UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT
OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange
Act of 1934
FEBRUARY 5, 2014
NOVO
NORDISK A/S
(Exact name of Registrant as specified in its charter)
Novo Allé
DK- 2880, Bagsvaerd
Denmark
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F
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Form 20-F [X]
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Form 40-F [ ]
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Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
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Yes [ ]
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No [X]
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If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g-32(b):82-_____________________
novo nordisk annual report 2013 The one rule we have to break – the Rule of Halves Is obesity a disease? – without doubt it is a growing threat to global health One size doesn’t fit all – when it comes to diabetes treatment If Novo Nordisk’s business strategy were to be described in one word, it would have to be ‘focus’
4 NOVO NORDISK AT A GLANCE 6 2013 performance and 2014 outlook 22 The one rule we have to break 6 Business strategy: ‘Our focus is our strength’ Risks to be aware of 42 24 One size dosen't fit all 1 Novo Nordisk's five regions
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Accomplishments
and results 2013 |
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| Our business | ||
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| Governance, leadership and shares | ||
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| Financial,
social and environmental statements |
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| Additional information | ||
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The Management review, as defined by the Danish
Financial
Statements Act (FSA), is found on pp 1–54 and 94.
This Annual Report is published in both a Danish
and an English
version. In the event of any discrepancies, the Danish version
shall prevail.
1
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Letter
from
the Chairman |
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Last year, at Novo Nordisk’s Annual General Meeting in March, I was named Chairman of the Board of Directors of which I have been a member since 2005. I feel honoured by and proud of this appointment, and will do my best to live up to the responsibilities that come with it. As a board member I’ve followed Novo Nordisk’s development during a very difficult period for the pharmaceutical industry. It has been an exciting journey: in terms of both financial value creation for our shareholders and positive impact on people with diabetes, Novo Nordisk has delivered outstanding results. I and the other members of Novo Nordisk’s Board are confident that Novo Nordisk will continue to do very well despite having been through a year that, frankly, will be remembered for a number of negative events: a Warning Letter from the US Food and Drug Administration (FDA), a delay for Tresiba® (insulin degludec) in the US, a safety scare around the class of products to which Victoza® belongs, and a major product recall. Our Chief Executive Officer, Lars Rebien Sørensen, will give you more details and share his reflections on these events on the following pages. What’s important for me to say is that the Board has followed up meticulously on each and every one of these events to ensure that management has responded appropriately to them to minimise the negative effects and the risk of reoccurrence. And we firmly believe that it has.
Chairman
of the Board of |
The Board has also reviewed the company’s long-term strategy and outlook as we do every year. Is it realistic? Is it ambitious? Does the company have the skills and resources to execute it? And if so, does it provide Novo Nordisk with the competitive advantages needed to be successful in a very competitive industry? We believe it does. We’ve also evaluated the strength of the company’s executive leadership and senior management and reviewed the succession preparedness for key positions. Together with the executive team we’ve assessed the company’s organisational strengths and weaknesses. Whenever we’ve identified issues that could become a significant obstacle to meeting the company’s long-term goals, we’ve agreed on a plan of action. We’re confident that in Lars Rebien Sørensen and his Executive Management team we have the leadership needed to execute Novo Nordisk’s strategy and execute it well. It has been a pleasure to see how two new members of Executive Management have been smoothly integrated into the team, and how the company’s bench of senior vice presidents has been expanded with new members, several of them from our large and very successful affiliate in the US. The Board is also pleased to announce the promotion of Chief Operating Officer Kåre Schultz to president. This is a reflection of the importance and complexity of his organisation and his successful management hereof. In this role, Kåre will work closely with Lars on planning Executive Management meetings and board meetings, and assume a more outward-facing role. Despite the challenges Novo Nordisk faced in 2013, it met the sales and profit targets we communicated at the beginning of the year. Sales grew by 12% and operating profit by 15%, both measured in local currencies. Furthermore, we made significant progress on the key development projects, which bodes well for future growth and for the company’s ability to achieve its long-term targets. Against this background, at the Annual General Meeting on 20 March 2014 the Board of Directors will propose a 25% increase in dividend to 4.50 Danish kroner per share of 0.20 krone. The Board of Directors has furthermore decided to initiate a new share repurchase programme of up to 15 billion kroner. I’d also like to highlight two important decisions that the Board has made regarding corporate governance. We established a Nomination Committee to enhance the process for nominating members to the Board, and set new targets for the diversity of the Board as regards gender and nationality. For more information on this, please see p 47. On behalf of the Board of Directors, I’d like to express my appreciation for the leadership shown by Lars Rebien Sørensen and his management team, and the hard work and dedication of the entire Novo Nordisk organisation.
Göran Ando
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Letter
from
the CEO |
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2013 was both a good year and a tough year for Novo Nordisk. Let me start with the tough part. As I mentioned in my letter in last year’s Annual Report, we began the year with the unsettling fact of having received a Warning Letter from the US Food and Drug Administration (FDA), following an inspection of one of our insulin-filling plants in Denmark. Unrelated to this, in February we received a Complete Response Letter from the FDA in which the agency requested additional cardiovascular safety data before it could complete its review of the New Drug Application for Tresiba® (insulin degludec). Tresiba® is our new-generation basal insulin with an ultra-long duration of action of more than 42 hours.
President and Chief Executive Officer Lars Rebien Sørensen at the Novo Nordisk Capital Markets Day in December 2013.
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To make matters worse, a debate emerged in March in which some scientists questioned whether the incretin class of diabetes medications – the class to which our very successful product Victoza® belongs – had an increased risk of side effects in the pancreas. Although the authorities later concluded that the data currently available don’t confirm the concerns, the debate did create anxiety among some patients using these products. In October, we had to recall a number of batches of NovoMix® insulin in some European countries as our analysis had shown that a small percentage of the products in these batches didn’t meet the specifications for insulin strength. Not the kind of events we’d hoped for in our 90th anniversary year – or in any other year for that matter. For Novo Nordisk’s employees, who take immense pride in the safety and efficacy of our products, such events are downright painful. They are, however, also a good opportunity for learning and reflection, and we have learned from these events and are still learning. To mention just two examples: we’re improving our measures to ensure compliance with the latest and ever-evolving standards for good manufacturing practice, and we’re collecting more data than ever regarding cardiovascular safety to rule out that our products are associated with unacceptable risks. I wish I could say that events such as the ones I’ve described will never happen again, but I’m not naive. Bad things happen, even to good companies; however, I firmly believe we’re coming out of these events wiser and stronger. Allow me to turn to the brighter part of my account of 2013. I’m glad to report that our strategic products are doing well in the market. Tresiba® was launched in Japan as the first country in February 2013 and by the end of the year had claimed 8.6% |
3
of the segment for long-acting insulin (basal insulin) measured in value. Several other countries launched Tresiba® during the year and in all countries where the product is competing on an equal footing with other insulin products, it’s gaining significant market shares.
Our established key products did well, too: sales of our modern insulins grew 14%, Victoza® 27%, NovoSeven® 8% and Norditropin® 16%, all measured in local currencies. I think it’s fair to say that this is a solid performance in a global pharmaceutical market characterised by all forms of cost-containment measures. To me it shows that there’s a large and growing need for our products.
From a regional perspective, North America was again the main contributor to our growth, followed by International Operations and Region China. It’s also in these regions we expect to see most of the growth in the coming years. Our sales growth, combined with continuous focus on the efficiency of our operations, resulted in operating profit growth of 7% reported and 15% in local currencies. Growth in net profit was 18% and measured on an earnings per share basis, the increase was 20% – all in all a very robust financial performance in 2013.
Several products in our development pipeline passed important milestones in 2013:
| • | The cardiovascular outcomes trial for Tresiba ® designed to provide the data requested by the FDA was initiated in October. |
| • | IDegLira, a fixed combination of liraglutide and insulin degludec for the treatment of type 2 diabetes, was filed for regulatory review in the EU. |
| • | We started the phase 3a programme for the faster-acting formulation of insulin aspart. |
| • | A 3 mg dose of liraglutide, the active substance in Victoza ®, was filed for regulatory review in both the US and the EU as a potential new obesity treatment. |
| • | Semaglutide, a once-weekly GLP-1 analogue, started phase 3 trials. |
| • | FDA approved our insulin injection pens FlexTouch ® and NovoPen Echo® for use with certain insulin products. |
| • | Within haemophilia, turoctocog alfa, our new factor VIII product for people with haemophilia A, was approved in the US, the EU and Japan. Turoctocog alfa will be marketed under the brand name NovoEight® in most countries. |
You’ll find more information about these and other significant product development milestones in the research and development section on p 10 and in articles in this Annual Report.
In 2014, we’ll maintain a high level of investment in research and development and in our growth markets and strategic products. We’ll have special focus on:
| • | The continued roll-out of Tresiba ® |
| • | The first launches of Ryzodeg ® – a combination of Tresiba® and our fast-acting insulin NovoRapid® – and NovoEight® |
| • | The regulatory reviews of IDegLira and liraglutide 3 mg |
| • | Further strengthening our systems and processes for ensuring compliance with all relevant regulatory standards |
| • | Implementing our strategy for global access to diabetes care targeted at people who currently don’t have access to the necessary medical treatment and care. |
As you’ll see from the article on the diabetes pandemic later in this Annual Report, the number of people with diabetes is growing at an alarming rate. The latest estimates are that by 2035 close to 600 million people will have diabetes and at some point most of them will require medical treatment. You can read more about this on pp 22–23.
At Novo Nordisk we have a critical role to play and are committed to playing our part in the fight against diabetes. We’ve set ourselves the target that 40 million people will be using our products by 2020. We are, however, keenly aware that our products alone will not address all the challenges. That’s why we’re working with partners all over the world to identify and implement local solutions for improving diabetes care. You’ll find some examples of this in the article on p 26.
In the coming years we’ll have special focus on how to address the diabetes challenge in the world’s big cities. All over the world, people are migrating to big cities and, unfortunately, urbanisation and type 2 diabetes go hand in hand. Not much is known about how to change the situation, but we’re determined to work with partners to find out.
In the face of the challenges that 2013 brought for Novo Nordisk, I’ve taken great pleasure from the collaboration I’ve had with my Executive Management team, our Senior Management Board and the Board of Directors, and from dealing with the challenges we have encountered. I look forward to an even closer collaboration with Kåre Schultz in his new role as president. I have worked with Kåre for almost 20 years and have enjoyed following his development as leader of increasingly larger and more complex organisations. His promotion is well-deserved recognition of his accomplishments and leadership potential.
I’d like to thank everyone in the Novo Nordisk organisation for their contributions to our results in 2013, the people who use our products for their confidence in us, our stakeholders and partners for their collaboration, and our shareholders for their continued support.
Lars Rebien Sørensen
President and chief executive officer
PS: Please tell us what you think about our Annual Report. Does it meet your information needs? Is it comprehensible? You can help improve our reporting by answering six questions at novonordisk.com/annualreport/feedback.
PRODUCTS ESTABLISHED IN MARKETED IN DENMARK 180 IN 1923 EMPLOYEES IN 75 COUNTRIES COUNTRIES Novo Nordisk Way
Novo Nordisk Way
In 1923, our Danish founders began a journey to change diabetes.
Today, we are thousands of employees across the world with the passion, the skills and the commitment to continue this journey to prevent, treat and ultimately cure diabetes.
| • | Our ambition is to strengthen our leadership in diabetes. |
| • | We aspire to change possibilities in haemophilia and other serious chronic conditions where we can make a difference. |
| • | Our key contribution is to discover and develop innovative biological medicines and make them accessible to patients throughout the world. |
| • | Growing our business and delivering competitive financial results is what allows us to help patients live better lives, offer an attractive return to our shareholders and contribute to our communities. |
| • | We never compromise on quality and business ethics. |
| • | Our business philosophy is one of balancing financial, social and environmental considerations – we call it the Triple Bottom Line. |
| • | We are open and honest, ambitious and accountable, and treat everyone with respect. |
| • |
We offer opportunities for our people to realise their potential. |
Every day we must make difficult choices, always keeping in mind what is best for patients, our employees and our shareholders in the long run.
It’s the Novo Nordisk Way.
The Triple Bottom Line
83.6 DKK BILLION IN SALES (+7%) 25.2 DKK BILLION IN NET PROFIT (+18%) Financially responsible Patients Socially responsible Environmentally responsible 24.3 MILLION PATIENTS USE OUR DIABETES CARE PRODUCTS (+7%) 125 THOUSAND TONS CO2 EMISSIONS (+2%) 38,436 EMPLOYEES WORLDWIDE (+11%) 2,685 THOUSAND M3 WATER CONSUMPTION (+8%)
5
2013 progress on strategic focus areas
Expand leadership in diabetes care 30% GLOBAL VALUE MARKET SHARE (+2%) Establish
presence in inflammation
• Five compounds in clinical trials with three in phase 2. Expand leadership
in growth disorders
• Liraglutide 3 mg for obesity completed phase 3a and was submitted in
the EU and the US. Pursue leadership in haemophilia
• NovoEight® was approved in the US, the EU and Japan.
• N9-GP successfully completed first phase 3a trial.
• NovoThirteen® was approved in the US.
Establish presence in obesity NovoSeven® sales DKK BILLION Norditropin®
sales DKK BILLION 2012 2013 2012 2013 8.9 9.3 5.7 6.1 (+4%) (+7%) 65.5
DKK BILLION IN SALES (+8%) 2.6 (+2%) 2.2 (–19%) 38.2 10.9 (+10%) (–4%)
11.6 (+23%) 27% GLOBAL VALUE MARKET SHARE (+1%)
• Tresiba® was launched in eight countries.
• DEVOTE, a cardiovascular outcomes trial designed to provide the data
for Tresiba® requested by the FDA, was initiated.
• IDegLira was filed for regulatory review in the EU.
• Semaglutide, a once-weekly GLP-1 analogue, started phase 3a trials. Protein-related
products Oral antidiabetic products Modern insulins Human insulins Victoza®
5
| 6 | ACCOMPLISHMENTS AND RESULTS 2013 |
2013 performance
and 2014 outlook
2013 was a year of mixed fortunes for Novo Nordisk marked by steady progression towards long-term financial, social and environmental targets, whereas the Complete Response Letter for Tresiba® in the US was a disappointment.
| Financial
performance The results for 2013 are higher than expected in the outlook for the year in the Annual Report 2012 and in line with the latest guidance provided in connection with the quarterly announcement in October 2013.* |
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Sales development
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| * | Please refer to the company announcement of 30 January 2014 for explanation of results compared with the latest expectations. |
Diabetes care
sales development
Sales of diabetes care products increased
by 12% measured in local currencies and by 8% in Danish kroner to DKK 65,456
million. Novo Nordisk is the world leader in diabetes care and now holds a
global value market share of 27% compared with 26% at the same time the previous
year.
Insulins and protein-
related products
Sales of insulins and protein-related products
increased by 11% in local currencies and by 6% in Danish kroner to DKK 51,577
million. Measured in local currencies, sales growth was driven by North America,
International Operations and Region China. Novo Nordisk is the global leader
with 48% of the total insulin market and 46% of the market for modern insulins
and new-generation insulins, both measured in volume.
The roll-out
of Tresiba®
(insulin degludec), the once-daily new-generation insulin with an ultra-long
duration of action, continues to progress. Launch activities are proceeding
as planned and feedback from patients and prescribers is encouraging. Tresiba® has been launched in eight countries with 20 more countries
expected to launch during 2014. In the countries where Tresiba®
is reimbursed on a similar level to insulin glargine, it has steadily grown
its share of the basal insulin market. In these countries, Tresiba®
now represents around 10% of the basal insulin
market measured in monthly
value market share. In the markets where Tresiba®
has been launched with restricted market access compared with insulin glargine,
market penetration remains modest.
Sales
of modern insulins increased by 14% in local currencies and by 10% in Danish
kroner to DKK 38,153 million. North America accounted for two-thirds of the
growth, followed by International Operations and Region China. Sales of modern
insulins now constitute 78% of Novo Nordisk’s sales of insulin.
Victoza®
(GLP-1 therapy for type 2 diabetes)
Victoza®
sales increased by 27% in local currencies and by 23% in Danish kroner to
DKK 11,633 million, reflecting robust sales performance driven by North America,
Europe and International Operations. Victoza®
holds the global market share leadership
in the GLP-1 segment with a 71% value market share compared with 68% in 2012.
The GLP-1 segment’s value share of the total diabetes care market has
increased to 6.9% compared with 5.9% in 2012.
NovoNorm®/Prandin®/PrandiMet®
(oral antidiabetic products)
Sales of oral antidiabetic products decreased
by 16% in local currencies and by 19% in Danish kroner to DKK 2,246 million.
The negative sales development reflects an impact from generic competition
in the US and Europe as well as a changed inventory set-up in China.
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NOVO NORDISK ANNUAL REPORT 2013
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ACCOMPLISHMENTS AND
RESULTS 2013
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7
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Biopharmaceuticals
sales development
Sales of biopharmaceutical products increased
by 12% measured in local currencies and by 6% in Danish kroner to DKK 18,116
million. Sales growth was primarily driven by North America and International
Operations.
NovoSeven®
(bleeding disorders therapy)
Sales of NovoSeven®
increased by 8% in local currencies and by 4% in Danish kroner to DKK 9,256
million. The market for NovoSeven®
remains volatile, and sales growth is primarily driven by North America and
International Operations.
Norditropin®
(growth hormone therapy)
Sales of Norditropin®
increased by 16% in local currencies and by 7% in Danish kroner to DKK 6,114
million. The sales growth is primarily driven by contractual wins, the support
programmes that Novo Nordisk offers healthcare professionals and patients as
well as the penetration of the prefilled FlexPro® device in North America and furthermore by growth in International
Operations. Novo Nordisk is the leading company in the global growth hormone
market with a 28% market share measured in volume.
Other biopharmaceuticals
Sales of other products within biopharmaceuticals,
which predominantly consist of hormone replacement therapy-related (HRT) products,
increased by 15% in local currencies and by 9% in Danish kroner to DKK 2,746
million. Sales growth is driven by North America and reflects a positive impact
of pricing and non-recurring adjustments to the provisions for rebates.
