental, social and year 1 January 2023 – 31 December 2023. financial matters, the results for the year and of the parent company’s governance accounting policies. In our opinion, the consolidated ESG The consolidated financial statements are presented in accordance with included in the consolidated financial statements, together with a presentation of the organisation’s environmental, social and governance IFRS Accounting Standards as endorsed by the EU. The parent financial description of the principal risks and uncertainties that the Group performance in accordance with these principles. financial position and the financial position as a whole of the entities statement gives a true and fair account and a balanced and reasonable statements are presented in accordance with the Danish Financial and the parent company face. Statements Act. Furthermore, the Annual Report is prepared in We recommend the Annual Report for adoption at the Annual General accordance with disclosure requirements for listed companies. In our opinion, the Annual Report of Novo Nordisk A/S for the financial Meeting. year 1 January 2023 to 31 December 2023 identified as NOVO-2023-12- In our opinion, the consolidated financial statements and the parent 31-en.zip is prepared, in all material respects, in compliance with the Bagsværd, 31 January 2024 financial statements give a true and fair view of the Group’s and the ESEF Regulation. parent company’s financial position at 31 December 2023, as well as of the results of their operations and cash flows for the financial year The consolidated ESG statement for 1 January – 31 December 2023 has 1 January 2023 - 31 December 2023. been prepared in accordance with the Danish Financial Statements Act, Registered Executive Management Board of Directors Lars Fruergaard Jørgensen Karsten Munk Knudsen President and CEO CFO Helge Lund Chair Henrik Poulsen Vice Chair Elisabeth Dahl Christensen Laurence Debroux Andreas Fibig Sylvie Grégoire Liselotte Hyveled Mette Bøjer Jensen Kasim Kutay Christina Law Martin Mackay Thomas Rantzau Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 96 Independent Auditor’s Report To stakeholders 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 2023 – 31 December 2023, which comprise the income statement, balance sheet, equity statement and notes, including a summary of material accounting policy information, 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 IFRS Accounting 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 2023, and of the results of its operations and cash flows for the financial year 1 January 2023 – 31 December 2023 in accordance with IFRS Accounting 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 2023, and of the results of its operations for the financial year 1 January 2023 – 31 December 2023 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. We have been reappointed annually by decision of the general meeting for a total continuous engagement period of three years up to and including the financial year 2023. 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 2023 – 31 December 2023. 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 How our audit addressed the key audit matter US sales rebates 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. 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. 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. We evaluated Management’s ability to estimate sales rebates accurately by considering the historical accuracy of the estimates in prior year. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 97 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 by the Danish Financial Statements Act and article 8 of Regulation (EU) 2020/852 (EU Taxonomy Regulation). 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 and article 8 of Regulation (EU) 2020/852 (EU Taxonomy Regulation). 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 IFRS Accounting Standards as endorsed by the EU and additional requirements of the Danish Financial Statements Act as well as the preparation of parent financial statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of consolidated financial statements and parent financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements and the parent financial statements, Management is responsible for assessing the Group’s and the Parent’s ability to continue as a going concern, for disclosing, as applicable, matters related to going concern, and for using the going concern basis of accounting in preparing the consolidated financial statements and the parent financial statements unless Management either intends to liquidate the Group or the Entity or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements and the parent financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements and these parent financial statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements and the parent financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Parent’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. 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; • Ensuring consistency between iXBRL tagged data and the consolidated financial statements • Conclude on the appropriateness of Management’s use of the going concern basis of presented in human readable format; and 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. • 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 • Obtain sufficient appropriate audit evidence regarding the financial information of the entities over the tagging process; or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and, where applicable, safeguards put in place and measures taken to eliminate threats. • Evaluating the completeness of the iXBRL tagging of the consolidated financial statements including notes; • Evaluating the appropriateness of the Company’s use of iXBRL elements selected from the ESEF taxonomy and the creation of extension elements where no suitable element in the ESEF taxonomy has been identified; • Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and • Reconciling the iXBRL tagged data with the audited consolidated financial statements. In our opinion, the annual report of Novo Nordisk A/S for the financial year 1 January to 31 December 2023 with the file name NOVO-2023-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. 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. Copenhagen, 31 January 2024 Deloitte Statsautoriseret Revisionspartnerselskab Business Registration No 33 96 35 56 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 2023 to 31 December 2023 with the file name NOVO-2023-12-31-en.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation), which includes requirements Anders Vad Dons State-Authorised Public Accountant mne25299 Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 98 Independent Auditor’s Assurance Report on the ESG statement To stakeholders of Novo Nordisk A/S Novo Nordisk A/S engaged us to provide limited assurance on the consolidated ESG statement (‘the ESG statement’) for the period 1 January – 31 December 2023, presented on pages 86 to 94 in the Annual Report 2023 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 it is free from material misstatement, whether due to fraud or error. Furthermore, Management is responsible for establishing objective accounting policies for the preparation of the ESG statement, 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 Basis for preparation and the ESG accounting policies; • forming an independent conclusion, based on the procedures we performed and the evidence we obtained; and • reporting our conclusion to the 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. 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 outlined 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 86 to 94 in the consolidated ESG statement for the period 1 January – 31 December 2023, have been prepared, in all material respects, in accordance with the Basis of preparation and the ESG accounting policies. Copenhagen, 31 January 2024 Deloitte Statsautoriseret Revisionspartnerselskab Business Registration No. 33 96 35 56 Anders Vad Dons State-Authorised Public Accountant mne25299 Mads Stærdahl Rosenfeldt ESG Partner Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 99 Additional information 100 More information 101 Product overview 102 ESG initiatives 104 Sustainability frameworks and performance Once considered the best mountain biker in Spain, David Lozano (right) was dropped from his professional contract after being diagnosed with type 1 diabetes. Determined to continue his career, David connected with Team Novo Nordisk, the world’s only all-diabetes professional cycling team. His transition to road biking has been full of personal triumphs, and his involvement in the team led his father – also diagnosed with type 1 diabetes – to take a more active role in managing the disease. David is pictured here with his teammate Matyas Kopecky. Watch Team Novo Nordisk’s documentary here Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 100 More information Additional reporting Novo Nordisk provides additional disclosure to satisfy legal requirements Form 20-F The Form 20-F is filed using a standardised reporting form so that Disclaimer The patients, employees and relatives portrayed in this Annual Report and stakeholder interests. Supplementary reports can be downloaded at: investors can evaluate the company alongside US domestic equities. and ancillary reports have participated of their own accord and solely to www.novonordisk.com/annualreport, while additional information can It is an annual reporting requirement by the US Securities and Exchange express their own personal opinions on topics referred to, which do not be found at: www.novonordisk.com. Commission (SEC) for foreign private issuers with equity shares listed on necessarily reflect the views and opinions of Novo Nordisk. Use of the Materiality Novo Nordisk relies on the International Integrated Reporting Council’s definition of materiality. Information deemed material for exchanges in the United States. pictures as illustrations is in no way intended to associate the patients, employees or relatives with the promotion of any Novo Nordisk Corporate Governance Report The Corporate Governance Report discloses Novo Nordisk’s compliance products. providers of financial capital in their decision-making is included in with corporate governance to meet the requirements of the Danish the Annual Report, i.e. it being of such relevance and importance that Financial Statements Act. it could substantively influence their assessments of Novo Nordisk’s Credits Design and production: Kontrapunkt. Illustrations: Kontrapunkt. ability to create value over the short, medium and long term. See how Novo Nordisk determines materiality and material issues at: Remuneration Report The Remuneration Report describes the remuneration awarded or due Photography: Carlos Rossini, Helen Orr, Jesper Edvarsen, Jesper Westley, Junpei Ono, Kelly Mailloux, Martin Nordmark, Marie Hald, Mauricio www.novonordisk.com. during 2023 to members of the Board and Executive Management Ramos, Thomas Fink. registered with the Danish Business Authority in accordance with section Annual Report This Annual Report is Novo Nordisk’s full statutory Annual Report pursuant 139b of the Danish Companies Act. The Remuneration Report is submitted to the Annual General Meeting for an advisory vote. to Section 149(1) of the Danish Financial Statements Act. The statutory Annual Report will be presented and adopted at the Annual General Meeting on 21 March 2024 and will subsequently be submitted to and be available References Throughout the Management review section in this report, links are at the Danish Business Authority. The consolidated financial statements provided to online sources for additional information. Some of the included in this Annual Report have been prepared in accordance with IFRS references are not mandatory and hence not included in the audit Accounting Standards (IFRS) as issued by the International Accounting of the Management review. For more news from Novo Nordisk, please Standards Board (IASB) and in accordance with IFRS Accounting Standards visit: www.novonordisk.com/investors.html and www.novonordisk.com/ endorsed by the EU and further requirements in the Danish Financial news-and-media/latest-news.html. Statements Act. Moreover, it meets the requirements of an integrated report, as per the International Integrated Reporting Framework. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 101 Product overview1 New-generation insulin and combinations Durable delivery systems • Tresiba®, insulin degludec • Ryzodeg®, insulin degludec/insulin aspart • Fiasp®, fast-acting insulin aspart • Xultophy®2, insulin degludec/liraglutide Modern insulin • Levemir®, insulin detemir • NovoRapid®3, insulin aspart • NovoMix® 30, biphasic insulin aspart • NovoMix® 50, biphasic insulin aspart • NovoMix® 70, biphasic insulin aspart4 Human insulin • Insulatard® isophane (NPH) insulin • Actrapid®, regular human insulin • Mixtard® 30, biphasic human insulin • Mixtard® 40, biphasic human insulin4 • 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®, FlexTouch® • NovoPen® 6 • NovoPen® 5 • NovoPen® 4 • NovoPen Echo® Plus • NovoPen Echo® Other delivery systems • PumpCart®, NovoRapid® and Fiasp® cartridge to be used in pump • Penfill® cartridge • Mallya® Oral antidiabetic agents • NovoNorm®, repaglinide Glucagon • GlucaGen®, glucagon (vial and Hypokit®) • Zegalogue®, dasiglucagon Needles • NovoFine® Plus • NovoFine® • NovoTwist® • NovoFine® AutoCover® Glucagon-like peptide-1 • Saxenda®, liraglutide 3.0 mg • Wegovy®, semaglutide 2.4 mg Obesity delivery systems • Saxenda®, FlexTouch® • Wegovy® Single Dose Device and FlexTouch® Rare blood disorders • NovoSeven®, eptacog alfa (recombinant activated factor VII) • NovoEight®5, turoctocog alfa (recombinant factor VIII) • NovoThirteen®, catridecacog (recombinant factor XIII) • Refixia®6, nonacog beta pegol, N9-GP (recombinant factor IX) • Esperoct®, turoctocog alfa pegol, N8-GP (recombinant factor VIII) • Alhemo®, concizumab (anti-TFPI) Rare endocrine disorders • Norditropin®, somatropin (rDNA origin) • Sogroya®, somapacitan (rDNA origin) Pre-filled human growth hormone delivery systems • FlexPro® • NordiFlex® Other delivery systems • PenMate®, automatic needle inserter for NordiFlex® Hormone replacement therapies • Vagifem®7, estradiol hemihydrate • Activelle®, estradiol/norethisterone acetate • Kliogest®, estradiol/norethisterone acetate • Novofem®, estradiol/norethisterone acetate • Trisequens®, estradiol/norethisterone acetate • Estrofem®, estradiol 1. Products listed may not be available in all markets. 2. In the US approved under the brand name Xultophy® 100/3.6. 3. In the US called NovoLog®. 4. The global discontinuation of NovoMix® 70 and Mixtard® 40 has been communicated. 5. In the US written Novoeight®. 6. In the US approved under the name of REBINYN®. 7. In the UK also called gina®. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 102 ESG initiatives We recognise the need to operate with proper regard to our impact on society and the environment. This table compiles some of our most significant initiatives within ESG. Agenda Name Description Reach Ambition 2023 Progress CO2e emissions Purchasing renewable energy Range of solutions helping us move towards 100% renewable energy supply. This includes Renewable Electricity Certificates (REC), Power Purchase Agreements (PPA) and on-site renewable energy solutions. Global Achieve zero CO2e emissions from operations by 2030. Minimising air transportation impact Three-fold approach to reduce CO2e emissions associated to air transportation. This includes limiting business flights, reducing air freight of our products and purchasing Sustainable Aviation Fuel (SAF). Global Achieve zero CO2e emissions from transportation by 2030. Across Novo Nordisk, 63.2% of the energy sourced and 99.5% of the power sourced this year was renewable. At production sites, 61.3% of the energy sourced and 100% of the power sourced was renewable. We reduced CO2e emissions associated to air transportation by 32%. We entered into the Sustainable Aviation Buyers Alliance (SABA) to purchase SAF, hereby securing significant investment and scalability in SAF solutions. Decarbonising supply chains Holistic effort to decarbonise our supply chain, with over 90% of CO2e emissions coming from suppliers, by identifying and implementing levers within high-impact scope 3 categories. Global Set an absolute, near-term scope 3 reduction target by the end of 2024. We started an in-depth supplier engagement programme and roadmap development. This will continue throughout 2024. Sustainable Markets Initiative (SMI) Public-private partnership, involving CEOs and leaders from healthcare organisations, that aims to decarbonise healthcare systems by reducing emissions from supply chains, patient care pathways and clinical trials. Global Address 3.5 million tonnes of CO2e per year across more than 100 of the members’ largest pharmaceutical suppliers. The SMI private sector CEOs launched joint, minimum environmental targets for suppliers. Plastic Converting to reusable devices Efforts to move away from single-use devices and convert into reusable devices that have a longer lifespan. While Novo Nordisk has manufactured reusable devices for almost 30 years, we intend to prioritise this conversion going forward. NWE1, AU2, CN3, CA4 Build on this year's conversions to raise the ambition level for 2024 and beyond. We increased our efforts to shift more patients towards reusable devices in Region North West Europe, Australia, China and Canada. Finding fossil-free plastic alternatives Efforts to find viable, lower-carbon alternatives to fossil-based plastic, which is present in the hundreds of millions of pens we produce every year. Global Replace plastic in our products with fossil-free alternatives. We announced a partnership with the LEGO Group to buy e-methanol from