Development in costs
and operating profit
The cost of goods sold grew 5% to DKK 14,140
million, resulting in a gross margin of 83.1% compared with 82.7% in 2012.
This development primarily reflects an underlying improvement driven by favourable
price development in North America and a positive net impact from product
mix due to increased sales of modern insulins and Victoza®.
The gross margin was negatively impacted by around 0.3 percentage point due
to the depreciation of key invoicing currencies versus the Danish krone compared
with prevailing exchange rates in 2012.
Total
non-production-related costs increased by 11% in local currencies and by 8%
in Danish kroner to DKK 38,621 million.
Sales
and distribution costs increased by 13% in local currencies and by 9% in Danish
kroner to DKK 23,380 million. The growth in costs is driven by the expansions
of the sales forces and sales and marketing investments in the US, China and
selected countries in International Operations as well as costs related to
the launch of Tresiba®.
The growth percentage for costs has also been impacted by changes to legal
provisions in 2012 and 2013.
Research
and development costs increased by 9% in local currencies and by 8% in Danish
kroner to DKK 11,733 million. Within diabetes care, costs are primarily driven
by development costs related to the initiation of the Tresiba®
cardiovascular outcomes trial, and the ongoing phase 3a trials for both faster-acting
insulin aspart and semaglutide, the once-weekly GLP-1 analogue. Within biopharmaceuticals,
costs are primarily related to the continued progress of the portfolio of
development projects within haemophilia and the phase 2 trial for anti-IL-20,
a recombinant human monoclonal antibody, in rheumatoid arthritis.
Administrative
costs increased by 9% in local currencies and by 6% in Danish kroner to DKK
3,508 million. The increase in costs is primarily driven by back-office infrastructure
costs to support the expansions of the sales organisations in North America,
China and selected countries in International Operations, non-recurring costs
related to new offices in Denmark and the US as well as an impact from a cost
refund in 2012 of a previously expensed fine related to an import licence
for a major market in International Operations.
Licence
income and other operating income constituted DKK 682 million compared with
DKK 666 million in 2012.
Operating
profit increased by 7% in Danish kroner to DKK 31,493 million. In local currencies,
the growth was 15%.
Net financials and tax
Net financials showed a net income of DKK
1,046 million compared with a net expense of DKK 1,663 million in 2012. As
of 31 December 2013, foreign exchange hedging gains of around DKK 1,200 million
have been deferred for recognition in the income statement in 2014.
In line
with Novo Nordisk’s treasury policy, the most significant foreign exchange
risks for the Group have been hedged, primarily through foreign exchange forward
contracts. The foreign exchange result was a net income of DKK 1,146 million
compared with a net expense of DKK 1,529 million in 2012. This net income
reflects gains on foreign exchange hedging involving especially the Japanese
yen and the US dollar due to their depreciation versus the Danish krone compared
with the prevailing exchange rates in 2012, which has been partly offset by
losses on commercial balances, primarily related to non-hedged currencies.
The effective tax rate for 2013 was 22.6%.
CONTINUED ►
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NOVO NORDISK ANNUAL REPORT 2013
| 8 | ACCOMPLISHMENTS AND RESULTS 2013 |
Capital expenditure
and free cash flow
Net capital expenditure for property, plant
and equipment was DKK 3.2 billion compared with DKK 3.3 billion in 2012. Net
capital expenditure was primarily related to new offices in Denmark, filling
capacity in Denmark and Russia, additional GLP-1 manufacturing capacity, new
diabetes research facilities in Denmark as well as device production facilities
in the US and Denmark.
Free cash
flow was DKK 22.4 billion compared with DKK 18.6 billion in 2012. The increase
of 20% compared with 2012 reflects the growth in net profit of 18% and a lower
impact from tax payments in 2013 compared with 2012 related to ongoing transfer
pricing disputes, which was partly offset by earlier payment of rebate liabilities
in the US.
Outlook 2014
The current expectations for 2014 are summarised in the table below:
| Expectations are
as reported, if not otherwise stated |
Expectations
30
January 2014
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| Sales growth | |
| • in local currencies |
8–11%
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| • as reported | Around 3.5 percentage points lower |
| Operating profit growth | |
| • in local currencies | Around 10% |
| • as reported | Around 5.5 percentage points lower |
| Net financials | Income of around DKK 750 million |
| Effective tax rate | Around 22% |
| Capital expenditure | Around DKK 4.0 billion |
| Depreciation, amortisation and impairment losses | Around DKK 2.9 billion |
| Free cash flow | Around DKK 26 billion |
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Sales growth
for 2014 is expected to be 8–11% measured in local currencies. This reflects
expectations of continued robust performance for the portfolio of modern insulins
and Victoza®
as well as a modest sales contribution from Tresiba®. These sales drivers are expected to be partly countered by
an impact from a more challenging contract environment in the US, generic
competition for Prandin® in the US during the first half of 2014, intensifying competition
within both diabetes and biopharmaceuticals as well as the macroeconomic conditions
in a number of markets in International Operations. Given the current level
of exchange rates versus the Danish krone, the reported sales growth is now
expected to be around 3.5 percentage points lower than growth measured in
local currencies.
For 2014,
operating profit growth
is expected to be around 10% measured in local currencies. This reflects a
significant increase in costs related to the continued progress of key development
projects within diabetes and biopharmaceuticals. In addition, significant
costs are expected in relation to sales force expansions and sales and marketing
investments in the portfolio of modern insulins and Victoza®
in the US, China and selected markets in International Operations as well
as the launch of Tresiba®
outside the US. Given the current level of exchange rates versus the Danish
krone, the reported operating profit growth is now expected to be around 5.5
percentage points lower than growth measured in local currencies.
For 2014,
Novo Nordisk expects a net financial income
of around DKK 750 million. The current expectation primarily reflects gains
associated with foreign exchange hedging contracts following the depreciation
of the Japanese yen and the US dollar versus the Danish krone compared with
the average prevailing exchange rates in 2013.
The effective
tax rate for 2014 is expected to be around
22%.
Capital
expenditure is expected to be around DKK
4.0 billion in 2014, primarily related to investments in additional GLP-1
manufacturing capacity, expansion of filling capacity, prefilled device production
facilities, construction of new laboratory facilities as well as expansion
of protein capacity within the CMC (Chemistry, Manufacturing and Control)
organisation. Depreciation, amortisation
and impairment losses are expected to be
around DKK 2.9 billion. Free cash flow is expected to be around DKK 26 billion.
All of
the above expectations are based on the assumption that the global economic
environment will not significantly change business conditions for Novo Nordisk
during 2014, and that currency exchange rates, especially the US dollar, will
remain at the current level versus the Danish krone.
Novo
Nordisk has hedged expected net cash flows in a number of invoicing currencies
and, all other things being equal, movements in key invoicing currencies will
impact Novo Nordisk’s operating profit as outlined in the table below:
| Key
invoicing currencies |
Annual
impact on Novo Nordisk’s operating
profit
of a 5% movement in currency
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Hedging
period
(months)
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| USD |
DKK 1,300 million
|
12 | |
| CNY |
DKK 220 million
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12 | * |
| JPY |
DKK 145 million
|
14 | |
| GBP |
DKK 85 million
|
12 | |
| CAD |
DKK 60 million
|
10 | |
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| * USD used as proxy when hedging Novo Nordisk’s CNY currency exposure. | |||
The financial impact from foreign exchange hedging is included in ‘Net financials’.
NOVO NORDISK ANNUAL REPORT 2013
|
ACCOMPLISHMENTS AND
RESULTS 2013
|
9
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Long-term financial targets
Novo Nordisk introduced four long-term financial
targets in 1996 to balance short- and long-term considerations, thereby ensuring
a focus on shareholder value creation. The targets have subsequently been revised
and updated on several occasions, most recently in connection with the release
of the financial statement for 2012. The targets have been selected to ensure
focus on growth, profitability, efficient use of capital and cash flow generation.
The targets
are based on an assumption of a continuation of the current business environment.
Significant changes to the business environment, including the structure of
the US healthcare system, regulatory requirements, pricing and contracting environment,
competitive environment, healthcare reforms and exchange rates, may significantly
impact the time horizon for achieving the long-term targets or require them
to be revised.
| Long-term financial target |
Result
2013
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Target
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| Operating profit growth | 7% | 15% | ||
| Operating margin | 38% | 40% | ||
| Operating profit after tax to net operating assets | 97% | 125% | ||
| Cash to earnings | 89% | |||
| Cash to earnings (three-year average) | 94% | 90% | ||
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Forward-looking statements
Novo Nordisk’s reports filed with or
furnished to the US Securities and Exchange Commission (SEC), including this
document as well as the company’s Form 20-F, both expected to be filed
with the SEC in February 2014, and written information released, or oral statements
made, to the public in the future by or on behalf of Novo Nordisk, may contain
forward-looking statements. Words such as ‘believe’, ‘expect’,
‘may’, ‘will’, ‘plan’, ‘strategy’,
‘prospect’, ‘foresee’, ‘estimate’, ‘project’,
‘anticipate’, ‘can’, ‘intend’, ‘target’
and other words and terms of similar meaning in connection with any discussion
of future operating or financial performance identify forward-looking statements.
Examples of such forward-looking statements include, but are not limited to:
| • | statements of targets, plans, objectives or goals for future operations, including those related to Novo Nordisk’s products, product research, product development, product introductions and product approvals as well as cooperation in relation thereto |
| • | statements containing projections of or targets for revenues, costs, income (or loss), earnings per share, capital expenditures, dividends, capital structure, net financials and other financial measures |
| • | statements regarding future economic performance, future actions and outcome of contingencies such as legal proceedings |
| • | statements regarding the assumptions underlying or relating to such statements. |
In this document, examples of
forward-looking statements can be found under the heading ‘2013 performance
and 2014 outlook’ and elsewhere.
These statements
are based on current plans, estimates and projections. By their very nature,
forward-looking statements involve inherent risks and uncertainties, both general
and specific. Novo Nordisk cautions that a number of important factors, including
those described in this document, could cause actual results to differ materially
from those contemplated in any forward-looking statements.
Factors
that may affect future results include, but are not limited to, global as well
as local political and economic conditions, including interest rate and currency
exchange rate fluctuations, delay or failure of projects related to research
and/or development, unplanned loss of patents, interruptions of supplies and
production, product recall, unexpected contract breaches or terminations, governmentmandated
or market-driven price decreases for Novo Nordisk’s products, introduction
of competing products, reliance on information technology, Novo Nordisk’s
ability to successfully market current and new products, exposure to product
liability and legal proceedings and investigations, changes in governmental
laws and related interpretation thereof, including on reimbursement, intellectual
property protection and regulatory controls on testing, approval, manufacturing
and marketing, perceived or actual failure to adhere to ethical marketing practices,
investments in and divestitures of domestic and foreign companies, unexpected
growth in costs and expenses, failure to recruit and retain the right employees,
and failure to maintain a culture of compliance.
Please
also refer to the overview of risk factors in ‘Risks to be aware of’
on pp 42–43.
Unless required by law, Novo Nordisk is under
no duty and undertakes no obligation to update or revise any forward-looking
statement after the distribution of this document, whether as a result of new
information, future events or otherwise.
| 10 | ACCOMPLISHMENTS AND RESULTS 2013 |
Research and
development
Diabetes
In 2013, Novo Nordisk made important advances
in the pipeline of diabetes care products.
Insulin
In response to the Complete Response Letter
on Tresiba®
from the US Food and Drug Administration (FDA), Novo Nordisk initiated a cardiovascular
outcomes trial (DEVOTE) in October. It is double-blind, uses insulin glargine
as comparator and will include 7,500 type 2 diabetes patients who have existing
or high risk of cardiovascular diseases. Novo Nordisk expects to have sufficient
data to support an interim analysis within two to three years and to complete
the study within four to six years from initiation. The data will also be used
to support the resubmission of Ryzodeg®, the combination
of Tresiba®
and insulin aspart.
Mid-2013,
Novo Nordisk filed IDegLira for regulatory review in the EU. IDegLira is a fixed
combination of insulin degludec and liraglutide and Novo Nordisk is the first
company to submit a product in this new class. The filing of IDegLira in the
US is pending the outcome of the interim analysis planned for the DEVOTE trial.
In the
prandial insulin segment Novo Nordisk began the phase 3a programme named onset®
for the faster-acting formulation of insulin aspart. The improved formulation
is intended to enable a faster onset of appearance of insulin in the bloodstream,
thereby mimicking the insulin secretion of a healthy individual more closely
than NovoRapid®.
Devices
In the US, the FDA approved FlexTouch®
for delivery of NovoLog® (NovoRapid®)
and Levemir®.
FlexTouch®
is a prefilled pen featuring a spring-loaded dosing action that allows users
to administer insulin at the touch of a button – regardless of dosage size.
The pen has been launched in the EU and Japan.
Also for
administering NovoLog®,
the FDA approved NovoPen Echo®, a reusable pen,
especially designed to meet the needs of children with diabetes. The pen has
been launched in the EU.
GLP-1 (Glucagon-Like Peptide-1)
In the GLP-1 category, Novo Nordisk initiated
phase 3a trials investigating the efficacy and safety of liraglutide as an adjunct
therapy to insulin in people with
type 1 diabetes. This programme,
named ADJUNCT™,
is expected to include 3,000 people with type 1 diabetes.
Novo Nordisk’s
once-weekly analogue semaglutide has now started three of six global phase 3a
trials, one of which will collect cardiovascular outcomes and other long-term
diabetes-related endpoints. In total, the SUSTAIN™
programme is expected to include more than 8,000 people with type 2 diabetes.
Novo Nordisk
also brought a tablet formulation of semaglutide, OG217SC, into phase 2 development.
Pioneering the effort within oral diabetes proteins, Novo Nordisk now has seven
oral formulations of insulin and GLP-1 analogues in the early pipeline (phase
1 and 2).
Obesity
Novo Nordisk successfully completed the SCALE™
phase 3a programme, which confirmed the efficacy and safety of liraglutide 3
mg for the treatment of obesity. Liraglutide 3 mg was filed for regulatory review
in the US and the EU in December.
Haemophilia
Novo Nordisk continued its strong progress
in the development of treatments for people with haemophilia and other rare
bleeding disorders.
Turoctocog
alfa, a recombinant coagulation factor VIII, was approved in the US, the EU
and Japan. The product, which is now being marketed under the trade name NovoEight®,
is indicated for use in adults and children with haemophilia A for control and
prevention of bleeding, perioperative treatment as well as routine prevention
of bleeding episodes. In January 2014, Germany was the first country to launch
the product.
Also for
people with haemophilia A, a long-acting coagulation factor, glycoPEGylated
rFVIII, N8-GP, is being studied in phase 3a. In March a trial was started in
children, which is a regulatory requirement.
Strong
results were reported in phase 3a for N9-GP, a long-acting recombinant factor
IX molecule for people with haemophilia B, with a safe and well-tolerated profile,
no inhibitor development and improved quality of life. Also, during major surgical
procedures a single preoperative dose of N9-GP prevented bleeding in all participants
with a 100% success rate. The compound continues development in clinical trials
in
children and during surgical
procedures.
In December,
the FDA approved recombinant coagulation factor XIII as Tretten®
for use in routine prophylaxis of bleeding in patients with congenital FXIII
A-subunit deficiency (approved as NovoThirteen®
in the EU).
Inflammation
Novo Nordisk aspires to improve the lives of
people with autoimmune and chronic inflammatory diseases by developing anti-inflammatory
compounds with new modes of action for rheumatoid arthritis, systemic lupus
erythematosus (SLE), inflammatory bowel disease and psoriatic arthritis. In
March, Novo Nordisk initiated a phase 2a trial with anti-IL-21 for severely
active Crohn’s disease.
Finally,
anti-NKG2D was approved for further phase 2 development for Crohn’s disease.
Growth hormone
Novo Nordisk completed its phase 1 trials for
the once-weekly growth hormone NN8640 in healthy volunteers and adults with
growth hormone deficiency. In the trial, NN8640 appeared to have a safe and
well-tolerated profile and no safety concerns were identified. The trial confirmed
the data from a similar trial in healthy adults and supports the suitability
of NN8640 for once-weekly dosing in adults with growth hormone deficiency.
NOVO NORDISK ANNUAL REPORT 2013
|
ACCOMPLISHMENTS AND
RESULTS 2013
|
11
|
Social
performance
Social performance has three dimensions: improving access to medical treatment and quality of care for patients, offering a healthy and engaging working environment for employees, and providing assurance that responsible business practices are in place, with the aim of contributing to the communities in which the company operates.
Patients
Novo Nordisk estimates that the company provides
medical treatments for approximately 24.3 million people with diabetes worldwide,
showing a 7% increase compared with 2012. The number is calculated based on
the WHO’s recommended daily doses for diabetes medicines. This growth is
driven by sales of insulin and Victoza®.
Of the
382 million people living with diabetes it is estimated that just over half
of them are diagnosed and many of those diagnosed do not receive medical treatment.
Novo Nordisk’s global access to diabetes care strategy aims to provide
better care for those who need it and currently do not have access to proper
diabetes care. The long-term goal is to reach 40 million people in 2020 with
diabetes care products and thereby enable more people with diabetes to live
better lives.
In 2013,
Novo Nordisk sold human insulin according to the company’s differential
pricing policy in 35 of the 49 Least Developed Countries (LDC), as defined by
the UN. According to this policy, the price should not exceed 20% of the average
prices in the western world. While the number of countries buying insulin in
accordance with this policy has been stable for some years, the volume sold
increased by 7%. In 2013 the LDC ceiling price for insulin treatment per patient
per day was USD 0.22, while the average price of insulins that Novo Nordisk
sold under this programme was USD 0.17. In other low- and middle-income countries,
Novo Nordisk sells large volumes of insulin at equally low tender prices through
government health programmes. In 2013, an estimated 5.2 million patients worldwide
have been treated with insulin at or for less than the LDC ceiling price.
Donations
through the World Diabetes Foundation amounted to DKK 64 million in 2013. The
World Diabetes Foundation
is an independent non-profit organisation
established in 2002 by Novo Nordisk to help expand access to diabetes care.
The foundation invests in sustainable initiatives to build healthcare capacity
with the aim of improving prevention and treatment of diabetes in developing
countries. Read more on worlddiabetesfoundation.org.
Novo Nordisk
also provides financial support to improve global access to haemophilia care.
In 2013, the company donated DKK 19 million to the Novo Nordisk Haemophilia
Foundation, established in 2005. The foundation supports projects and fellowships
in developing and emerging economies. Initiatives focus on capacity-building,
awareness, diagnosis and registries. Read more on nnhf.org.
Employees
At the end of 2013, the total number of employees
was 38,436, corresponding to 37,978 full-time positions, which is an 11% increase
compared with 2012. This growth is driven by expansion of the sales and marketing
organisation in the regions North America and International Operations as well
as significant expansion in Denmark in the research and development organisation
and in production.
Employee
turnover decreased from 9.1% in 2012 to 8.1%, reflecting a continued positive
trend. The average number covers some geographical variation.
The consolidated
score in the annual employee engagement survey, eVoice, was 4.4, measured on
a scale of 1 to 5, with 5 being the best score. The survey measures the extent
to which the organisation is working in accordance with the Novo Nordisk Way.
The 2013 result is an improvement on the score of 4.3 in 2012, and indicates
that despite continued growth, there is a strong culture and commitment to the
company’s values. Read more about the long-term target
on p 12.
In terms
of diversity, by the end of 2013 a total of 70% of the 33 senior management
teams were composed of a diverse group, with members of both genders and different
nationalities. This represents a continued and steady positive trend towards
the ambition that by the end of 2014 all senior management teams must meet these
diversity criteria or explain why this has not yet been achievable.
In 2013, the average frequency rate of occupational injuries was 3.5 per million working hours, compared with 3.6 in 2012. Uniform occupational health and safety management procedures are being rolled out in the global organisation.
Assurance
Mandatory training in business ethics is a
high priority. In 2013, 97% of all relevant employees completed and documented
their training and passed the related tests. This is a slight decrease from
99% in 2012, which can be explained by a higher number of employees in scope
of training and the introduction of tests with an explicit requirement that
documentation of training must be provided in addition to passing the tests.
Annual business ethics training is required for all employees, including new
hires. Business ethics training is a key element in all onboarding programmes.
Adherence
to the company’s global standards for ethical behaviour must be observed
and is monitored. Internal business ethics audits are conducted by means of
on-site interviews and documentation reviews to assess compliance with legal
requirements and internal procedures. During 2013, 45 business ethics reviews
were conducted, compared with 48 in 2012.
During
the year, the global facilitator team conducted 75 audits of units’ adherence
to the Novo Nordisk Way, so-called facilitations, covering approximately 11,500
employees, ie around one-third of the entire workforce. A facilitation consists
of document review and interviews with local management, employees and stakeholders
to determine the level of adherence to corporate values and behaviours spelled
out in the Novo Nordisk Way. A conclusive report, presented to the Board of
Directors, identifies best practices that are shared internally, while findings
of non-compliance are reported to local management, which must subsequently
implement corrective actions. Timely closure, measured as an average over a
three-year period during which the entire organisation is covered, is consistently
high. By the end of 2013, 96% of actions were closed on time, and the conclusion
is that there is a high level of compliance with the Novo Nordisk Way across
the organisation.
CONTINUED ►
NOVO NORDISK ANNUAL REPORT 2013
| 12 | ACCOMPLISHMENTS AND RESULTS 2013 |
A
total of 221 supplier audits were conducted to assess the level of compliance
with Novo Nordisk’s standards for suppliers. These relate to quality as
well as environment, labour, human rights and business ethics, in line with
Novo Nordisk’s responsible sourcing standards.
These
audits are undertaken by Novo Nordisk’s corporate quality organisation.
The level of audit activity was on par with 2012. Of these, 25 audits in 2013
were focused on responsible sourcing criteria, compared with 45 in 2012. Only
high-risk
suppliers, identified through
a robust risk assessment, are selected for responsible sourcing audits. In 2013,
one critical finding was identified regarding excessive overtime. This finding
is being addressed.
Following
the receipt in December 2012 of a Warning Letter from the US Food and Drug Administration
(FDA), a re-inspection was carried out in August 2013. In January 2014 Novo
Nordisk received confirmation from the agency that the violations had been addressed
satisfactorily.
In 2013, Novo Nordisk had six
instances
of product recalls from the market, which is the same level as the previous year. Among one of these, an internal quality control found that a small percentage (0.14%) of certain batches of the company’s prefilled insulin product NovoMix® 30 did not meet the specifications for insulin strength. As a result 3 million products were recalled from wholesalers, pharmacies and patients in several European markets. The root cause was found to be a production error and has been resolved.
Long-term social targets
2013 performance against
long-term social targets
| Novo Nordisk has chosen three long-term social targets to support long-term financial performance, balancing responsibility with profitability, with the aim of creating sustainable value for shareholders and other stakeholders. The social targets reflect aspirations expressed in the Novo Nordisk Way: helping people live better lives, working the Novo Nordisk Way and nurturing a diverse working environment. In 2013, progress was made against all three targets. | |
NOVO NORDISK ANNUAL REPORT 2013
|
ACCOMPLISHMENTS AND
RESULTS 2013
|
13
|
Environmental
performance
Novo Nordisk’s environmental performance is measured on three strategic dimensions: consumption of water, consumption of energy and CO2 emissions from energy consumption.
Water and energy
In 2013, 2,572,000 GJ energy and 2,685,000
m3
water were consumed at production sites around the world. This equals an increase
of 6% and 8% respectively, which is linked to the increased production volume
output and new production capacity.
Around
half of the water and 30% of the energy consumed at the company’s 13 production
sites is consumed at the production site in Kalundborg, Denmark. Optimisations
achieved at this site therefore have a significant impact on the company’s
total resource consumption.
CO2
emissions
In 2013, CO2 emissions from production
amounted to a total of 125,000 tons.
This equals a 2% increase compared with 2012, which is directly linked to
the increased consumption of energy.
The increase in CO2 emissions
is less than the increase in energy consumption, because part of the increase
in energy consumption happened at sites where
the energy consumed is less CO2-intensive.
At the same time, consumption decreased at sites with coal-based energy supply.
The company’s
target of a 10% absolute reduction in 10 years is expected to be met in 2014.
Since 2005, 685 energy-saving projects
have led to a total reduction in CO2
emissions of 44,000 tons annually.
Production sites that rely on coal-based energy supply will be in focus for
further reductions. These sites are Kalundborg in Denmark and Tianjin in China.
Waste
In 2013, Novo Nordisk generated 91,712 tons
of waste, which is an increase of 11% compared with 2012. Of this, 81% is non-hazardous
organic production waste in diabetes care.
The objective
is to reduce environmental impact from waste. As a consequence, instead of setting
traditional reduction targets measured by quantity, those areas where environmental
impacts from waste can be reduced the most have been singled out for focused
attention.
Since October
2011, the company’s organic production waste has been used for energy recovery
in biogas plants, whereas previously it was used for animal feed. As a consequence,
organic production waste is now reported as waste, included in the total waste
volume. Organic waste production is the type of waste that increases the most
in line with growing production. The total waste volume excluding organic production
waste is stable.
Long-term environmental targets
2013 performance against
long-term environmental targets
Novo Nordisk has chosen three long-term environmental
targets to support long-term financial performance, balancing responsibility
with profitability, with the aim of creating sustainable value for shareholders
and other stakeholders. The environmental targets for consumption
of energy and water and CO2
emissions contribute to optimising
production efficiency and reducing environmental impacts.
The consumption
of energy and water for production is increasing due to continued growth in
sales and, as a consequence, emissions of CO2
are increasing too.
Performance
against the targets is as projected and the targets are expected to be met.
Long-term environmental targets update
The long-term environmental targets for consumption
of energy and water were revised and updated in 2013 to ensure that they were
aligned with new business priorities in response to the need for expansions
of production capacity and an increased product portfolio.
The new
targets remain ambitious and reflect the aspiration of continuous decoupling
of environmental impacts from business growth, measured as increase in sales
in local currencies. The targets have been set as a maximum 50% increase in
energy and water consumption compared with business growth, measured as a
three-year average. This will be particularly challenging in years of production
expansion and running-in of new plants or production lines.
NOVO NORDISK ANNUAL REPORT 2013
| 14 | ACCOMPLISHMENTS AND RESULTS 2013 |
| DKK million |
2009
|
2010
|
2011
|
2012
|
2013
|
2012–2013
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial performance | Change | |||||||||||
| Net sales | 51,078 | 60,776 | 66,346 | 78,026 | 83,572 | 7% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Underlying sales growth in local currencies | 11% | 13% | 11% | 12% | 12% | |||||||
| Currency effect (local currency impact) | 1% | 6% | (2% | ) | 6% | (5% | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net sales growth as reported | 12% | 19% | 9% | 18% | 7% | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation, amortisation and impairment losses | 2,551 | 2,467 | 2,737 | 2,693 | 2,799 | 4% | ||||||
| Operating profit | 14,933 | 18,891 | 22,374 | 29,474 | 31,493 | 7% | ||||||
| Net financials | (945 | ) | (605 | ) | (449 | ) | (1,663 | ) | 1,046 | N/A | ||
| Profit before income taxes | 13,988 | 18,286 | 21,925 | 27,811 | 32,539 | 17% | ||||||
| Net profit for the year | 10,768 | 14,403 | 17,097 | 21,432 | 25,184 | 18% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets | 54,742 | 61,402 | 64,698 | 65,669 | 70,337 | 7% | ||||||
| Equity | 35,734 | 36,965 | 37,448 | 40,632 | 42,569 | 5% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital expenditure, net | 2,631 | 3,308 | 3,003 | 3,319 | 3,207 | (3% | ) | |||||
| Free cash flow1 | 12,332 | 17,013 | 18,112 | 18,645 | 22,358 | 20% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial ratios | ||||||||||||
| Percentage of sales | ||||||||||||
| Sales outside Denmark | 99.2% | 99.4% | 99.3% | 99.4% | 99.4% | |||||||
| Sales and distribution costs | 30.2% | 29.9% | 28.6% | 27.6% | 28.0% | |||||||
| Research and development costs | 15.4% | 15.8% | 14.5% | 14.0% | 14.0% | |||||||
| Administrative costs | 5.4% | 5.0% | 4.9% | 4.2% | 4.2% | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross margin1 | 79.6% | 80.8% | 81.0% | 82.7% | 83.1% | |||||||
| Net profit margin1 | 21.1% | 23.7% | 25.8% | 27.5% | 30.1% | |||||||
| Effective tax rate1 | 23.0% | 21.2% | 22.0% | 22.9% | 22.6% | |||||||
| Equity ratio1 | 65.3% | 60.2% | 57.9% | 61.9% | 60.5% | |||||||
| Return on equity (ROE)1 | 31.3% | 39.6% | 46.0% | 54.9% | 60.5% | |||||||
| Cash to earnings1 | 114.5% | 118.1% | 105.9% | 87.0% | 88.8% | |||||||
| Payout ratio1 | 40.9% | 39.6% | 45.3% | 45.3% | 47.1% | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Long-term financial targets | Targets | |||||||||||
| Operating margin1 | 29.2% | 31.1% | 33.7% | 37.8% | 37.7% | 40% | ||||||
| Operating profit growth | 20.7% | 26.5% | 18.4% | 31.7% | 6.9% | 15% | ||||||
| Operating profit after tax to net operating assets1 | 47.3% | 63.6% | 77.9% | 99.0% | 97.2% | 125% | ||||||
| Cash to earnings, (three-year average) | 111.5% | 115.6% | 112.8% | 103.7% | 93.9% | 90% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
Diabetes care sales
.. Oral antidiabetic products (OAD)
.. Protein-related products
.. Victoza®
.. Human insulins
.. Modern insulins (insulin analogues)
Biopharmaceuticals sales
... Other products
... Norditropin(R)
... NovoSeven(R)
Sales by geographic region
... Japan & Korea
... Region China
... International Operations
... Europe
... North America
|
ACCOMPLISHMENTS AND
RESULTS 2013
|
15
|
|
2009
|
2010
|
2011
|
2012
|
2013
|
2012–2013
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Social performance | Change | |||||||||||
| Least developed countries where Novo Nordisk sells insulin according to the differential pricing policy | 36 | 33 | 36 | 35 | 35 | – | ||||||
| Donations (DKK million)2 | 83 | 84 | 81 | 84 | 83 | (1% | ) | |||||
| New patent families (first filings) | 55 | 62 | 80 | 65 | 77 | 18% | ||||||
| Employees (total) | 29,329 | 30,483 | 32,632 | 34,731 | 38,436 | 11% | ||||||
| Employee turnover | 8.3% | 9.1% | 9.8% | 9.1% | 8.1% | |||||||
| Relevant employees trained in business ethics |
N/A
|
98% | 99% | 99% | 97% | |||||||
| Product recalls |
2
|
5 | 5 | 6 | 6 | – | ||||||
| Warning Letters and re-inspections |
0
|
0 | 0 | 1 | 1 | – | ||||||
| Company reputation with external key stakeholders (scale 1–7) |
N/A
|
N/A
|
5.6 | 5.7 | 5.8 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Long-term social targets | Targets | |||||||||||
| Patients reached with Novo Nordisk diabetes care products in millions (estimate) |
N/A
|
N/A
|
20.9 | 22.8 | 24.3 | 40 by 2020 | ||||||
| Working the Novo Nordisk Way (scale 1– 5) |
N/A
|
N/A
|
4.3 | 4.3 | 4.4 | 4.0 | ||||||
| Diverse senior management teams |
50%
|
54% | 62% | 66% | 70% | 100% by 2014 | 3 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Environmental performance | Change | |||||||||||
| Energy consumption (1,000 GJ) |
2,246
|
2,234 | 2,187 | 2,433 | 2,572 | 6% | ||||||
| Water consumption (1,000 m3) |
2,149
|
2,047 | 2,136 | 2,475 | 2,685 | 8% | ||||||
| CO2 emissions from energy consumption (1,000 tons) |
166
|
95 | 94 | 122 | 125 | 2% | ||||||
| Wastewater (1,000 m3) |
2,062
|
1,935 | 2,036 | 2,272 | 2,457 | 8% | ||||||
| Waste (tons) |
26,362
|
25,627 | 41,376 | 82,802 | 91,712 | 11% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Long-term environmental targets | Targets | |||||||||||
| Energy consumption (vs prior year) |
(11%
|
) | (1% | ) | (2% | ) | 11% | 6% | 6% | 4 | ||
| Water consumption (vs prior year) |
(20%
|
) | (5% | ) | 4% | 16% | 8% | 6% | 4 | |||
| CO2 emissions from energy consumption (vs 2004 baseline) |
(24%
|
) | (56% | ) | (57% | ) | (44% | ) | (42% | ) | by 2014 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share performance | Change | |||||||||||
| Basic earnings per share/ADR in DKK1,5 |
3.59
|
4.96 | 6.05 | 7.82 | 9.40 | 20% | ||||||
| Diluted earnings per share/ADR in DKK1, 5 |
3.56
|
4.92 | 6.00 | 7.77 | 9.35 | 20% | ||||||
| Total number of shares (millions) 31 December5 |
3,100
|
3,000 | 2,900 | 2,800 | 2,750 | (2% | ) | |||||
| Net asset value per share, (Group) in DKK5 |
11.53
|
12.32 | 12.91 | 14.51 | 15.48 | 7% | ||||||
| Dividend per share in DKK5 |
1.50
|
2.00 | 2.80 | 3.60 | 4.50 | 25% | ||||||
| Total dividend (DKK million) |
4,400
|
5,700 | 7,742 | 9,715 | 11,866 | 6 | 22% | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
1. For definitions, please refer to p 93. 2. Donations to the World Diabetes Foundation and the Novo Nordisk Haemophilia Foundation, which are working to increase healthcare capacity in developing countries. 3. By the end of 2014 all senior management teams must comply with the target to be diverse in terms of both gender and nationality or explain why this has not yet been achievable. 4. The 6% equals 50% of the business growth measured as the increase in sales in local currencies. For detailed target definition, please refer to p 13. 5. As at 2 January 2014 a stock split of the company’s trading unit was conducted. Comparative figures have been restated to reflect the change in trading unit from DKK 1 to DKK 0.20. 6. Proposed dividend for the year (not yet declared).
NOVO NORDISK ANNUAL REPORT 2013
Employees (total)
... Japan & Korea
... Region China
... International Operations
... Europe*
... North America
Includes headquarter functions and Research and Development
in Denmark.
... Waste*
... Waste excl organic production
waste for biogas
* Before 2011, most of the non-hazardous organic production
waste was used for animal feed and classified as a by-product.
Since October 2011, all this waste has been sent for energy
recovery in biogas plants and is therefore reported as waste.
Net cash distribution
to shareholders
... Dividends
... Share repurchases
Business
strategy:
‘Our focus is our strength’
If Novo Nordisk’s business
strategy were to be
described in one word, it would have to be ‘focus’.
Each
year, a team of people from different parts of
Novo Nordisk’s global organisation is tasked by senior management to
explore the business environment, analyse trends and come back and challenge
Novo Nordisk’s strategy based on the findings.
Novo
Nordisk’s corporate strategy is the result of this process, which ends
when the Board of Directors approves the updated strategy in June. In the following
months, it is anchored in the annual business and organisation plans, balanced
scorecards and performance targets.
The direction
and the core elements of the strategy do not change fundamentally from year
to year, but are adjusted whenever signals of change occur in Novo Nordisk’s
business environment. The adjustments ensure that Novo Nordisk is capable of
meeting current and emerging challenges and opportunities.
The current
business environment has plenty of both. It is characterised by slow economic
growth and austerity measures in some parts of the world, and rapid economic
growth and urbanisation with alarming implications for public health in others.
In high-income countries with ageing populations, governments and private payers
are reluctant to pay a premium for new, innovative therapies. Low- and middle-income
countries fight a double burden of poverty and poor health, and access to care
is inadequate and unevenly distributed. Many countries with largely publicly
funded healthcare systems are putting in place market restrictions for new medications
and in the US, pharmaceutical companies, including Novo Nordisk, are facing
increasingly tough pricing negotiations with managed care organisations and
pharmacy benefit managers.