European Energy and use it as a lower-carbon alternative to conventional plastics. Production of the resulting plastic is expected for 2025. Recycling injection devices Take-back scheme tasked with recycling injection pens. This includes pilot programmes in a number of countries, and the world's first industry pilot in Denmark, in collaboration with Lilly, Sanofi and Merck. DK5, UK6, BR7, FR8 Collect 25% of the injection pens in Denmark within the industry pilot’s first year, and achieve an 85% recycling rate by the end of 2024. We launched the world’s first industry pilot in Denmark and are currently achieving a 50% recycling rate of the materials in the returned injection pens. Access and affordability Access to Insulin Commitment Commitment to provide human insulin at a ceiling price of USD 3 per vial to governments and public tenders in 77 LMIC9, as well as USD 2 per vial to selected humanitarian organisations and NGOs. LMIC Secure access to affordable insulin to significantly more people living with diabetes in LMIC. An estimated 2.4 million people accessed care under this commitment. Changing Diabetes® in Children Public-private partnership providing comprehensive care for children and young people living with type 1 diabetes in LMIC. This includes free life-saving medicine and supplies for those up to 25 years old. Thermostable insulin Cross-functional initiative that challenges and re-evaluates the thermal stability of short- and intermediate-acting human insulin products. These are widely used in LMIC and humanitarian settings, where people with diabetes, and without access to stable cooling options, can benefit from revised storage guidance. 29 countries across AF10, ME11, AS12, SA13 LMIC Reach 100,000 vulnerable children and young people living with type 1 diabetes by 2030. So far, we have reached 52,249 children and young people, trained 25,314 healthcare professionals and refurbished 406 clinics. Reach national approvals in the 72 countries considered for revised storage conditions. So far, we have 29 national approvals for more flexible storage conditions. iCARE Integrated business model, driven by our regional affiliate, that uses partnerships across sub-Saharan Africa to improve access to diabetes care. It does so by establishing and strengthening four building blocks of diabetes management: capacity, affordability, reach and empowerment. Sub-Saharan Africa Secure access to diabetes care for vulnerable patients. We reached 433 thousand people with diabetes and trained 3,523 healthcare professionals. Africa for Africa Commitment to significantly increase availability of insulin to people with diabetes on the African continent. It focuses on local production, and will both reduce the environmental footprint from transportation and support creation of local jobs. Africa Produce more than 60 million vials by 2026. We announced a partnership with South African-based pharmaceutical manufacturer Aspen Pharmacare to increase the production of insulin for the African continent. Partnering for Change Collaboration between the International Committee of the Red Cross (ICRC), the Danish Red Cross and Novo Nordisk investigating better approaches to care for people living with non-communicable diseases (NCDs) in humanitarian crises. LB14, IQ15 Publish nine peer-reviewed articles on NCD care in humanitarian crises. Six peer-reviewed articles were published, four are under review and an additional two are in the pipeline. 1. NWE: North West Europe. 2. AU: Australia. 3. CN: China. 4. CA: Canada. 5. DK: Denmark. 6. UK: United Kingdom. 7. BR: Brazil. 8. FR: France. 9. LMIC: Low- and middle-income countries. 10. AF: Africa. 11. ME: Middle East. 12. AS: Asia. 13. SA: South America. 14. LB: Lebanon. 15. IQ: Iraq. Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 103 ESG initiatives (continued) Agenda Name Description Reach Ambition 2023 Progress Access and affordability (continued) MyInsulinRxTM Programme allowing eligible patients to obtain a monthly supply of any combination of Novo Nordisk insulin products (up to three vials or two packs of pens) for USD 35. Patient Assistance Program Programme offering 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. Immediate Supply Program Programme providing a free, one-time, short-term 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 Offers Offers reducing the cost for commercially insured patients who are exposed to higher than average copays. US16 US US US Provide access to affordable insulin to those in need in the US. We replaced My99Insulin with MyInsulinRxTM, reducing the out of pocket cost for patients from USD 99 to 35. Provide access to affordable diabetes medication to those in need in the US. We provided free insulin to 63 thousand people and free GLP-1-based medicines to 162 thousand people. Provide access to affordable insulin to those in need in the US. Nine thousand patients had access to this programme, and we provided education on availability of our affordability offerings. Provide access to affordable diabetes medication to those in need in the US. We provided USD 169 million in copay assistance for insulin and USD 599 million in copay assistance for GLP-1-based medicines. Prevention Cities Changing Diabetes Programme bringing together a network of 47 city-based public-private partnerships that aim to prevent obesity and type 2 diabetes in vulnerable populations and children. Global Promote health equity, expand prevention efforts and address barriers to health for vulnerable populations and children. Over 50 research studies were conducted, more than 250 local partnerships were created or strengthened, and over 85 local interventions on diabetes and obesity were initiated. Partnership with UNICEF Collaboration aiming to prevent childhood obesity across Latin America and Asia Pacific. It uses policies, programmes and practices to directly impact the nutrition, wellbeing and development of children. MX17, CO18, BR, ID19 Directly impact at least 10 million children through