Many
pharmaceutical companies are seeing major products going off patent and are
unable to bring out innovative products that can make up for the lost revenue.
Some have chosen to cut research and development budgets and lay off thousands
of employees. Some have added generic and over-the-counter medicines to their
offering, while others have created a broader service offering around their
core products. And all have realised that new products will only have a chance
in the market if they address unmet medical needs and are accompanied by convincing
data about their health-economic benefits.
Novo
Nordisk has decided to continue making large investments in research and development,
strategic products and growth markets. The decision is based on a firm belief
that huge unmet medical needs remain to be addressed, not least within diabetes,
a disease that is growing at an alarming rate all over the world. Read more
on pp 22–23.
To meet
the increasing demands for data about its products’ health-economic benefits,
capabilities are being further strengthened within the company’s market
access functions. Moreover, Novo Nordisk is expanding its field force in countries
where there are significant opportunities for market expansion. It is also exploring
new ways of reaching people with unmet health needs. For example, pilot programmes
in low-income countries such as Kenya and Bangladesh have helped improve access
to products in rural areas.
A focused strategy
The three core elements of Novo Nordisk’s strategy have remained unchanged for years:
First, Novo Nordisk has a sharp focus on a few diseases and conditions where it can make a significant difference. As a result of this focus, the company has built strong positions within diabetes care, haemophilia and growth disorders, while creating a platform for entering into treatments for obesity and autoimmune inflammatory diseases.
| Second, activities are leveraging the company’s five core capabilities: | |
| • | Engineering, formulating, developing and delivering protein-based treatments |
| • | Deep disease understanding |
| • | Efficient large-scale production of proteins |
| • | Planning and executing global launches of new products |
| • | Building and maintaining a leading position in emerging markets. |
17
Third,
Novo Nordisk has a values-based management system formalised in the Novo Nordisk
Way. Read more on p 4. A key element of the Novo
Nordisk Way is the Triple Bottom Line business principle, which was written
into the company’s Articles of Association at the Annual General Meeting
in 2004. It states that Novo Nordisk “strives to conduct its activities
in a financially, environmentally and socially responsible way”.
This
is the company that 24.3 million patients rely on for their daily medication,
where more than 38,000 employees work and in which more than 130,000 investors
have bought shares.
The five strategic focus areas
 |
1. Expand leadership in diabetes |
382 million people worldwide are living
with diabetes and it is predicted that by 2035 close to 600 million people
worldwide will have diabetes. Read more about the diabetes
pandemic on pp 22–23.
The global
market for diabetes care products amounts to approximately 238 billion Danish
kroner, of which Novo Nordisk products account for about 27%. The market has
been growing by around 11% annually in the last decade and is expected to experience
continued solid growth driven by an increased prevalence of diabetes and the
need for better treatments. Of this global market, insulin accounts for 52%,
oral diabetes products for 41% and GLP-1 products for 7%.
In 1923
the first patients were treated with insulin from the company that is now Novo
Nordisk, and diabetes care remains its largest and fastest-growing business
area.
Diabetes care accounts for close
to 78% of Novo Nordisk’s total sales, most of which comes from insulin
and GLP-1 products. In both areas Novo Nordisk is the global market leader in
terms of volume.
Novo Nordisk
is well positioned to address the unmet medical needs in diabetes.
| The insulin portfolio | |
| The insulin portfolio includes: | |
| • | Tresiba ® (insulin degludec), a once-daily new-generation basal insulin analogue with an ultra-long duration of action and a flat and stable action profile that reduces the rate of low blood sugar (hypoglycaemia). Read more about Tresiba® on pp 24–25. |
| • | Ryzodeg ® (insulin degludec/insulin aspart), a soluble insulin combination of Tresiba® and NovoRapid® (insulin aspart) providing both basal and mealtime glucose control. |
| • | NovoRapid ® (marketed as NovoLog® in the US), the world’s most widely used rapid-acting insulin for use at mealtimes. |
| • | NovoMix ® 70/50/30 (NovoLog® Mix 70/30 in the US), dual-release modern insulins that cover both mealtime and basal requirements. These insulins can be used either to initiate or intensify insulin therapy. |
| • | Levemir ® (insulin detemir), a soluble, long-acting modern insulin for once-daily use. It provides glucose control with a favourable weight profile. |
The primary goal of Novo Nordisk’s diabetes research is to discover new therapies that lower blood glucose while reducing the risk of low blood sugar. A recent result of this research is IDegLira, a fixed combination of insulin degludec and liraglutide (the active ingredient in Victoza®). IDegLira is under regulatory review in the EU. Read more about IDegLira on pp 24–25.
Novo
Nordisk is also developing a new faster-acting formulation of insulin aspart
to be taken at mealtimes and recently initiated an extensive phase 3a programme.
In addition
to new and improved injectable insulins, Novo Nordisk is also developing formulations
of insulin that can be taken as tablets.
GLP-1 (Glucagon-Like Peptide-1)
With the launch of Victoza®
in 2009, Novo Nordisk entered the GLP-1 therapy segment. Victoza® is a human GLP-1
analogue with 97% similarity to the natural gut hormone. Victoza®
is taken once daily and, like natural GLP-1, works by stimulating the beta cells
in the pancreas to release insulin only when blood sugar levels are high.
GLP-1 therapy
is a significant advance in the treatment of type 2 diabetes because it lowers
glucose with only a very low risk of triggering low blood sugar.
Victoza®
is approved for adults with type 2 diabetes who are unable to achieve blood
glucose goals with lifestyle changes and tablet-based treatment (metformin,
the most widely used tablet for type 2 diabetes). In less than two years, Victoza®
became the leading GLP-1 treatment globally and has steadily expanded the market
for GLP-1 treatment. The market is currently valued at around 16.4 billion kroner,
of which Victoza® accounts for approximately 70%. Available in more than 80 markets,
Victoza®
is now used by approximately 800,000 people worldwide according to company estimates.
Based on
the expertise Novo Nordisk has gained through the development of Victoza®,
the company is now building a GLP-1 portfolio with the intention of providing
an even broader range
CONTINUED ►
| Novo
Nordisk’s strategy Strategic focus areas |
Core capabilities | |||||||||||||||
| Expand leadership in DIABETES | Engineering, formulating, developing and delivering proteinbased treatments |
Deep disease under- standing |
Efficient large-scale production of proteins |
Planning and executing global launches of new products |
Building and maintaining a leading position in emerging markets |
|||||||||||
| Establish presence in OBESITY | ||||||||||||||||
| Pursue leadership in HAEMOPHILIA | ||||||||||||||||
| Expand leadership in GROWTH DISORDERS | ||||||||||||||||
| Establish presence in INFLAMMATION | ||||||||||||||||
|
Novo
Nordisk Way and the Triple Bottom Line business principle
|
||||||||||||||||
of treatment options. Key projects include a once-weekly GLP-1 analogue, semaglutide, which in 2013 entered phase 3a development. Novo Nordisk is also developing formulations of GLP-1 that can be taken as tablets.
Injection devices
Novo Nordisk invented the market for insulin
injection devices with the launch of the world’s first insulin pen in 1985.
Today, Novo Nordisk offers the world’s most widely used durable and disposable
devices for insulin and GLP-1, NovoPen®
4 and FlexPen®,
and is currently introducing its latest innovations, NovoPen®
5 and FlexTouch®,
in many markets. The development of injection devices is based on extensive
studies of how patients experience their daily injections and what they want
from their device. It is an area where Novo Nordisk can make a difference by
developing devices that are simple, safe and user-friendly. Read
more about devices on p 10.
 |
2. Establish a presence in obesity |
According to the World Health Organization
(WHO), obesity has reached pandemic proportions, with up to 1.4 billion adults
(over 20 years old) being overweight. Of these, more than 200 million men
and nearly 300 million women are clinically obese (ie BMI ≥ 30). Obesity
is known to be a major risk factor in developing serious diseases such as
type 2 diabetes and cardiovascular diseases.
Despite
the growing prevalence of obesity globally, there are only a few pharmaceutical
treatment options currently available and reimbursement for these medications
is limited. The market for obesity products currently amounts to 2–3 billion
kroner.
Novo
Nordisk has been investigating the use of liraglutide in a 3 mg dose as a
new once-daily treatment for some people with obesity, namely those with obesity-related
medical conditions such as prediabetes, sleep apnoea, high blood pressure
and lipid disorders. Liraglutide 3 mg is under regulatory review in the EU
and the US. Read more about obesity on pp 28–29.
 |
3. Pursue leadership in haemophilia |
Haemophilia is an inherited or acquired bleeding
disorder that prevents blood from clotting. An estimated 420,000 people worldwide
are living with severe or moderate haemophilia. The global haemophilia drug
market is estimated at 53 billion kroner and has grown by more than 4% annually
in recent years.
Novo Nordisk
entered the haemophilia market in 1996 when it introduced NovoSeven®
for the treatment of haemophilia patients who form antibodies against traditional
treatments. The
company’s ambition is to move from this niche into the main segments of the haemophilia A and B market and achieve a leadership position by developing improved treatment options for all patients. Read more about haemophilia on p 30.
 |
4. Expand leadership in growth disorders |
Novo Nordisk has been active
in the treatment of growth hormone deficiency for almost four decades. Growth
hormone therapy is most frequently used in developed countries. Globally it
is estimated that more than 2 million people are eligible for growth hormone
therapy.
The market
for growth disorder treatments is estimated at 16.4 billion kroner and has grown
by more than 4% annually since 2009. Novo Nordisk is the leading provider of
human growth hormone with a global market share of 30% measured by value.
Novo Nordisk’s
strategy in growth hormone therapy is to expand leadership by providing innovative
and convenient products and devices. Norditropin® (somatropin) is the
only liquid growth hormone product with room temperature stability after first
use that is available in a prefilled pen device. Novo Nordisk’s newest
injection device for growth hormone is Norditropin®
FlexPro®,
which has an easy-touch dosing mechanism.
Novo Nordisk
is also developing a long-acting growth hormone formulation, currently in phase
1 trials.
 |
5. Establish presence in inflammation |
Autoimmune inflammatory diseases,
such as rheumatoid arthritis and Crohn’s disease, result from the immune
system attacking the body’s own tissues and creating a chronic state of
inflammation. Many people with autoimmune inflammatory diseases do not respond
adequately to current treatments.
Novo Nordisk
is using its expertise in designing therapeutic proteins and within chronic
disease management care to develop new treatments, particularly for patients
who are unresponsive to current treatments. Novo Nordisk has built a portfolio
of first-in-class compounds with three projects being investigated in phase
2 clinical studies.
The core capabilities
Engineering, formulating, developing
and delivering protein-based treatments
Novo Nordisk has dedicated research and development
facilities in Denmark, China, the US and India. More than 7,000 employees
are involved in research and development activities throughout the company,
working in partnerships with external biotech and academic researchers.
Novo Nordisk’s researchers have many years’ experience with formulation technology, protein engineering, expression and delivery, enabling the company to continuously improve the properties of therapeutic proteins such as insulin and GLP-1. Furthermore, since 1985, when Novo Nordisk launched the world’s first insulin injection device – NovoPen® – the company has developed world-class expertise in designing and producing simple and convenient devices for injecting protein therapeutics.
Deep disease understanding
Novo Nordisk has a deep understanding of the
unmet medical needs associated with chronic conditions. This, together with
strong relationships and numerous collaborations with external researchers and
clinicians, provides a solid foundation for the company’s research, development
and marketing activities. One example is DAWN2™
(Diabetes Attitudes, Wishes and Needs), a study conducted in 17 countries and
including more than 15,000 people with diabetes, their family members and healthcare
professionals. DAWN2™
highlights opportunities for improving diabetes care, education and community
support.
| Efficient large-scale production of proteins |
|
| A high-quality, cost-effective global manufacturing infrastructure is a prerequisite for competing successfully in an increasingly competitive pharmaceutical market. It also enables Novo Nordisk to make treatments available at very low prices in developing countries. Novo Nordisk has a global production set-up with facilities strategically located in five countries across four continents: | |
| • | The production of active pharmaceutical ingredients is a highly specialised process and mainly takes place in Denmark, where Novo Nordisk has nine plants, including the largest insulin factory in the world. |
| • | The production of diabetes finished products takes place in five countries: Denmark, France, the US, Brazil and China, which all have the approval and ability to export to other markets. |
| • | In addition, Novo Nordisk has a number of smaller manufacturing plants that support local demand in selected countries. |
| • | All production facilities operate under one global quality management system with centrally deployed standard operating procedures (SOPs) for all involved employees. This ensures a uniform and high quality standard for all products. |
All manufacturing sites are held accountable for meeting ambitious targets for minimising their impact on the environment. Performance measures include energy and water consumption, CO2 emissions and the amount of waste
19
generated during production processes. Read more about production on pp 36–37.
Planning and executing global launches
of new products
Due to the high and increasing costs associated
with developing, obtaining approval for and marketing a new medicine, most pharmaceuticals
must be launched globally to optimise the return on investment. And, importantly,
such launches must happen over a relatively short time so there is a reasonable
period left before the product’s patents expire. Through the launches of
Victoza®
in multiple markets over the past years, Novo Nordisk has refined this capability,
which is now being utilised in connection with the launch of, for example, Tresiba®.
Building and maintaining a leading position
in emerging markets
Many years of experience have helped Novo Nordisk
understand the needs of new markets and forge partnerships with local stakeholders.
The company’s strategy has always been to establish a local organisation
early – as soon as there are signs of a market developing – and to
grow organically as the market develops. This has enabled Novo Nordisk to build
long-term relations and a sustainable market presence, and is a key reason behind
Novo Nordisk’s success in rapidly developing markets such as China. Read
more about Novo Nordisk’s five regions on pp 31–35.
The Triple Bottom Line business principle
Novo Nordisk’s strategy is underpinned
by the Triple Bottom Line business principle, which ensures that financial,
social and environmental impacts are considered when decisions are made. This
requires systematic and respectful engagements with key stakeholders to stay
attuned to their interests and expectations.
The aim
is to ensure long-term profitability by mitigating risks and minimising negative
impacts from business activities, and to enhance the positive contributions
to society from the company’s global operations.
Financially responsible:
profitable for the long term
Doing business in a profitable and responsible
way is the basis for the long-term viability of the company. Novo Nordisk
uses four long-term financial targets to steer the business towards long-term
sustainable growth. These targets help Executive Management balance growth
in the short term with investments in longer-term growth such as new production
facilities and research and development activities.
Socially responsible: promote
healthy living – and a healthy and engaging workplace
It is Novo Nordisk’s mission to help people
with diabetes, haemophilia and other chronic diseases live better lives. This
is encapsulated in the company’s corporate commitments of Changing Diabetes®
and Changing Possibilities in Haemophilia®.
As a research-based healthcare company, Novo Nordisk’s main contribution
is to discover and develop innovative biological medicines and make them accessible
to patients throughout the world.
With its
deep disease understanding and patient focus, Novo Nordisk plays an active part
in the fight against diabetes. The company is engaged in the prevention of diabetes
through the promotion of healthy living, and is working to improve awareness,
diagnosis and treatment of diabetes. Through these efforts, Novo Nordisk aims
to reduce the human and financial burden of diabetes. Read
more about Changing Diabetes®
on pp 26–27.
Social
responsibility is also about ensuring a healthy and engaging workplace for Novo
Nordisk’s employees. A healthy, inclusive and engaging working environment
helps attract, motivate and retain the right people, and this is critical to
sustain global growth and make positive contributions to society. Diversity
of backgrounds and experience enriches the working environment. A diversity
aspiration has been set for senior management teams. It drives strategic efforts
to encourage recruitment and promotion of women and people from different nationalities
throughout the organisation. The people strategy offers global standards for equal opportunities, respect for the individual and a safe working environment. As a particular focus, the company promotes healthy lifestyles at work through its NovoHealth programme.
Environmentally responsible:
preserve nature’s resources
Producing more with less is not just sound
household management; it is a way to help preserve scarce natural resources
and proactively address sustainability challenges throughout the value chain.