programmatic activities by 2026. So far, the partnership has benefitted more than 2.7 million children and caregivers across Latin America and the Caribbean through direct programmatic reach. Diversity and inclusion Global parental leave policy Policy offering a minimum of eight weeks of paid leave within the first year of becoming a parent to all non-birthing parents globally, regardless of gender. Global Ensure that all employees get the opportunity to bond with their child. Employees worldwide continue to benefit from our enhanced parental leave policy. Global inclusion index Numerical indicator, included in our annual employee engagement survey, of how employees rate the state of inclusion in Novo Nordisk. It includes four statements covering psychological safety, equal opportunity, sense of belonging and valuing of diverse perspectives. Global Sustain progress on the state of inclusion in Novo Nordisk. Of the more than 47,000 employees who completed the survey, 82% rated the inclusion statements favourable, compared to 78% in 2021 and 82% in 2022. Yearly equal pay reviews Equal pay reviews conducted on a yearly basis and followed by corrective actions for confirmed equal pay risk cases. Global, excluding US Mitigate bias in pay processes and decisions. Out of the more than 49,000 positions covered in the pay review, we identified 0.6% with an equal pay gap and we are taking corrective actions. Gender diversity targets Two aspirational gender diversity targets that accelerate progress towards balanced gender representation and ensure leadership accountability. Global Achieve a balanced gender representation across all managerial levels and a minimum of 45% women and 45% men in senior leadership positions by the end of 2025. By end of year, 46% of all leaders were women, and 41% of leaders in senior leadership positions were women, compared to 44% and 39%, respectively, at the end of 2022. Company culture Novo Nordisk Way Facilitation Collaborative assessment that a team of facilitators performs with selected units to evaluate their compliance with the Novo Nordisk Way. Global Assess all high-risk units yearly. 42 units were assessed, one of which was deemed to not be working in accordance with the Novo Nordisk Way. The most frequent findings raised to management teams relate to ambition, empowerment, stakeholder relations, simplicity or agility. Ethics and compliance Global Ethics and Compliance Framework The Novo Nordisk Way, our OneCode and international and local standards for responsible business conduct set the foundation for ethics and compliance in Novo Nordisk. This covers anti-fraud, anti-bribery, anti-off-label promotion, transparency in dealing with healthcare professionals and organisations, protection of personal data and respect to human rights. Global Ensure that all Novo Nordisk employees act with integrity and in compliance with the ethics and compliance framework. We launched OneCode, which sets expectations and guides all Novo Nordisk employees on how we act as a company and individuals. Annual Ethics and Compliance Training Ethics and compliance training conducted on an annual basis and mandatory for all employees, including all new hires. Global Train all Novo Nordisk employees annually in ethics and compliance. 99% of all employees completed and documented their training, with the remaining 1% missing mainly due to employees being on leave. Business Ethics Reviews Business ethics reviews performed by Group Internal Audit (GIA) in subsidiaries, production sites, vendors and headquarters to assess the level of ethics and compliance in Novo Nordisk. Global Complete 45 business ethics reviews in 2024. 40 business ethics reviews were completed, compared to 35 reviews in 2022. Consolidated conclusions were reported to Executive Management and the Audit Committee. GIA assessed that the level of ethics and compliance in Novo Nordisk is sound. 16. US: United States. 17. MX: Mexico. 18. CO: Colombia. 19. ID: Indonesia. Novo Nordisk Annual Report 2023Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 104 Sustainability frameworks and performance We strive to follow and adhere to international standards, recommendations and commitments set by globally recognised entities. We are also regularly assessed by independent organisations on our ESG performance. This table compiles some of the most relevant standards, recommendations and commitments we adhere to, as well as assessments we receive. Agenda Name Type Description Scale Result Comment Value Reporting Foundation (VRF) Standard The VRF (previously known as Sustainability Accounting Standards Board, and now part of the IFRS Foundation) enables organisations to provide industry-based disclosures on sustainability risks and opportunities affecting cash flows, access to finance or cost of capital in short, medium or long term. N/A N/A Novo Nordisk reports on VRF in alignment with the ‘Biotechnology & Pharmaceuticals’ standard. We are fully or partially aligned with all the 25 indicators required by VRF. UN Sustainable Development Goals (UN SDGs) Commitment The UN SDGs are a set of 17 goals and 169 targets designed to achieve a sustainable future by 2030. The goals cover a range of issues, including poverty, inequality, climate change and environmental sustainability. N/A N/A UN Global Compact (UNGC) Ten Principles Commitment The UNGC requires companies to align strategies and operations with universal principles on human rights, labour, environment and anti-corruption, and to take actions that advance societal goals. N/A N/A Morgan Stanley Capital International (MSCI) ESG Ratings Assessment The MSCI ESG Ratings measure an organisation's resilience to financially material ESG risks. They assess how companies manage risks compared to their peers, using a customised methodology to identify industry leaders and laggards. CCC-AAA AAA Novo Nordisk uses SDGs to step up sustainability, drive zero environmental impact by 2030 and improve healthcare for more people. The priority