As its business grows, Novo Nordisk seeks to reduce the consumption of natural
resources and manufactured inputs across the value chain. In addition, there
is also a focus on minimising outputs in the form of emissions such
as CO2 and waste. Read more about
production on pp 36–37.
| Maximising
the value of the Triple Bottom Line |
|
| The Triple Bottom Line business principle creates value for Novo Nordisk in three ways as it: | |
| 1. | makes the company more adaptive to changes in its business environment. This, in turn, mitigates risks and builds trust. Novo Nordisk proactively engages with stakeholders to address global and systemic challenges that could affect the company’s success in the long term. One example is an active engagement in the development of a new set of global sustainable development goals under the auspices of the United Nations. |
| 2. | strengthens competitiveness. Changing Diabetes® is an example of how demonstrating social responsibility and systematic stakeholder engagements can effectively complement market strategies to drive revenue growth. Novo Nordisk has developed a method to demonstrate the business case, called the Blueprint for Change programme. Through a series of case studies, the programme documents how the company’s approach to doing business in ways that are responsible and profitable creates shared value, ie benefits for both stakeholders and the business. |
| 3. | is an engine for innovation in collaboration with partners. One example is from the recent Blueprint for Change case study in Indonesia, one of the company’s selected growth markets. The study showed how Novo Nordisk, by working with partners, can develop its business by reaching out more effectively to people with diabetes who currently do not have access to insulin treatment. The study has informed the strategy in Indonesia. Read more at novonordisk.com/sustainability. |
| 20 | OUR BUSINESS |
Diabetes care
| Compound |
Indication
|
Description
|
Phase 1 | Phase 2 | Phase 3 | Filed/ regulatory approval |
||||||
| Diabetes | ||||||||||||
|
|
||||||||||||
| Tresiba® (insulin degludec) NN1250 |
Type 1 and 2 diabetes | A new-generation basal insulin with an ultra-long duration of action of more than 42 hours. Approved to offer patients reduced risk of hypoglycaemia and the possibility of adjusting the time of injection, when needed. Approved and launched in the EU, Japan and other markets. Additional data required by the US FDA are being generated for the planned resubmission. |  |
|||||||||
|
|
||||||||||||
| Ryzodeg® (insulin degludec and insulin aspart) NN5401 |
Type 1 and 2 diabetes | A soluble co-formulation of Tresiba®, the new-generation basal insulin analogue with an ultra-long duration of action, and NovoRapid® (insulin aspart, marketed as NovoLog® in the US), a rapid-acting mealtime insulin. Approved to offer patients reduced risk of hypoglycaemia. Approved in the EU, Japan and other markets. Additional data required by the US FDA are being generated for the planned resubmission. | |
|||||||||
|
|
||||||||||||
| IDegLira (a fixed combination of insulin degludec and liraglutide) NN9068 |
Type 2 diabetes |
A combination of insulin degludec and liraglutide intended to offer the benefits of the two components in a single preparation. Under regulatory review in the EU. Regulatory filing in the US is awaiting the additional data required by the FDA for Tresiba®. | |
|||||||||
|
|
||||||||||||
| Faster-acting insulin aspart NN1218 |
Type 1 and 2 diabetes including pump users | A new formulation of insulin aspart to accelerate onset of action. |  |
|||||||||
|
|
||||||||||||
| Semaglutide NN9535 |
Type 2 diabetes | A once-weekly GLP-1 analogue intended to offer the clinical benefits of a GLP-1 analogue with less frequent injections. | |
|||||||||
|
|
||||||||||||
| LATIN T1D NN9211 |
Type 1 diabetes | Liraglutide, a once-daily human GLP-1 analogue, intended to offer clinical benefits as adjunct therapy to insulin. | |
|||||||||
|
|
||||||||||||
| OG217SC NN9924 |
Type 2 diabetes | A long-acting GLP-1 analogue intended to offer the clinical benefits of a GLP-1 analogue in a tablet. |  |
|||||||||
|
|
||||||||||||
| OG987GT NN9926 |
Type 2 diabetes | A long-acting GLP-1 analogue intended to offer the clinical benefits of a GLP-1 analogue in a tablet. |  |
|||||||||
|
|
||||||||||||
| OG987SC NN9927 |
Type 2 diabetes | A long-acting GLP-1 analogue intended to offer the clinical benefits of a GLP-1 analogue in a tablet. | |
|||||||||
|
|
||||||||||||
| OG217GT NN9928 |
Type 2 diabetes | A long-acting GLP-1 analogue intended to offer the clinical benefits of a GLP-1 analogue in a tablet. | |
|||||||||
|
|
||||||||||||
| LAI287 NN1436 |
Type 1 and 2 diabetes | A long-acting basal insulin analogue with potential for once-weekly dosing. | |
|||||||||
|
|
||||||||||||
| OI338GT NN1953 |
Type 1 and 2 diabetes | A long-acting basal insulin analogue intended to offer the clinical benefits of a basal insulin analogue in a tablet. | |
|||||||||
|
|
||||||||||||
| OI362GT NN1954 |
Type 1 and 2 diabetes | A long-acting basal insulin analogue intended to offer the clinical benefits of a basal insulin analogue in a tablet. | |
|||||||||
|
|
||||||||||||
| OI287GT NN1956 |
Type 1 and 2 diabetes | A long-acting basal insulin analogue intended to offer the clinical benefits of a basal insulin analogue in a tablet. | |
|||||||||
|
|
||||||||||||
| Obesity | ||||||||||||
|
|
||||||||||||
| Liraglutide 3 mg NN8022 |
Obesity | A once-daily human GLP-1 analogue for use as adjuvant to lifestyle changes intended to offer weight loss for people with severe obesity, including those at particular risk of developing diabetes. Under regulatory review in the US and the EU. | |
|||||||||
|
|
||||||||||||
NOVO NORDISK ANNUAL REPORT 2013
|
OUR BUSINESS
|
21
|
Biopharmaceuticals
| Compound |
Indication
|
Description
|
Phase 1 | Phase 2 | Phase 3 | Filed/ regulatory approval |
||||||
| Haemophilia | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||
| N8-GP NN7088 |
Haemophilia A | A long-acting recombinant coagulation factor VIII derivative intended to offer prophylaxis and treatment of bleeds. | |
|||||||||
|
|
||||||||||||
| N9-GP NN7999 |
Haemophilia B | A long-acting recombinant coagulation factor IX derivative intended to offer prophylaxis and treatment of bleeds. | |
|||||||||
|
|
||||||||||||
| Concizumab NN7415 |
Haemophilia A, B and with inhibitors | A monoclonal antibody against Tissue Factor Pathway Inhibitor (TFPI) intended for bleeding prevention after subcutaneous administration. | |
|||||||||
|
|
||||||||||||
| Growth disorders | ||||||||||||
|
|
||||||||||||
| NN8640 | Growth disorders | A long-acting human growth hormone intended to offer less than once-daily injections. | |
|||||||||
|
|
||||||||||||
| Inflammation | ||||||||||||
|
|
||||||||||||
| Anti-IL-20 NN8226 |
Rheumatoid arthritis |
A recombinant human monoclonal antibody with a novel mechanism of action. The drug is intended to improve treatment outcomes in patients who do not respond adequately to existing treatments. | |
|||||||||
|
|
||||||||||||
| Anti-IL-21 NN8828 |
Crohn’s disease |
A recombinant human monoclonal antibody with a novel mechanism of action. The drug is intended to improve treatment outcomes in patients who do not respond adequately to existing treatments. | |
|||||||||
|
|
||||||||||||
| Anti-NKG2D NN8555 |
Crohn’s disease |
A recombinant human monoclonal antibody with a novel mechanism of action. The drug is intended to improve treatment outcomes in patients who do not respond adequately to existing treatments. | |
|||||||||
|
|
||||||||||||
| Anti-C5aR NN8210 |
Rheumatoid arthritis |
A recombinant human monoclonal antibody with a novel mechanism of action. The drug is intended to improve treatment outcomes in patients who do not respond adequately to existing treatments. | |
|||||||||
|
|
||||||||||||
| Anti-NKG2A NN8765 |
Rheumatoid arthritis |
A recombinant human monoclonal antibody with a novel mechanism of action. The drug is intended to improve treatment outcomes in patients who do not respond adequately to existing treatments. | |
|||||||||
|
|
||||||||||||
| Anti-IL-21 NN8828 |
Systemic lupus erythematosus | A recombinant human monoclonal antibody with a novel mechanism of action. The drug is intended to improve treatment outcomes in patients who do not respond adequately to existing treatments. | |
|||||||||
|
|
||||||||||||
|
Phase 1
Studies in a small group (usually 10–100) of healthy volunteers, and sometimes patients, to investigate how the body handles, distributes and eliminates new medication and establish maximum tolerated dose. |
Phase
2 Studies of various dose levels in a larger group of patients (usually 100–1,000) to learn about the new medication’s effect on the condition and its side effects. In phase 2, clinical trials are carried out to evaluate efficacy (and safety) in specified populations of patients. The outcome of phase 2 trials is clinical proof of concept and the selection of dose for evaluation in phase 3 trials. |
Phase
3 Studies in large groups of patients (more than 8,000) comparing a new medication with a commonly used drug or placebo for both safety and efficacy. Phase 3a covers trials conducted after efficacy is demonstrated and prior to regulatory submission. Phase 3b covers clinical trials completed during and after regulatory submission. In small therapeutic areas such as haemophilia, regulatory guidelines may allow the design of single-arm therapeutic confirmatory trials or trials that compare against eg historical control instead of existing treatment or placebo. |
Read more at novonordisk.com/investors and clinicaltrials.gov.
22
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|
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382 million people in the world
have diabetes today. |
|
|
Diabetes
is an insidious disease of pandemic proportions. Ban Ki-moon, the Secretary-General
of the United Nations, has described diabetes as a tsunami in slow motion.
According to the latest figures from the International Diabetes Federation
(IDF), 382 million people in the world have diabetes today – a number
predicted to grow to close to 600 million by 2035.1* 80% of the total number
affected live in low- and middle-income countries, where the pandemic
is gathering pace at alarming rates due to the lifestyle changes associated
with economic growth and urbanisation. * All footnotes can be found on p 112. |
be almost non-existent,
while in other countries a key issue is that even those people who are
diagnosed and treated do not reach their treatment targets and therefore
have a high risk of developing complications. Cannot be ignored
|
 |
382 MILLION PEOPLE LIVE WITH DIABETES WORLDWIDE BY 2035 592 MILLION PEOPLE WILL LIVE WITH DIABETES
NOVO NORDISK ANNUAL REPORT 2013
|
The International Diabetes Federation (IDF) estimates that there are currently 35 million people with diabetes living in the Middle East and North Africa. With a population of 9 million, Cairo is the largest city in this region and as in all other big cities, the number of people with diabetes is increasing. |
|
|
 |
The Rule of Halves
According to the Rule of Halves*, only around 6% of people with diabetes live
a life free from diabetes-related complications.
Of the
estimated
382 million
people with
diabetes
About
50% are
diagnosed**
Of whom
about 50%
receive
care**
Achieve
treatment
targets
Of whom
about 50%
achieve
treatment
targets**
Achieve
desired
outcomes
Of whom
about 50%
achieve
desired
outcomes**
* Hart J.T., Rule of Halves: implications of increasing diagnosis and reducing dropout for future workload and prescribing costs in primary care,
Br J Gen Pract 1992, March; 42(356):116-119, and W.C.S. Smith, A.J. Lee, I.K. Coombie, H. Tunstall-Pedoe, Control of blood pressure in
Scotland: The rule of halves, BMJ, 300 (1990): 981-983.
** Actual rates of diagnosis, treatment, targets and outcomes vary in different countries.
|
Potential complications
|
What is diabetes? Diabetes affects the way
the body uses food for growth and energy. There are two main forms of
diabetes: type 1 and type 2. Type 1 diabetes is a lifelong autoimmune
disease that develops when the body produces an immune response against
its own cells, destroying beta cells in the pancreas. As a result, the
pancreas stops producing insulin, often – but not always – at
a young age. |
How is diabetes treated? People with type 1 diabetes
need to start taking insulin as soon as they are diagnosed and must continue
to do so for the rest of their lives. |
Stroke
Strokes are up to
four times as likely
Blindness
Diabetes is a
leading cause
of blindness
Heart attack
Heart attack is three
times as likely and
heart disease is up
to four times as
likely
Total kidney
failure
Total kidney failure is
three times as likely
Amputation
Diabetes is a leading
cause of non-traumatic
lower-limb amputations.
NOVO NORDISK ANNUAL REPORT 2013
|
OTHER BUSINESS
|
25
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has been designed with
this need in mind. Greater than the sum
of its parts
|
Image
of the insulin degludec molecule based
|
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The fear of low blood sugar (hypoglycaemia) means that many people with type 2 diabetes are not treating their condition intensively enough to reduce blood sugar to the recommended level. Adding to this problem is the inflexibility of when injections must be taken, which can lead many people to not take insulin as prescribed. These factors can result in people with diabetes being at risk of developing severe long-term complications. When long is not long enough |
after meals too. For
these people, Novo Nordisk has developed IDegLira, a combination of
Tresiba®
and Victoza®
(liraglutide), delivered in a single daily dose. Victoza®,
a human GLP-1 analogue, stimulates insulin secretion and inhibits glucagon
secretion in a blood glucose-dependent manner and has also been shown
to reduce body weight.
|
|
Making Tresiba® available for patients Tresiba®
was approved in the EU in January 2013 and by the end of the year it
had been launched in eight countries. In countries with broad market
access, Tresiba®
has quickly gained a significant share of the market for long-acting
insulins. |
Tresiba® study results Translating the results from clinical trial programmes into real advances in clinical practice can be challenging, especially since new medicines are often utilised in patients who are not responding well to available therapies. However, recent findings from Marc Evans, a clinician investigator in the UK, provide some important insights into how much value Tresiba® can bring to patients who are experiencing challenges with other insulins. Dr Evans studied 25 consecutive patients who were experiencing poor glucose control and frequent low blood sugar with either insulin glargine or Levemir® (insulin detemir). He found that when switched to Tresiba®, these patients improved their glucose control (in both type 1 and type 2 diabetes) and substantially reduced the frequency of low blood sugar episodes.2 |
NOVO NORDISK ANNUAL REPORT 2013
| 26 | OUR BUSINESS |
Changing
diabetes
where it matters most
It has been
almost a decade since Novo Nordisk launched
Changing Diabetes®,
its promise to people with
diabetes to help them live a better life. Much has been
achieved in this time, but a lot still needs to be done.
|
Novo
Nordisk’s core responsibility to people with diabetes and to society
is to deliver innovative, high-quality products. We
have a very diverse insulin portfolio, from human insulins to modern insulin
analogues,” says Jakob Riis, executive vice president of Marketing
& Medical Affairs. “Our core focus is to drive innovation and
develop even better products to help people achieve the best possible
outcome of their treatment.” The challenge is global, the solutions
local |
Ambitious long-term target |
NOVO NORDISK ANNUAL REPORT 2013
|
Team Novo Nordisk
has raced more than
9,500 km in 55 races since its launch in December 2012. |
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Inspire people with diabetes |
Eliodoro Gonzales lives in Bolivia.
|
The World Diabetes Foundation The World Diabetes Foundation was established by Novo Nordisk in 2002 as an independent trust with the vision of being a catalyst for change in developing countries. Since 2002, Novo Nordisk has donated around 1.1 billion Danish kroner to the Foundation. The largest share (37%) is spent on strengthening healthcare systems and building healthcare capacity. As of October 2013, 7,138 clinics had been established or strengthened, 4.6 million patients had been treated and 221,935 healthcare professionals trained. |
||
| Training
apprentices in China. |
In
most of Africa there is a lack of knowledge about diabetes. |
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 |
Building healthcare capacity Healthcare professionals who are capable of detecting and treating diabetes are needed to catch up with the accelerating growth in the prevalence of diabetes. In China, Novo Nordisk, the government and local partners collaborate to increase quality diabetes care. As of October 2013, 2,076 apprentices have been trained and people across 830 counties have benefited from improved diagnosis and treatment. Another example is the new REACH programme in which Novo Nordisk-owned Steno Diabetes Center is scaling up its efforts by establishing an education centre in various countries in Asia. Once fully rolled out, the programme, which is funded by the Novo Nordisk Foundation, is expected to train more than 9,200 healthcare professionals globally each year. |
|
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|
Patsy Left Hand
Bull is a tribal elder of the Lakota Sioux tribe in the Rosebud Reservation. |
Ranjith
is enrolled in the
Changing Diabetes® in Children programme in India. |
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|
Supporting vulnerable populations |
Changing
Diabetes®
in Children In some developing countries, the life expectancy for children with type 1 diabetes is less than one year. In 2010, Novo Nordisk committed 75 million Danish kroner over five years to provide free insulin and care to children as part of its Changing Diabetes® in Children programme. The programme is a collaboration with local partners including ministries of health and the World Diabetes Foundation. Since 2010, 93 clinics have been established and over 4,150 local healthcare professionals have received the proper training and education to treat children. More than 11,700 children in nine countries across Africa and Southeast Asia have been enrolled in the programme. |
 |
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| 28 | OUR BUSINESS |
The increasing prevalence of obesity is no longer just an issue for high-income countries; the number of people who are overweight or obese is rising to record-breaking levels in low- and middle-income countries too. Without doubt, obesity is a growing threat to global health as it has many potentially life-threatening complications, not least type 2 diabetes. With liraglutide 3 mg, Novo Nordisk hopes to be able to offer a new treatment option for some people with obesity.
|
According
to the World Health Organization,
being overweight or obese is the fifth leading risk for deaths worldwide,
and is linked to more deaths globally than being underweight. In the US,
where more than 35% of adults, or some 100 million people, are obese,1
the American Medical Association recently recognised obesity as a disease.
In 2011, a US congress committee urged the US Food and Drug Administration
(FDA) to take steps to support the development of new treatments for obesity.
The US isn’t the only country sounding the alarm over the obesity
epidemic. Worldwide there appears to be a new willingness to address obesity. Moderate weight loss has significant
health benefits |
significant health benefits.9–15
However, with most people
not managing to achieve and maintain this level of weight loss with diet
and exercise alone, other treatment options are necessary. “In the
past, when medicines with an acceptable efficacy and safety profile were
lacking and after diet and exercise had failed, doctors may have been
reluctant to engage in dialogue with patients about obesity,” says
Heather Millage, corporate vice president and responsible for bringing
liraglutide 3 mg to the market. “We hope obesity care will improve
when more tools – in particular liraglutide 3 mg – are available
for the treatment of this disease.” Liraglutide 3 mg, Novo Nordisk’s
once-daily GLP-1 therapy, has recently completed the fourth phase 3a trial
as part of SCALE™, the clinical development
programme for obesity treatment. A natural hormone
|
liraglutide 3 mg during
one year lost 10% of their body weight. And the majority of patients who
had prediabetes at the beginning of the trial and who took liraglutide
3 mg reverted to a normal glucose level.” In fact, the majority of
people with obesity treated with liraglutide 3 mg in the largest trial
in the development programme achieved a clinically relevant weight loss
of 5%. In one of the trials that extended for 104 weeks, weight loss achieved
after one year was maintained for two years. Stigmatisation of people
with obesity |
NOVO NORDISK ANNUAL REPORT 2013
|
Maria Lopez is one of the |
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29
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| Definition
of obesity Obesity is defined as abnormal or excessive fat accumulation that may impair health for people with a BMI over 30. BMI provides the most convenient population-level measure of overweight and obesity currently available.16 BMI itself, however, does not define health risk. The role of hormones
in obesity |
|||||
The number of adults with obesity has doubled
since 1980
500 million
1980 2008
Worldwide rates of obesity have doubled since
1980, with more than 500 million adults classified as obese in 2008 – more
than 10% of the world’s adult population (World Health Organization’s
global estimates from 2008).
| 30 | OUR BUSINESS |
| Haemophilia Haemophilia is an inherited or acquired bleeding disorder that prevents blood from clotting. People with haemophilia lack, either partially or completely, an essential clotting factor needed to form stable blood clots. Internal bleeding into the joints, muscles and other tissues can cause severe pain, joint damage and disability. The treatment for haemophilia involves intravenous administration of replacement clotting factors. Treatment may be administered when bleeding occurs or, increasingly, on a preventive basis (prophylactic treatment). People with haemophilia A may have either a decreased ability or total inability to produce clotting factor VIII. Approximately 350,000 people have haemophilia A globally. However, the disease is severely under-diagnosed in developing countries. People with haemophilia B have deficiencies in producing clotting factor IX. Haemophilia B is inherited in the same way as haemophilia A, but is five times less common (70,000 people worldwide). Around 3,500–4,500 people with haemophilia worldwide have high-titre inhibitors. |
Living with haemophilia HERO (Haemophilia Experiences, Results and Opportunities) is an international study that aims to build an understanding of life with haemophilia, seen from the perspective of people with haemophilia, their families and their healthcare providers. Read more about the study, which is supported by Novo Nordisk’s programme Changing Possibilities in Haemophilia®, at novonordisk.com/ hero. |
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NOVO NORDISK ANNUAL REPORT 2013
North America .. Europe .. International Operations .. Region China .. Japan & Korea
Novo Nordisk markets its products in more than 180 countries. Despite the differences in terms of economic development, political systems and healthcare infrastructure between these countries, Novo Nordisk’s business model is fundamentally the same all over the world.
|
Novo
Nordisk has employees in 75 countries. They share the common ambition
to be the country’s leading pharmaceutical company within the selected
disease areas, both in commercial terms and when it comes to making a
positive change for patients. Key to achieving this ambition are biological
pharmaceuticals with new, distinct properties that Novo Nordisk’s
researchers have invented and developed. These products, for example NovoRapid®/
NovoLog®,
Levemir®
and Victoza®,
are what make up the bulk of Novo Nordisk’s revenues in all of its
five business regions. Creating value for customers
Organisation |
other pharmaceutical companies may build a presence through the acquisition of local companies, joint ventures or rented sales forces, Novo Nordisk prefers to hire its own people and train them to become the best. This is also seen as the best way to convey and preserve a strong company culture. Competitors Regional differences CONTINUED ► |
NOVO NORDISK ANNUAL REPORT 2013
| 32 |
|
The North American region
consists of the US and Canada and is Novo Nordisk’s largest in terms
of sales, which isn’t surprising given that the US is the world’s
largest pharmaceutical market. In 2012, total pharmaceutical sales in
the US amounted to 327 billion US dollars, of which 6% was spent on products
for treating diabetes. |
Levemir®,
modest growth of human insulin and a 31% growth in sales of Victoza®, measured in local
currencies. A complex healthcare
system |
providers such as physician,
hospital and pharmacy networks to provide the required service. They provide
different levels of coverage based on the payers’ willingness to
pay for selected services for their employees. A PBM is an intermediary
that contracts with payers and health plans to manage the pharmacy benefit
for a specific population. Typical services include claims processing,
managing enrolee eligibility, contracting pharmacy networks and managing
rebate contracts with pharmaceutical companies. Growing pressures
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 |
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North
America|
In Philadelphia,
65% of the adult inhabitants
are estimated to be overweight, making it one of the most obese cities in the US. More than 10% of the inhabitants have diabetes. |
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Nordisk maintains a competitive presence on the US market. The company’s key diabetes care products have broad market access and are capturing market shares. In fact, in 2013 Novo Nordisk’s three modern insulins were the only products with a growing volume market share in the US in the modern insulin category. Growing market for
diabetes products |
To further strengthen the presence in the US, Novo Nordisk’s US affiliate has expanded its field force several times in recent years. The latest expansion was announced in 2013 with the addition of more than 350 new representatives, who after an intensive period of training will be in the field by April 2014. Preparing for a new
market Developments to look
out for |
initiated a cardiovascular
outcomes trial involving 7,500 patients. Read more
on pp 24–25. CONTINUED ► |
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 |
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Sales in North America
|
Europe is Novo Nordisk’s
second largest region in terms of sales. Sales growth has been modest
in recent years – in the low single-digit range. To a large extent,
this is a result of the depressed economy in many European countries in
the wake of the financial crisis. This has led governments to implement
cost-cutting measures, both through price cuts on medicines and by limiting
access to new medicines. Tresiba® has been affected
by such measures in countries such as the UK and Denmark. Tresiba®
is important for future growth |
With sales of 12 billion
Danish kroner in 2013 and average annual sales growth of around 15% since
2009, International Operations is Novo Nordisk’s main contributor
to growth after North America. Thinking of International Operations as
one business region requires a stretch of the imagination, though. It
encompasses 149 countries all over the world with more than 4.4 billion
people – Latin America, Africa, the Middle East, the Gulf, most of
Asia, and Australia. A region of extraordinary diversity, it covers some
of the world’s poorest countries and some of the richest. |
Future growth With sales of 7.2 billion
Danish kroner in 2013 and average annual sales growth of around 19% since
2009, China has been a major contributor to Novo Nordisk’s growth
in recent years. This is predicted to be the case in the coming years
too, partly due to the rapidly increasing number of people with diabetes
in China. According to the latest estimates from the International Diabetes
Federation, more than 99 million people in China have diabetes today.
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 |
 |
 |
Europe
International
Operations
Region
ChinaSales in Europe
Sales in International Operations
Sales in Region China
35
|
13% in local currencies. The sales growth was driven by all three modern insulins, while sales of human insulins only grew modestly. Currently, 97% of Novo Nordisk’s insulin volume in China is used in devices, primarily the durable device NovoPen®. GLP-1 products are currently not reimbursed in China and this class of products is therefore relatively small. However, its share of the total diabetes care market in value expanded to 0.6% compared with 0.5% in 2012. Victoza® holds a GLP-1 value market share of 74%. Reforms to widen healthcare coverage
With a 52% market share measured in volume, Novo Nordisk is the clear insulin market leader in Japan. The use of devices remains high in Japan, with 98% of Novo Nordisk’s insulin volume being used in devices, primarily FlexPen®. |
In
2013, Novo Nordisk’s sales of diabetes care products in Japan &
Korea decreased by 4% in local currencies. This sales development reflects
a stagnant Japanese insulin volume market and the negative impact from
a challenging competitive environment. A shift in recent years from the
use of premixed insulin products, where Novo Nordisk is the clear leader
with NovoMix®, to basal insulin
products, where Novo Nordisk is in fierce competition with Sanofi, has
led to a loss of market share. |
|
Japan
& Korea
Sales in Japan & Korea
Diabetes care
Value market share by geographic region
... North America
... Europe
... International Operations
... Region China
... Japan & Korea
Modern insulins
Global value market share by brand in its
respective insulin segment*
... NovoMix(r)
... NovoRapid(r)
... Levemir(r)
* Levemir(r) in the long-acting segment, NovoRapid(r) in the
rapid-acting segment and NovoMix(r) in the dual-release segment.
| Key regional facts | North America |
Europe | International Operations |
Region China4 | Japan & Korea |
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|
|
|
|
|
|
|
|
|
|
|
|
| Population (million)1 |
349
|
538
|
4.408
|
1.351
|
178
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| GDP per capita (USD)1 |
51,796
|
33,242
|
4,499
|
6,091
|
39,925
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| Healthcare spend per capita (USD)1 |
8,310
|
3,575
|
292
|
278
|
3,566
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| Physicians per 1,000 people1 |
2.4
|
3.3
|
1.1
|
1.8
|
2.1
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| Number of people with diabetes (million)2 |
27
|
34
|
203
|
99
|
11
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| Diagnosis rate2 |
78%
|
64%
|
55%
|
46%
|
51%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| Diabetes national prevalence2 |
11%
|
9%
|
8%
|
10%
|
8%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| Novo Nordisk total sales (DKK billion) |
39.0
|
20.1
|
12.0
|
7.2
|
5.3
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| Insulin value market share3 |
38%
|
47%
|
49%
|
57%
|
52%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| Insulin volume market share3 |
41%
|
49%
|
56%
|
59%
|
49%
|
|||||
|
|
|
|
|
|
|
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|
1. The World Bank. 2. The 2013 data are based on the IDF Diabetes Atlas, 6th edition, 2013. Prevalence rates have been estimated lower in a number of countries compared with the 5th edition used in the Novo Nordisk Annual Report 2012. This reduction is due to changes in methodology and sources used by IDF for a given country and not to an improvement in diabetes prevalence. All studies from the same country show an increase in diabetes prevalence over a longer time period. 3. IMS Health, IMS MIDAS Customized Insights, November 2013. 4. Data from IMS Health, IDF and The World Bank include China only.
The complexity of insulin production
| More than 24 million people globally rely on Novo Nordisk’s products to treat their diabetes. Around 10,000 employees are responsible for manufacturing high-quality products – with low environmental impact. |
|
Insulin production at Novo Nordisk starts in Kalundborg, a town of about 16,000 inhabitants 100 kilometres west of Copenhagen, Denmark. It is here that the company makes insulin crystals, the active ingredient in its insulin products, through the processes of fermentation, recovery and purification. Site Kalundborg is Novo Nordisk’s largest production site at 1,350,000 m2 – equivalent to 270 football pitches. In fact, it’s the largest production site for insulin in the world, making around half of the world’s insulin crystals. A complex production
process |
our manufacturing strategy,
and our unique capabilities enable us to produce large volumes of insulin
at a competitive cost.” Final production close
to patients |
to create the different
types of Novo Nordisk insulin, for example Levemir® (insulin
detemir) or Tresiba® (insulin degludec). In the filling
process, glass Penfill® cartridges and vials are filled
on high-speed lines. Once filled and inspected, some cartridges are mounted
into injection devices, such as FlexPen® and FlexTouch®.
Finally, the products are packed to fulfil customer orders and shipped
to their destination after final quality control. Continuous improvement
|
NOVO NORDISK ANNUAL REPORT 2013
|
|
Novo Nordisk uses one
global approach to ensure the quality of its products no matter where
in the world they are produced. The company’s quality management
system has been designed to ensure that all manufacturing processes follow
its standard operating procedures (SOPs) and are in compliance with international
standards such as Good Manufacturing Practice and ISO 9001. In total,
Product Supply, the company’s production division, has more than
15,000 SOPs. |
Ephrem Rudahunga works at site Kalundborg, the largest insulin production site in the world.
|
production through technology upgrades, skill-building and process optimisation. “The introduction and in-house development of cLEAN®, our version of the lean manufacturing principles, has had a very positive impact on the quality and performance of our processes and hence the production cost,” Henrik Wulff says. In fact, the company’s ambition to improve production performance has produced remarkable results, with cost of goods sold as a percentage of sales falling from 28% to 17% from 2003 to 2013. Energy savings
|
long-term aspiration is
to continuously decouple environmental impacts from business growth. Since
2004, Novo Nordisk has reduced the emissions of CO2
by 42%. In response to the need for expansions
of production capacity and an increased product portfolio, the long-term
environmental targets for consumption of energy and water were revised
and updated in 2013. |
become more difficult to
optimise our absolute footprint as we’ve become so efficient. However,
we remain committed to ensuring that our environmental impact grows more
slowly than the company grows its sales,” explains Henrik Wulff. |
|
A Warning Letter
with important learnings |
An error that shouldn’t
have happened |
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NOVO NORDISK ANNUAL REPORT 2013
| 38 | OUR BUSINESS |
| As a business with shareholders to satisfy, the pharmaceutical industry must have a strong focus on financial performance. But the industry’s greater purpose is to improve human health. At first glance these ambitions may appear conflicting – is it therefore any wonder that the issue of trust is so often raised? | and redacted to protect
patient and site confidentiality – as they are the complete descriptions
of the trials presented in a standardised format and the actual material
used for submission to regulatory authorities. “In this way, we hope
to further reassure healthcare professionals and patients that what we communicate
is an accurate reflection of what we have observed and thereby strengthen
public confidence in the approved medical treatments,” adds Peter Kristensen. He stresses that Novo Nordisk will publish the CSRs after regulatory approval in the EU and in the US, so that the |
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|
The
pharmaceutical industry is no stranger to critical media attention. Headlines
often call into question the ethics and transparency of business practices
that must balance financial and social responsibilities. It is easy to
find people who don’t trust pharmaceutical companies to put the interests
of patients above profits. Data transparency |
clinical trial results of approved products
public,” explains Peter Kristensen, senior vice president of Global
Development. |
|
||
NOVO NORDISK ANNUAL REPORT 2013
|
OUR BUSINESS
|
39
|
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decision-making process of the regulatory authorities is not made even more complex by a parallel public debate. In addition, prior to approval, Novo Nordisk regards the design of its trials, as well as the results obtained, as confidential information. “We have to protect competitive information. Otherwise investments in future treatments will be lost, which would be bad for patients and the industry alike,” points out Peter Kristensen. Access to patient-level
data
A selection of books |
research data from clinical
trials has recently been proposed by the European Medicines Agency (EMA).
Novo Nordisk agrees that there is value in making these data available:
“We have a responsibility to patients to ensure that the data they
contribute to clinical trials are leveraged as much as possible to advance
scientific understanding. We believe that by sharing detailed clinical
trial data with the research community, new knowledge may be created that
could contribute to the development of new and improved treatments,”
Peter Kristensen highlights. “However, we have to be careful that
patient confidentiality is not compromised and that competitive business
information is not divulged.” Integrity and transparency
are the foundation for building trust |
“Our business ethics strategy is there to safeguard the integrity of our relationships with all our stakeholders and we want to make sure our actions are transparent,” comments Lise Kingo, executive vice president and chief of staffs. She is also the chair of the Business Ethics Board, which is responsible for implementing the company’s business ethics strategy. “We have focused on business ethics for a long time and we’re always looking for ways we can make improvements in this area.” By way of example, Lise Kingo mentions that all relevant employees are trained in – and then tested on – the company’s standard operating procedures for interactions with and payments to healthcare professionals. Global reporting, global
transparency CONTINUED ► |
NOVO NORDISK ANNUAL REPORT 2013
 |
|
Europe, but throughout the world. We are therefore ready to roll out this system in each country once specific national requirements have been announced and taken into account,” explains Lise Kingo. “We hope that these new regulations and revised codes of conduct will enhance transparency and reassure external stakeholders of our commitment to ethical behaviour.” Reaffirming results
to build confidence |
saving treatments for people
who are, by nature of their medical condition, vulnerable. The company therefore
continuously and actively monitors the safety profile of its products. Stringent
protocols and systems are in place to ensure product safety, both during
the development phases and after a product has been launched. Read
more in the box on p 41. However, new pharmaceuticals often come under the spotlight, particularly if they represent a new class of drug. A recent example is GLP-1-based diabetes therapies, a drug class to which Novo Nordisk’s Victoza® belongs. The safety of this drug class was challenged early in 2013, when a study (which did not include |
Victoza®)
suggested an increased risk of side effects on the pancreas. The FDA and
EMA reacted by reviewing data on GLP-1-based therapies to see if a link
between them and an increase in pancreatic side effects could be determined. In July, the EMA concluded that currently available data did not confirm the concerns over an increased risk of pancreatic adverse events with these medicines. The FDA has not officially announced the conclusion of its review. However, in response to questions from the media, a spokesperson said that the FDA was in agreement with the EMA’s conclusions. Mads Krogsgaard Thomsen, executive vice president and chief science officer, |
41
 |
Continuous safety
|
||
| welcomed the EMA’s conclusion:
“Novo Nordisk is committed to patient safety and continuously monitors
for adverse events related to all of its medicines. Victoza®
has more than 1.9 million patient years of use and a strong body of evidence
to support its safety and efficacy based on both clinical trial and real-world
practice data.” Karsten Lollike, corporate vice president and head of Global Product Safety, adds that Novo Nordisk continues to conduct studies to assess the effects of long-term use of Victoza® on the pancreas. This includes a review of databases and the cardiovascular outcomes trial LEADER®, to be completed in 2016, and other post-marketing studies. |
“Ensuring the safety of our products remains our top priority. I believe our history – and how we have handled safety issues and concerns in the past – proves our commitment is more than just words,” explains Karsten Lollike. “I’m really pleased that in a recent survey1 Novo Nordisk was ranked number one in the industry by patients for having a good record in ensuring patient safety. I believe this shows that patients trust us.” An ongoing issue requires
a long-term perspective |
years to come, Lise Kingo hopes that Novo Nordisk’s approach to business ethics will demonstrate the company’s commitment to building trust with all its stakeholders: “We have clear priorities and the needs of patients come first – this has been the case ever since the company was founded. We have a Triple Bottom Line approach that ensures all business decisions live up to our financial, social and environmental responsibilities. This long-term perspective is absolutely fundamental to the way we work and how we run our business, and I believe this is our firm foundation for being a credible and trustworthy company,” she concludes. |
|
Several developments in 2013 were reminders that there are, and always will be, risks associated with Novo Nordisk’s business – risks that all investors should be aware of. |
|||||
|
8 February 2013: The US Food and Drug Administration (FDA) informs Novo Nordisk that it cannot approve the New Drug Applications for Tresiba® (insulin degludec) and Ryzodeg® (insulin degludec/ insulin aspart) in their current form. This unexpected development meant that these two insulin products could not be launched in the US in 2013 as originally planned. Read more on pp 24–25. 22 March 2013: A study is published suggesting that GLP-1-based drugs for treating type 2 diabetes have an increased risk of pancreatic side effects. Although the authorities later concluded that currently available data did not confirm the concerns, the growth of this market segment was affected in some countries. Read more on pp 38–41. 23 October 2013: Novo Nordisk announces a recall of 3 million NovoMix® insulin products in several European countries due to a production error. Situations leading to product recalls may pose a risk to patient safety, lead to disruption of supplies in the affected countries and tarnish Novo Nordisk’s reputation. Read more on pp 36–37. Three examples of three different types of risk that come with being a pharmaceutical company and investor in one. And there are more. This article covers the main types of risk that Novo Nordisk faces. For some specific risks, reference is made to articles elsewhere in the Annual Report and notes to the consolidated statements. |
Market risks The principal market risks Novo Nordisk experiences are: |
In addition to these global risks, in some countries in the International Operations region political instability or war may pose a risk to Novo Nordisk’s business for varying lengths of time. Delays or failure of
pipeline products |
|||
| • | price pressure and reimbursement restrictions by payers | ||||
| • | the launch of new products by established competitors | ||||
| • | increased competition from producers of biosimilar medicines in key markets. | ||||
Europe, China and the US are all main markets for Novo Nordisk where payers – both governments and private payers – take measures to limit spending on medicines, typically by driving down prices, demanding higher rebates and/or restricting access to and reimbursement of products. This is unlikely to change in the foreseeable future. For Novo Nordisk, reimbursement restrictions pose a significant risk when launching a new product such as Tresiba®, the new-generation basal insulin with ultra-long duration of action. Despite the patient benefits and data supporting the health-economic benefits of the product, it is not always possible to obtain market access on what Novo Nordisk considers reasonable conditions. In some countries, the company may therefore not launch Tresiba® under the current conditions. The launch of new products by established competitors is an inherent market risk. As mentioned on p 33 in the article about Novo Nordisk’s five regions, new products are under way in both the insulin and GLP-1 segments, including a biosimilar version of the best-selling modern insulin product. How and to what extent such events will change the market dynamics is not possible to predict at present. |
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 |
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43
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|
regulatory approval process, as illustrated by the aforementioned decision by the FDA regarding Tresiba® and Ryzodeg®. Supply disruptions Quality and product
safety issues Financial risks |
hedges expected future
cash flows for selected key currencies. Read more
about how Novo Nordisk manages this risk in notes 4.2 and 4.3 on pp 79–83. Information technology
risks Business ethics and
legal risks |
AIC with a few observations,
which have no material impact on Novo Nordisk’s business in China. This example underlines the potential business ethics risks associated with being a pharmaceutical company. To minimise the risk of violating national and international regulations, over the past decade Novo Nordisk has strengthened its global and regional business ethics compliance programmes. Global governance, a business ethics policy and global business ethics procedures, together with elaborate training programmes and tests for employees, close monitoring of performance, reporting requirements and audits, all aim to mitigate business ethics risks. In June 2011, Novo Nordisk settled two civil cases with the US Department of Justice regarding alleged improper marketing of NovoSeven®. As part of the settlement, Novo Nordisk’s US affiliate entered into a five-year Corporate Integrity Agreement with the Office of the Inspector General of the US Department of Health and Human Services. Under that agreement, the US affiliate has added additional reporting and other procedures to its already robust compliance programme. Also in the US, Novo Nordisk is a defendant in product liability lawsuits related to hormone therapy products and Victoza®. Read more about these and other pending litigations against Novo Nordisk and investigations involving the company, in note 3.6 on pp 74–76. Protection of intellectual property through patents is very important for promoting innovation and stimulating long-term economic growth and job creation. Novo Nordisk’s business model is based on developing new, innovative products, and when the company makes significant new inventions it will typically seek to patent them. Intellectual property risks occur if, for example, a government does not recognise the validity of patents or is unable to uphold patent rights, or if a competitor infringes a Novo Nordisk patent or challenges its validity. |
|||||
| Novo
Nordisk’s risk management policy “In Novo Nordisk we will proactively manage risk to ensure continued growth of our business and to protect our people, assets and reputation. This means that we will: |
|||||||
| • | utilise an effective and integrated risk management system while maintaining business flexibility | ||||||
| • | identify and assess material risks associated with our business | ||||||
| • | monitor, manage and mitigate risks.” | ||||||
| For more information on Novo Nordisk’s risk management process, please visit novonordisk.com/about_us. | |||||||
 |
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| 44 | GOVERNANCE, LEADERSHIP AND SHARES |
Novo Nordisk has two classes of shares: A shares and B shares. All A shares are owned by Novo A/S – a wholly owned subsidiary of the Novo Nordisk Foundation. Novo Nordisk’s B shares are listed on NASDAQ OMX Copenhagen, and on the New York Stock Exchange as American Depository Receipts (ADRs). Through open and proactive communication, the company seeks to provide the basis for fair and efficient pricing of its B shares.