SDGs are Goal 3 (Good health and wellbeing) and Goal 12 (Responsible consumption and production). Novo Nordisk is committed to UNGC principles and has been an active participant since 2002. We submit the ‘Communication on Progress’ focusing on governance, human rights, labour, environment and anti-corruption on an annual basis. Novo Nordisk maintained an AAA leadership ESG rating in line with the past six years, and is among the top 5% of pharmaceutical peers, which comprises 267 companies. Sustainalytics ESG Risk Ratings Assessment The Sustainalytics ESG Risk Ratings measure an organisation's exposure to industry-specific, material ESG risks as well as risk management. Sustainalytics ESG Risk Ratings assess the ESG performance of more than 16,000 companies. >40-0 23.1 Novo Nordisk ranked among the top 15% of the pharmaceutical industry group, with a ranking of 139 out of 912, incurring an ESG risk rating of 23.1 (medium risk). Sustainalytics ESG Risk Ratings range from severe (>40) to negligible (0-10) risk. Standard & Poor's (S&P) Scores Assessment The S&P Global ESG Score measures ESG performance via disclosures, media analysis, modelling approaches and company engagement. The S&P Corporate Sustainability Assessment (CSA) Score is the ESG Score without utilising modelling approaches. 0-100 59 in ESG Score 53 in CSA Score Novo Nordisk ranked in the 91st percentile within the pharma peer group with an ESG score of 59 and a CSA score of 53. Corporate Knights Global 100 Assessment The Corporate Knights 19th annual ranking of the world’s 100 most sustainable corporations is based on an assessment of over 6,000 public companies with revenue over USD 1 billion. 100-1 53 Novo Nordisk ranked 1st within Denmark in the ‘Pharmaceutical & Biotech Manufacturing Peer Group’, 2nd in the healthcare sector globally and 53rd in the overall rank. Taskforce on Climate-related Financial Disclosures (TCFD) Standard The TCFD establishes recommendations for disclosing comparable and consistent information on climate-related aspects across organisations. TCFD is specifically focused on climate governance, strategy, risk management and setting of metrics and targets. N/A N/A Science Based Targets initiative (SBTi) Standard The SBTi defines best practice in emissions reduction and net zero targets aligned with climate sciences. It also independently assesses and approves companies’ targets in accordance with its strict criteria. N/A N/A Novo Nordisk integrates TCFD-recommended scenarios into its risk management: limiting temperature increase below 2ºC, preferably 1.5ºC as per the Paris Agreement, and a 4ºC increase scenario as high-emission alternative. We have assessed production sites on these scenarios and intend to assess the entire supply chain going forward. Novo Nordisk has an approved near-term 2030 target in line with the 1.5 °C requirement from SBTi. Additionally, Novo Nordisk is committed to achieving net zero emissions by 2045, with an aim to be aligned with SBTi’s net zero requirements. Carbon Disclosure Project (CDP) Scores Assessment The CDP measures environmental performance through three disclosure stages: awareness, management and leadership. The CDP Scores incentivise companies to measure and manage environmental impacts via climate change and water security questionnaires. D- to A A in CDP Climate A- in CDP Water 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. Scores for the 2023 CDP Climate & Water will be available at: www.cdp.net in February 2024. UN Guiding Principles on Business and Human Rights (UNGPs) Commitment The UNGPs comprise of guidelines for states and companies to prevent, address and remedy adverse impacts on human rights in their business operations. N/A N/A In accordance with the UNGPs, Novo Nordisk commits to the responsibility to respect human rights throughout own operations and value chains, as elaborated in our Human Rights Commitment. In adherence with the UN Guiding Principles Reporting Framework, Novo Nordisk annually publishes a Human Rights Report which outlines our latest work towards meeting this responsibility. Please refer to: www.novonordisk.com/sustainable-business/esg-portal/social.html. Access To Medicine Foundation (ATMI) Score Assessment The ATMI evaluates 20 of the world’s largest pharmaceutical companies on their performance on priority access-to-medicine topics. Companies are assessed based on research and development, governance of access and product delivery. 0-5 2.97 In 2022, 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. ATMI will release updated ranking for top 20 companies in 2024. World Economic Forum (WEF) ‘Good Work Framework’ Standard The WEF ‘Good Work Framework’ sets out five objectives and goals: promote fair pay and social justice; provide flexibility and protection; deliver on health and well-being; drive diversity, equity and inclusion; foster employability and learning culture. N/A N/A Novo Nordisk published a WEF ‘Good Work Framework’ case study in March 2023 titled ‘Making Inclusivity a Reality’. It featured work practices and aspirational targets in D&I. OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD Guidelines) Recommendation The OECD Guidelines are government-backed recommendations on responsible business conduct with the purpose of fostering business contribution to sustainable development and addressing adverse impacts on people, planet and society that stem from business activities. N/A N/A Novo Nordisk adheres to the OECD Guidelines on a corporate level as part of our commitment to ethical business conduct. We set expectations in line with the OECD Guidelines towards Novo Nordisk suppliers by integrating the OECD Guidelines to our Responsible Sourcing Standards. Novo Nordisk Annual Report 2023Financial statements of the parent company 2023 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. 105 Balance sheet At 31 December Note 2023 2022 DKK million Note 2023 2022 DKK million Note 2023 2022 Income statement For the year ended 31 December DKK million Net sales Cost of goods sold Gross profit Sales and distribution costs Research and development costs Administrative costs Other operating income and expenses Operating profit Profit in subsidiaries, net of tax Financial income Financial expenses 2 3 3 3 3 8 4 4 198,078 142,656 Assets (38,433) (31,060) Intangible assets 159,645 111,596 Property, plant and equipment (42,291) (37,476) Financial assets (28,731) (19,209) Other receivables and prepayments 6 7 8 9 28,755 53,822 87,543 1,238 (2,002) (2,135) Total non-current assets 171,358 132,302 1,315 87,936 15,973 3,636 1,012 Raw materials 53,788 Work in progress 19,238 Finished goods 567 Inventories (4,581) (6,280) Trade receivables 8,415 5,659 16,211 13,657 4,311 2,975 28,937 22,291 2,348 1,877 Profit before income taxes 102,964 67,313 Amounts owed by affiliated companies 30,398 18,192 Income taxes Net profit (19,557) (11,975) Tax receivables 8 83,407 55,338 Other receivables and prepayments 9 5,494 Receivables Marketable securities 38,248 15,838 Derivative financial instruments 11 2,344 Cash at bank Total current assets Total assets Equity and liabilities 19,449 Share capital 10 451 456 34,547 Net revaluation reserve 78,306 Development costs reserve — Reserve for cash flow hedges and exchange rate adjustments Retained earnings Total equity Borrowings Deferred income tax liabilities Other provisions Total non-current liabilities Borrowings Derivative financial instruments Trade payables 24,696 17,785 1,756 1,524 1,594 77,185 105,682 16,855 6,282 1,280 1,045 62,091 82,901 21,199 2,967 1,303 24,417 25,469 5,072 1,272 6,778 169 2,903 4,782 12 5 13 12 11 7 3,185 23,261 10,921 2,727 9,795 68,995 10,623 95,990 267,348 201,297 Amounts owed to affiliated companies 108,865 74,059 Tax payables Other liabilities Total current liabilities Total liabilities Total equity and liabilities 3,046 12,216 3,115 7,899 137,249 92,927 161,666 118,396 267,348 201,297 Financial statements of the parent companyNovo Nordisk Annual Report 2023Equity statement DKK million Share capital Net revaluation reserve Reserve for cash flow hedges and exchange rate adjustments Development costs reserve Retained earnings 2023 2022 Refer to note 4.3 in the consolidated financial statements for details on the number of shares, treasury shares and total number of A and B shares in Novo Nordisk A/S. Balance at the beginning of the year 456 17,785 1,045 1,524 62,091 82,901 70,469 106 Appropriated from net profit Appropriated from net profit to net revaluation reserve Exchange rate adjustments of investments in subsidiaries 8,304 (1,393) Realisation of previously deferred (gains)/losses on cash flow hedges Deferred gains/(losses) on cash flow hedges incurred during the period (998) 1,547 Development costs Other adjustments Transactions with owners: Total dividend for the year Interim dividends paid during the year Dividends paid for prior year Reduction of the B share capital Purchase of treasury shares Share-based payments (note 3) Tax related to restricted stock units Balance at the end of the year Proposed appropriation of net profit: Interim dividend for the year Final dividend for the year Appropriated to net revaluation reserve Transferred to retained earnings Distribution of net profit 33,116 33,116 8,304 (1,393) (998) 1,547 — 1,284 232 (232) 1,284 41,987 41,987 (13,430) (13,430) 29,532 (2,144) 2,291 1,610 998 — 976 27,950 (9,613) (18,337) (18,337) (15,690) 5 — — (29,924) (29,924) (24,086) 562 63 562 63 433 175 (5) 451 24,696 1,594 1,756 77,185 105,682 82,901 13,430 28,557 8,304 33,116 83,407 9,613 18,337 (2,144) 29,532 55,338 Financial statements of the parent companyNovo Nordisk Annual Report 2023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 107 2023 2022 19,525 14,656 562 1,709 301 1,039 23,136 23,754 26,111 433 1,281 247 629 17,246 19,201 20,926 2023 2022 Other employee costs Total employee costs 197,969 142,413 Average number of full-time employees 109 243 Year-end number of full-time employees For information regarding remuneration to the Board of Directors and Executive Management, refer to note 2.4 to the consolidated financial statements. 198,078 142,656 124,860 79,953 40,038 12,800 20,380 32,789 14,412 15,502 198,078 142,656 Sales are attributed to a geographical segment based on location of the customer. For definitions of segments, 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. 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. 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, refer to the consolidated financial statements. No separate statement of cash flows has been prepared for the parent company; refer to the statement of cash flows for the Group. Supplementary accounting policies for the parent company Intangible assets Goodwill recognised in subsidiaries is amortised over 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 method 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. 2 Sales DKK million Sales by business segment Diabetes and Obesity care Rare disease Total sales Sales by geographical segment North America Operations International Operations: EMEA China Rest of World Total sales Financial statements of the parent companyNovo Nordisk Annual Report 2023108 Intellectual property rights Software and other intangibles 20,167 11,347 — 31,514 2,672 840 1,499 — 5,011 26,503 3,653 490 — 4,143 1,699 171 21 — 1,891 2,252 2023 23,820 11,837 — 35,657 4,371 1,011 1,520 — 6,902 28,755 2022 12,572 11,399 (151) 23,820 3,462 810 250 (151) 4,371 19,449 Intangible assets primarily relate to intellectual property rights, internally developed software and costs related to major IT projects. Intangible assets which are not yet available for use amount to DKK 19,993 million (DKK 10,007 million in 2022). 