|
Share capital and ownership |
2013, Novo A/S also held
nominal value DKK 32,762,800 of B share capital. Each A share carries
200 votes and each B share carries 20 votes. With 25.5% of the total share
capital, Novo A/S controls 74% of the total number of votes, excluding
Novo Nordisk’s holding of treasury shares. The capital structure |
return in the short term. Novo Nordisk’s guiding principle is that any excess capital, after the funding of organic growth opportunities and potential acquisitions, is returned to investors. The company applies a pharmaceutical industry payout ratio to dividend payments complemented by share repurchase programmes. As decided at the 2013 Annual General Meeting, a reduction of the company’s B share capital, corresponding to approximately 1.8% of the total share capital, was implemented in April 2013 by cancellation of treasury shares. This enabled Novo Nordisk to continue to buy back shares without exceeding the limit for a holding of treasury shares equivalent to 10% of the total share capital. During the 12-month period since the release of the financial results for 2012, Novo Nordisk repurchased shares worth DKK 14 billion. Since 2008, the share repurchase programme has primarily been conducted in accordance with the provisions of European Commission Regulation No 2273/2003 of 22 December 2003 (also known as the Safe Harbour Regulation). In this programme Novo Nordisk appoints financial institutions as lead managers to execute a part of its share repurchase programme independently and without influence from Novo Nordisk. Share repurchase programme
for 1 February 2014 to 31 January 2015 |
Breakdown of shareholders % of capital (% of votes)Novo A/S, Bagsværd, Denmark Novo Nordisk A/S Other 25.5 (74.0) 3.7 (0.0) 70.8 (26.0)
Geographic distribution of shareholders* % of share capital (2012 % of share capital) Denmark North America UK and Ireland Other * Calculated using shareholders’ registered home country. 41.1 (40.4) 31.9 (34.0) 12.8 (12.9) 14.2 (12.7)
NOVO NORDISK ANNUAL REPORT 2013
|
GOVERNANCE, LEADERSHIP
AND SHARES
|
45
|
|
Share price performance |
Payment of dividends Communication with
shareholders |
hosts conference calls with Executive Management following key events and the release of financial results. Executive Management and Investor Relations also travel extensively to ensure that all investors with a major holding of Novo Nordisk shares can meet with the company on a regular basis and that a number of smaller investors and potential investors also have access to the company’s Management and Investor Relations. Analyst coverage |
Novo Nordisk’s share performance compared with benchmark indexes
| Total price development in the period up to 31 December 2013 | 1 year | 3 years | 5 years | |||
| Novo Nordisk’s B shares on NASDAQ OMX, DKK |
8%
|
58%
|
267%
|
|||
| Novo Nordisk’s ADRs on the New York Stock Exchange, USD |
13%
|
64%
|
260%
|
|||
| NASDAQ OMX Copenhagen 20 Index |
24%
|
35%
|
148%
|
|||
| MSCI Europe Health Care Index |
20%
|
39%
|
48%
|
|||
| MSCI US Health Care Index |
36%
|
92%
|
108%
|
 |
 |
 |
Dividend payments and payout ratio Dividend per share for the year1 (left) Payout ratio2 (right) 1. Adjusted for the five for one stock split implemented
as of 2 January 2014. 2. Dividend for the year as a percentage of net profit. 3. Proposed dividend for the financial year 2013. DKK
Price development and monthly turnover of Novo Nordisk’s B shares on NASDAQ OMX Copenhagen 2013 Turnover of B shares (left) Novo Nordisk’s B share closing prices (right) DKK billion DKK
Total shareholder return Per cent
NOVO NORDISK ANNUAL REPORT 2013
 |
|
In 2013,
the Board of Directors established a Nomination Committee to enhance
|
 |
|
GOVERNANCE, LEADERSHIP
AND SHARES
|
47
|
Governance structure
Shareholders
Shareholders have ultimate authority over the
company and exercise their rights to make decisions at general meetings in person,
by proxy or by correspondence. Resolutions can generally be passed by a simple
majority. However, resolutions to amend the Articles of Association require
two-thirds of votes cast and capital represented, unless other adoption requirements
are imposed by the Danish Companies Act. Novo Nordisk is not aware of the existence
of any agreements with or between shareholders on the exercise of votes or control
of the company.
At the
annual general meeting, shareholders approve the annual report and any amendments
to the company’s Articles of Association. Shareholders also elect board
members and the independent auditor.
Novo
Nordisk’s share capital is divided into A shares and B shares. Special
rights attached to A shares include pre-emptive subscription rights in the
event of an increase of the A share capital, pre-emptive purchase rights in
the event of a sale of A shares and priority dividend if the dividend is below
0.5%. B shares take priority for dividends between 0.5% and 5% and for liquidation
proceedings. Read more about shares and capital structure
on pp 44–45.
Board of Directors
Novo Nordisk has a two-tier management structure
consisting of the Board of Directors and Executive Management. The two bodies
are separate and no one serves as a member of both. The Board of Directors
determines the company’s overall strategy and follows up on its implementation,
supervises the performance, ensures adequate management and organisation,
and as such actively contributes to developing the company as a focused, sustainable,
global pharmaceutical company. The Board of Directors supervises Executive
Management in its decisions and operations. The Board of Directors may also
issue new shares or buy back shares in accordance with authorisations granted
by the annual general meeting and recorded in the meeting minutes. For minutes
from annual general meetings, see novonordisk.com/about_us.
The Board
of Directors has 11 members, seven of whom are elected by shareholders and
four by employees in Denmark. Shareholder-elected board members serve a one-year
term and may be re-elected. Members must retire at the first annual general
meeting after reaching the age of 70. Four of the seven shareholder-elected
board members are independent as defined by the Danish Corporate Governance
Recommendations. Read more on pp 52–53.
A proposal
for nomination of board members is presented by the newly established Nomination
Committee to the Board of Directors, taking into account required competences
as defined by the Board of Directors’ competence
profile and reflecting the result
of a self-assessment process facilitated by internal or external consultants.
The assessment process is based on written questionnaires and evaluates the
Board of Directors’ composition and the skills of its members, including
whether each board member and executive participates actively in board discussions
and contributes with independent judgement.
To ensure
that discussions include multiple perspectives representing the complex, global
pharmaceutical environment, the Board of Directors aspires to be diverse in
gender and nationality. Currently, one shareholder-elected board member is
female and five of the seven shareholder-elected board members are non-Danes.
In 2013, the Board of Directors increased its ambition and set out new targets
with the aim that by 2017 it will consist of at least two shareholder-elected
board members with Danish nationality and at least two shareholder-elected
board members with a nationality other than Danish – and at least two
shareholder-elected board members of each gender. In accordance with section
99b of the Danish Financial Statements Act, Novo Nordisk discloses its mandatory
diversity report at novonordisk.com/annualreport.
The self-assessment
conducted in 2013 resulted in a continued focus on discussion of the current
critical issues and on management development and succession planning. In
order to support continued fulfilment of the Novo Nordisk Way, criteria for
board members include integrity, accountability, fairness, financial literacy,
commitment and desire for innovation. Members are also expected to have experience
of managing major companies that develop, manufacture and market products
and services globally. The competence profile, which includes the nomination
criteria, is available online at novonordisk.com/about_us.
Under Danish
law, Novo Nordisk’s employees in Denmark are entitled to be represented
by half of the total number of board members elected at the annual general meeting.
In 2010, employees elected four board members from among themselves – three
male and one female, all Danes. Board members elected by employees serve a four-year
term and have the same rights, duties and responsibilities as shareholder-elected
board members.
Novo Nordisk’s
Board of Directors met seven times during 2013.
Chairmanship
The annual general meeting directly elects
the chairman and vice chairman of the Board of Directors. The Chairmanship carries
out administrative tasks such as planning board meetings to ensure a balance
between overall strategy-setting and financial and managerial supervision of
the company. Other tasks include reviewing the fixed asset investment portfolio
and recommending the remuneration of board members and Executive Management.
In practice, the Chairmanship
has the role and responsibility of a remuneration committee, as the Board of
Directors considers that each board member must have the opportunity to contribute
actively to discussions and have access to all relevant information on remuneration.
In March 2013,
the Annual General Meeting elected a new chairman, Göran Ando, and a
new vice chairman, Jeppe Christiansen. See novonordisk.com/about_us
for a report on the Chairmanship’s activities.
Audit Committee
The three members of the Audit Committee are
elected by the Board of Directors among its members. Two members qualify as
independent and have been designated as financial experts as defined by the
US Securities and Exchange Commission (SEC). Under Danish law, two members qualify
as financial experts and as independent. In 2013, an employee representative
was elected as a member.
The Audit
Committee assists the Board of Directors with oversight of the external auditors,
the internal audit function, the procedure for handling complaints regarding
accounting, internal accounting controls, auditing or financial reporting
matters and business ethics matters (whistleblowing), financial, social and
environmental reporting, business ethics compliance, post-completion reviews
and post-investment reviews of investments, long-term incentive programmes,
and in 2013 it was agreed that the Audit Committee also assists with oversight
of IT security. In 2013, the Board of Directors re-elected Hannu Ryöppönen
as chairman and Liz Hewitt as a member of the Audit Committee and, further,
elected Stig Strøbæk as a new member. See novonordisk.com/about_us
for a report on the Audit Committee’s activities.
Nomination Committee
In 2013, the Board established a Nomination
Committee consisting of four members to enhance the process for nominating members
to the Board of Directors. Two members qualify as independent, while one member
is an employee representative.
The Nomination
Committee assists the Board with oversight of the competence profile and composition
of the Board, nomination of members and committees, and other tasks on an
ad hoc basis as specifically decided by the Board. In 2013, the Board of Directors
elected Göran Ando as chairman and Bruno Angelici, Liz Hewitt and Anne
Marie Kverneland as members of the Nomination Committee. See novonordisk.com\about_us
for a report on the Nomination Committee’s activities.
Executive Management
The Board of Directors has delegated responsibility
for day-to-day management of Novo Nordisk to its Executive
CONTINUED ►
NOVO NORDISK ANNUAL REPORT 2013
| 48 | GOVERNANCE, LEADERSHIP AND SHARES |
Management. In 2013, two new executives were appointed and Executive Management now consists of the president and chief executive officer plus six executives. They are responsible for overall conduct of the business and all operational matters, for organisation of the company as well as allocation of resources, determination and implementation of strategies and policies, direction-setting, and ensuring timely reporting and provision of information to the Board of Directors and Novo Nordisk’s stakeholders. Executive Management meets at least once a month and often more frequently. The Board of Directors appoints members of Executive Management and determines remuneration. The Chairmanship reviews the performance of the executives.
Assurance
External audit
The company’s financial reporting and
the internal controls over financial reporting processes are audited by an independent
audit firm elected at the annual general meeting. The auditor acts in the interest
of shareholders and expresses an audit opinion on the annual report as well
as reporting any significant audit findings to the Audit Committee and the Board
of Directors. As part of Novo Nordisk’s commitment to its social and environmental
responsibility, the company voluntarily includes an assurance report for social
and environmental reporting in the annual report. The assurance provider reviews
whether the social and environmental performance information covers aspects
deemed to be material and verifies the internal control processes for the information
reported.
Internal audit
Novo Nordisk’s internal audit function
provides independent and objective
assurance, primarily within
internal control of financial processes and business ethics.
To
ensure that the internal financial audit function works independently of Executive
Management, its charter, audit plan and budget are approved by the Audit Committee.
The Audit Committee reviews the result of the audits and must approve the appointment,
remuneration and dismissal of the head of the internal audit function.
Three other
types of assurance activity – quality audits, organisational audits and
values audits, called facilitations – help ensure that the company adheres
to high-quality standards and operates in accordance with the Novo Nordisk Way.
Compliance
Novo Nordisk’s B shares are listed on
NASDAQ OMX Copenhagen and on the New York Stock Exchange (NYSE) as American
Depository Receipts (ADRs). The applicable corporate governance codes for
each stock exchange and a review of Novo Nordisk’s compliance are available
at novonordisk.com/about_us.
In accordance
with section 107b of the Danish Financial Statements Act, Novo Nordisk discloses
its mandatory corporate governance report at novonordisk.
com/about_us/corporate_governance/ compliance.asp.
In
2013, new Danish corporate governance recommendations were introduced, and
Novo Nordisk adheres to all but the following:
| • | The Board of Directors has not established a remuneration committee (but in practice the Chairmanship has such role). |
| • | Current employment contracts for Executive Management allow in some instances for severance payments of more than 24 months’ fixed base salary plus pension contribution. |
| • | The majority of the Nomination Committee’s members are not independent. It consists of two members who are not independent, including the Chairman, and two members who are independent. |
The reasons
for deviating from the first two recommendations are given on pp 47
and 50. The reason for deviating from the third
recommendation is that the Board of Directors finds that this composition
of the Nomination Committee allows for both a representative of the majority
shareholder as well as an employee representative to be on the Nomination
Committee, while keeping it small.
Novo Nordisk
complies with the corporate governance standards of NYSE applicable to foreign
listed private issuers.
As a controlled
company, Novo Nordisk is not obliged to comply with all standards established
by NYSE. Furthermore, Novo Nordisk as a foreign private issuer is permitted
to follow home country practice, which is the case in relation to independence
requirements, audit committee, equity compensation plans, code of business conduct
and ethics, and CEO certification.
The Novo
Nordisk Way outlines the company’s ambitions and the values that characterise
the way Novo Nordisk does business and interacts with its stakeholders. Furthermore,
it sets the direction for and applies to all employees in Novo Nordisk. Read
more about the Novo Nordisk Way on p 4.
Novo
Nordisk is part of the Novo Group and adheres to the Charter for Companies
in the Novo Group, which is available online at novo.dk.
However, all strategic and operational matters are solely decided by the Board
of Directors and Executive Management of Novo Nordisk. Read
more about the Novo Group on p 44.
Corporate governance codes and practices
* The Chairmanship is directly elected by the annual general meeting.