365 170 — — — 32 Cost at the beginning of the year Additions during the year Disposals during the year Cost at the end of the year Amortisation at the beginning of the year Amortisation during the year 567 Impairment losses for the year 1,150 Amortisation and impairment losses reversed on disposals during the year 4 Amortisation at the end of the year Carrying amount at the end of the year 4 Financial income and financial expenses 6 Intangible assets DKK million 2023 2022 DKK million Interest income relating to subsidiaries Interest income relating to external counterparties Foreign exchange gain (net) Financial gain from forward contracts (net) Capital gain from marketable securities 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 5 Deferred income tax assets/(liabilities) 487 936 772 1,263 144 34 3,636 4,225 38 — — — 318 4,581 2,705 1,659 463 299 6,280 DKK million 2023 2022 Net deferred tax asset/(liability) at the beginning of the year Income/(charge) to the income statement Income/(charge) to equity Net deferred tax asset/(liability) at the end of the year (2,967) (2,797) (518) 228 (2,629) (566) (6,282) (2,967) The Danish corporate tax rate is 22% in 2023 (22% in 2022). Financial statements of the parent companyNovo Nordisk Annual Report 2023109 7 Property, plant and equipment DKK million Cost at the beginning of the year Additions during the year Disposals during the year Transfer from/(to) other items 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 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 Land and buildings Plant and machinery Other equipment Assets under construction 2023 23,801 25,384 4,489 12,018 65,692 822 (330) 597 219 (849) 800 24,890 25,554 11,328 16,918 1,142 1,180 5 (326) 67 (855) 12,149 17,310 12,741 8,244 1,011 — 150 (266) 509 4,882 2,899 426 21 (276) 3,070 1,812 72 21,229 22,420 (316) (1,761) (1,906) — 31,025 86,351 — — 316 31,145 2,748 409 (316) (1,773) — 32,529 31,025 53,822 — 1,083 2022 55,995 10,223 (526) — 65,692 28,988 2,597 36 (476) 31,145 34,547 580 Leased property, plant and equipment primarily relates to lease of office buildings, warehouses, laboratories and vehicles. Financial statements of the parent companyNovo Nordisk Annual Report 20238 Financial assets DKK million Cost at the beginning of the year Investments during the year Divestments and repayments during the year Cost at the end of the year Value adjustments at the beginning of the year Profit/(loss) before tax Share of result after tax in associated company Income taxes on profit for the year Market value adjustment Dividends received Divestments during the year 110 9 Other receivables and prepayments Other receivables and prepayments includes prepayments of DKK 5,375 million, primarily related to prepaid contract manufacturing and R&D activities 10 Share capital For information on share capital, refer to note 4.3 to the consolidated financial statements. 11 Derivatives For information on derivative financial instruments, refer to note 4.5 to the consolidat- ed financial statements. All derivatives in the group are entered into with Novo Nordisk A/S as the counterpart. Investments in subsidiaries Amounts owed by affiliated companies Investment in associated company Other securities and investments 4,975 800 (3,328) 2,447 292 105 105 90 (38) 54,660 5,170 (29) 59,801 34,407 18,112 (1,332) (9,127) 29 2023 2022 60,497 53,987 757 124 (63) 818 6,094 (3,420) 63,171 (268) 34,521 18,112 (38) 6,697 (187) 60,497 35,933 19,713 (4) (1,332) (1,596) (6) (6) (135) (9,127) (23,305) 12 Borrowings Effect of exchange rate adjustment charged to the income statement (271) Effect of exchange rate adjustment charged to equity Other adjustments Value adjustments at the end of the year 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 (2,285) 1,467 41,271 (16,712) (807) 892 (16,627) 84,445 For a list of companies in the Novo Nordisk Group, refer to note 5.7 to the consolidated financial statements. 25 (96) 54 (367) (2,285) 1,467 — 220 1,768 1,927 DKK million Within 1 year 1-5 years More than 5 years Total borrowings 2023 5,072 2022 169 12,889 12,627 3,966 8,572 21,927 21,368 21 52 (345) 40,999 34,521 (16,712) (18,356) (807) 892 1,121 523 Borrowings mainly consist of loans from Novo Nordisk Finance (Netherlands) B.V. related to issuance of Eurobonds. — 2,468 — 157 — (16,627) (16,712) 473 87,543 78,306 Financial statements of the parent companyNovo Nordisk Annual Report 2023111 2023 2022 804 18,448 25,218 11,780 95 11,778 6,727 7,746 13 Other provisions 16 Commitments and contingencies Provisions for pending litigations are recognised as other provisions. For information on pending litigations, 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. DKK million Commitments Leases1 14 Related party transactions For information on transactions with related parties, refer to note 5.4 to the consolidated financial statements. The parent company’s share of services provided by NNIT Group amounts to DKK 327 million (DKK 578 million in 2022). Novo Nordisk A/S is included in the consolidated financial statements of the Novo Nordisk Foundation. 15 Fee to statutory auditors DKK million Statutory audit1 Audit-related services Tax advisory services Other services Total fee to statutory auditors 1. 2022 statutory audit fee includes DKK 6 million of additional fee related to 2021. 2023 9 2 4 15 30 2022 15 2 1 9 27 Research and development obligations Research and development - potential milestones2 Commercial product launch - potential milestones2 Purchase obligations relating to investments in property plant and equipment 1,072 232 Purchase obligation relating to contract manufactures 33,107 13,362 Other purchase obligations Guarantees given for subsidiaries3 Other guarantees 2,742 2,533 35,608 31,858 993 127 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; refer to note 5.2 to the consolidated financial statements. 3. Guarantees given for subsidiaries mainly relate to guarantees 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, refer to notes 3.5 and 5.2 to the consolidated financial statements. Financial statements of the parent companyNovo Nordisk Annual Report 2023Novo Nordisk A/S – Novo Alle 1, 2880 Bagsværd, Denmark – CVR no. 24256790 +45 4444 8888 (switchboard), novonordisk.com 

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