Compliance
Governance structure Assurance
Danish and foreign laws and regulations Corporate governance standards Novo
Nordisk Way Audit of financial data and review of social and environmental data
(internal and external)Facilitation and organisational audit (internal)
Quality audit and inspections (internal and external) Board of Directors Shareholders
Executive Management Organisation Chairmanship* Nomination Committee Audit Committee
NOVO NORDISK ANNUAL REPORT 2013
|
GOVERNANCE, LEADERSHIP
AND SHARES
|
49
|
At the Annual General Meeting in 2013, Novo Nordisk’s shareholders approved that the maximum allocation for both the short- and long term incentive programmes for Executive Management was increased to 12 months’ base salary plus pension contribution. This was done to ensure flexibility for the Board of Directors in executive remuneration, as the benchmark had shown that elements of the executive remuneration were below market levels.
Remuneration of the Board of Directors and Executive Management is assessed on an annual basis against a benchmark of Nordic companies as well as European pharmaceutical companies that are similar to Novo Nordisk in size, complexity and market capitalisation. The results are presented to the Board of Directors by the chairman at its October meeting. The company strives for simplicity when composing the remuneration package, and its remuneration principles provide guidance for remuneration of the Board of Directors and Executive Management. These principles are available at novonordisk.com/about_us/corporate_ governance/remuneration.asp.
Board of Directors’
remuneration
The remuneration of Novo Nordisk’s Board of Directors comprises a fixed
base fee, a multiplier of the fixed base fee for the Chairmanship and members
of the company’s Audit Committee and
Nomination Committee, fees for
ad hoc tasks and a travel allowance.
At
the December meeting, the Board of Directors agrees on recommendations for remuneration
levels for the next financial year. In connection with the approval of the annual
report, the Board of Directors endorses the actual remuneration for the past
financial year and the recommendation on remuneration levels for the current
financial year. These are then presented to the annual general meeting for approval.
Travel and other expenses
All board members who reside outside
Denmark are paid a fixed travel allowance: 3,000 euros for Europe-based board
members and 6,000 euros for board members based outside Europe. Otherwise,
no travel allowance is paid to board members when attending board meetings
outside Denmark. Expenses such as travel and accommodation in relation to
board meetings as well as relevant continuing education are reimbursed. Novo
Nordisk also pays social security taxes imposed by foreign authorities and
bank transfer fees.
Variable remuneration
Board members are not offered stock
options, warrants, restricted stock or participation in other incentive schemes.
Executive Management’s
remuneration
The remuneration of Novo Nordisk’s
Executive Management is proposed by the Chairmanship and approved by the Board
of Directors. Remuneration packages for executives comprise a fixed base salary, a cash-based incentive, a share-based incentive, a pension contribution and other benefits. The split between fixed and variable remuneration is intended to result in a reasonable part of the salary being linked to performance, while promoting sound, long-term business decisions to achieve the company’s objectives. All incentives are subject to claw-back if it is subsequently determined that payment was based on information that was manifestly misstated.
Fixed base salary
The fixed base salary is intended
to attract and retain executives with the professional and personal competences
required to drive the company’s performance.
Cash-based incentive
The cash-based incentive is designed
to incentivise individual performance and achievement of a number of predefined
short-term functional and individual business targets linked to goals in the
company’s Balanced Scorecard. Short-term targets for the chief executive
officer are fixed by the chairman of the Board of Directors, while the targets
for the other members of Executive Management are fixed by the chief executive
officer. The Chairmanship evaluates the degree of achievement for each member
of Executive Management based on input from the chief executive officer.
CONTINUED ►
Board of Directors
In 2013, the base fee for members of the Board of Directors was DKK 500,000 (DKK 500,000 in 2012)
|
2013
|
2012
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| DKK million |
Fixed
base fee
|
Fee for
ad hoc tasks and
committee work
|
Travel
allowance
|
Total
|
Fixed
base fee
|
Fee for
ad hoc tasks and
committee work
|
Travel
allowance
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Göran Ando3, 4 (chairman of the Board and of the Nomination Committee) | 1.4 | – | 0.1 | 1.5 | 1.0 | – | 0.1 | 1.1 | ||||||||
| Jeppe Christiansen1 (vice chairman of the Board) | 0.8 | – | – | 0.8 | – | – | – | – | ||||||||
| Hannu Ryöppönen (chairman of the Audit Committee) | 0.5 | 0.5 | 0.1 | 1.1 | 0.5 | 0.4 | 0.1 | 1.0 | ||||||||
| Liz Hewitt1 (member of the Audit Committee and the Nomination Committee) | 0.5 | 0.3 | 0.1 | 0.9 | 0.4 | 0.2 | 0.1 | 0.7 | ||||||||
| Stig Strøbæk (member of the Audit Committee) | 0.5 | 0.2 | – | 0.7 | 0.5 | – | – | 0.5 | ||||||||
| Bruno Angelici (member of the Nomination Committee) | 0.5 | 0.1 | 0.1 | 0.7 | 0.5 | – | 0.1 | 0.6 | ||||||||
| Henrik Gürtler | 0.5 | – | – | 0.5 | 0.5 | – | – | 0.5 | ||||||||
| Ulrik Hjulmand-Lassen | 0.5 | – | – | 0.5 | 0.5 | – | – | 0.5 | ||||||||
| Thomas Paul Koestler | 0.5 | – | 0.3 | 0.8 | 0.5 | – | 0.3 | 0.8 | ||||||||
| Anne Marie Kverneland (member of the Nomination Committee) | 0.5 | 0.1 | – | 0.6 | 0.5 | – | – | 0.5 | ||||||||
| Søren Thuesen Pedersen | 0.5 | – | – | 0.5 | 0.5 | – | – | 0.5 | ||||||||
| Steen Scheibye2 | 0.4 | – | – | 0.4 | 1.5 | – | – | 1.5 | ||||||||
| Kurt Anker Nielsen2 | 0.1 | 0.1 | – | 0.2 | 0.5 | 0.3 | – | 0.8 | ||||||||
| Jørgen Wedel2 | – | – | – | – | 0.1 | 0.1 | 0.1 | 0.3 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total | 7.2 | 1.3 | 0.7 | 9.2 | 5 | 7.5 | 1.0 | 0.8 | 9.3 | 5 | ||||||
|
|
|
|
|
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| 1. | Liz Hewitt was first elected at the Annual General Meeting in March 2012, and Jeppe Christiansen was first elected at the Annual General Meeting in March 2013. |
| 2. | Jørgen Wedel resigned as of March 2012. Steen Scheibye and Kurt Anker Nielsen resigned as of March 2013. |
| 3. | Novo Nordisk provides secretarial assistance to the chairman in Denmark and the UK. |
| 4. | As Göran Ando also holds the position of chairman of the Board, he has not received a fee as chairman of the Nomination Committee. |
| 5. | In addition, social security taxes have been paid by Novo Nordisk amounting to less than DKK 1 million (less than DKK 1 million in 2012). |
| 50 | GOVERNANCE, LEADERSHIP AND SHARES |
In 2013, the Annual General Meeting approved that the maximum allocation per year cannot exceed 12 months’ base salary plus pension contribution, and in March the Board of Directors determined that the 2013 maximum would be up to 10 months.
Share-based incentives
The long-term share-based incentive programme
is designed to promote the collective performance of Executive Management and
align the interests of executives and shareholders. Share-based incentives are
linked to both financial and non-financial targets.
The long-term
incentive programme is based on a calculation of shareholder value creation
compared with planned performance. In line with Novo Nordisk’s long-term
financial targets, the calculation of shareholder value creation is based on
reported operating profit after tax reduced by a weighted average cost of capital-based
return requirement on average invested capital. A proportion of the calculated
shareholder value creation is allocated to a joint pool for the participants,
who include Executive Management and other members of the Senior Management
Board.
Pension
Pension contributions are paid to enable executives
to build up an income for retirement.
Other benefits
Other benefits are added to ensure that overall
remuneration is competitive and aligned with local practice. Such benefits are
approved by the Board of Directors via delegation of powers to the Chairmanship.
In addition, executives may participate in employee benefit programmes such
as employee share purchase programmes.
Severance payment
Novo Nordisk may terminate employment by giving
executives 12 months’ notice. Executives may terminate their employment
by giving Novo Nordisk six months’ notice. In addition to the notice period,
executives are entitled to a severance payment.
Current
employment contracts allow severance payments of up to 36 months’
fixed base salary plus pension
contribution in the event of a merger, acquisition or takeover of Novo Nordisk.
If an executive’s employment is terminated by Novo Nordisk for other reasons,
the severance payment is three months’ fixed base salary plus pension contribution
per year of employment as an executive, taking into account previous employment
history. In no event will the severance payment be less than 12 months’
or more than 36 months’ fixed base salary plus pension contribution.
The existing
employment contracts will not be changed.
For the two executives who joined Executive Management in 2013 and for all future
employment contracts for executives, the severance payment will be no more than
24 months’ fixed base salary plus pension contribution, which will bring
Novo Nordisk into alignment with the Danish Corporate Governance Recommendations
in the long term.
Non-financial
targets are determined on the basis of an assessment of the objectives regarded
as particularly important to the fulfilment of the company’s long-term
performance. These are typically related to reaching specific milestones within
research and development, such as execution of trials, product approvals and
product launches, or milestones within sustainability related to patients, environment,
company reputation and development of employees. The total number of non-financial
targets varies, but is typically made up of 10–15 targets within five to
six categories.
In 2013,
the Annual General Meeting approved that the maximum allocation per year cannot
exceed 12 months’ base salary plus pension contribution and in March the
Board of Directors determined that the 2013 maximum for Executive Management
would be nine months. If the financial target is met for economic profit, and
at least 85% performance is reached on non-financial targets, the allocation
to the joint pool would correspond to 4½ months’ base salary plus
pension contribution for Executive Management.
This pool
is then converted into Novo Nordisk B shares, which in any given year are locked
up for three years before they are transferred to the participants. The shares
in the joint pool are allocated to the participants prorated according to their
base salary as per 1 April in any given year. If a participant resigns during
the lock-up period, his or her shares will remain in the joint pool for the
benefit of the other participants.
Further
information on Novo Nordisk’s share-based incentives is available online
at novonordisk.com/about_us.
Remuneration package components
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| Remuneration | Board of Directors |
Executive Management |
Comments relating
to Executive Management |
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| Fixed fee/base salary |
 |
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Accounts for 30–55% of the total value of the remuneration package* |
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| Fee for committee work |
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| Fee for ad hoc tasks |
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| Cash bonus |
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Up to 6–10 months’ fixed base salary + pension contribution per year |
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| Share-based incentive |
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Up to 9 months’ fixed base salary + pension contribution per year |
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| Pensions |
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25–30% of fixed base salary and cash-based incentive |
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| Travel and other expenses |
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| Benefits |
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Non-monetary benefits such as company car and phone |
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| Severance payment |
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Up to 24 months’ fixed base salary + pension. The employment contracts entered into before 2008 exceed the 24-month limit, though will not exceed 36months’ fixed base salary plus pension contribution |
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| * The interval 30–55% states the span between ‘maximum performance’ and ‘on-target performance’. | |||
NOVO NORDISK ANNUAL REPORT 2013
|
GOVERNANCE, LEADERSHIP
AND SHARES
|
51
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Delayed approval
of Tresiba®
in the US reduces share allocation in the 2013 incentive programme
|
||
| While Novo Nordisk exceeded the planned financial performance in 2013, the company did not meet its target of having Tresiba® approved in the US due to the Complete Response Letter from the US Food and Drug Administration (FDA) in February. This event also entailed that the target for the submission of IDegLira for regulatory approval to the FDA could not be met. As a | consequence of these shortcomings, the allocation of shares under the long-term incentive programme was reduced. For 2013, Executive Management was allocated an amount equal to 4.75 months’ fixed base salary plus pension contribution per member compared with a potential maximum allocation of nine months. | |
Remuneration of the Executive Management
and other members
of the Senior Management Board
| 2013 | 2012 | |||||||||||||||||||||||
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| DKK million |
Fixed
base
salary
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Cash
bonus
|
Pension
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Benefits
|
Share-
based
incentive
|
Total
|
Fixed
base
salary
|
Cash
bonus
|
Pension
|
Benefits
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Share-
based
incentive
|
Total
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| Executive Management | ||||||||||||||||||||||||
| Lars Rebien Sørensen | 10.1 | 5.1 |
3.8
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0.3 | – | 19.3 | 8.4 | 2.9 |
2.8
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0.3 | – | 14.4 | ||||||||||||
| Jesper Brandgaard | 5.7 | 2.4 |
2.0
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0.3 | – | 10.4 | 4.8 | 1.6 |
1.6
|
0.3 | – | 8.3 | ||||||||||||
| Lars Fruergaard Jørgensen1 | 4.1 | 1.4 |
1.4
|
0.3 | – | 7.2 | – | – |
–
|
– | – | – | ||||||||||||
| Lise Kingo | 5.1 | 1.9 |
1.8
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0.3 | – | 9.1 | 4.3 | 1.1 |
1.4
|
0.3 | – | 7.1 | ||||||||||||
| Jakob Riis1 | 4.1 | 1.4 |
1.4
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0.3 | – | 7.2 | – | – |
–
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– | – | – | ||||||||||||
| Kåre Schultz | 6.3 | 2.7 |
2.4
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0.3 | – | 11.7 | 5.2 | 1.4 |
1.7
|
0.3 | – | 8.6 | ||||||||||||
| Mads Krogsgaard Thomsen | 5.7 | 2.4 |
2.0
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0.3 | – | 10.4 | 4.8 | 1.6 |
1.6
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0.3 | – | 8.3 | ||||||||||||
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| Executive Management in total | 41.1 | 17.3 |
14.8
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2.1 | – | 75.3 | 27.5 | 8.6 |
9.1
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1.5 | – | 46.7 | ||||||||||||
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| Other members of the Senior Management Board in total2 | 82.7 | 4 | 32.3 |
25.5
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14.4 | – | 154.9 | 72.1 | 4 | 25.0 |
22.3
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8.4 | – | 127.8 | ||||||||||
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| Share allocation3 | 51.5 | 51.5 | 73.1 | 73.1 | ||||||||||||||||||||
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| 1. | Effective 31 January 2013, Novo Nordisk’s Executive Management was expanded to include two new members, Jakob Riis and Lars Fruergaard Jørgensen. |
| 2. | The total remuneration for 2013 includes remuneration to 33 senior vice presidents (26 in 2012), five of whom have retired or left the company (none in 2012). The 2013 remuneration for the retired senior vice presidents is included in the table above, whereas severance payments of DKK 57.2 million are not included. |
| 3. | The joint pool of shares is locked up for three years before it is transferred to the participants employed at the end of the three-year period. The value is the cash amount of the share bonus granted in the year using the grant-date market value of Novo Nordisk B shares. Based on the split of participants at the establishment of the joint pool, approximately 40% of the pool will be allocated to the members of Executive Management and 60% to other members of the Senior Management Board (2012: 30% and 70%, respectively). In the lock-up period, the joint pool may potentially be reduced in the event of lower-than-planned value creation in subsequent years. |
| 4. | Including social security taxes paid amounting to DKK 2.0 million (DKK 1.5 million in 2012). |
Management’s long-term incentive programme
The shares allocated to the joint pool for 2010 (842,880 shares) were released to the individual participants subsequent to the approval of the Annual Report 2013 by the Board of Directors and the announcement on 30 January 2014 of the full-year financial results for 2013. Based on the share price at the end of 2013, the value of the released shares is as follows:
|
Number
|
Market value1
|
|||
| Value as at 31 December 2013 of shares released on 30 January 2014 |
of shares
|
(DKK million)
|
||
|
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| Executive Management | ||||
| Lars Rebien Sørensen | 74,985 | 14.9 | ||
| Jesper Brandgaard | 49,990 | 9.9 | ||
| Lars Fruergaard Jørgensen | 24,995 | 5.0 | ||
| Lise Kingo | 49,990 | 9.9 | ||
| Jakob Riis | 24,995 | 5.0 | ||
| Kåre Schultz | 49,990 | 9.9 | ||
| Mads Krogsgaard Thomsen | 49,990 | 9.9 | ||
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| Executive Management in total | 324,935 | 64.5 | ||
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| Other members of the Senior Management Board in total2 | 392,970 | 78.1 | ||
|
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| 1. | The market value of the shares released in 2014 is based on the Novo Nordisk B share price of DKK 198.80 at the end of 2013. |
| 2. | In addition, 124,975 shares (market value: DKK 24.8 million) were released to retired members of the Senior Management Board. |
| Lars Rebien Sørensen serves as a board member of Danmarks Nationalbank, from which he received remuneration of DKK 22,232 in 2013 (DKK 22,012 in 2012), as a member of the Supervisory Board of Bertelsmann AG, from which he received remuneration of EUR 122,000 in 2013 (EUR 129,000 in 2012) and as a board member of Thermo Fisher Scientific Inc, from which he received remuneration of USD 314,786 in 2013 (USD 219,840 in 2012). Jesper Brandgaard serves as chairman of the Board of Directors of SimCorp A/S, from which he received remuneration of DKK 871,068 in 2013 (DKK 801,846 in 2012). Kåre Schultz serves as a board member of LEGO A/S, from which he received remuneration of DKK 350,000 in 2013 (DKK 300,000 in 2012). Kåre Schultz also serves as chairman of the Board of Directors of Royal Unibrew A/S, from which he received remuneration of DKK 625,000 in 2013 (DKK 625,000 in 2012). Mads Krogsgaard Thomsen serves as a board member of the University of Copenhagen, from which he received remuneration of DKK 40,500 in 2013 (DKK 79,800 in 2012). Lise Kingo serves as a board member of Grieg Star Group AS from April 2013, from which she received remuneration of NOK 225,000. Jakob Riis serves as a board member of ALK-Abelló A/S, from which he received remuneration of DKK 375,000 in 2013. | |
NOVO NORDISK ANNUAL REPORT 2013
 |
 |
 |
||
| Göran Ando (chair) | Jeppe Christiansen (vice chair) | Bruno Angelici | ||
|
|
|
|
||
| Formerly CEO of Celltech Group plc, UK
(retired). Member of the Board of Novo Nordisk A/S in 2005, vice chair since
2006, chair since 2013 and chair of the Nomination Committee since 2013. Management duties: Symphogen A/S, Denmark (chair), member of the boards of Novo A/S, Denmark, Molecular Partners AG, Switzerland, Archimedes Pharma Ltd., UK, and RAND Health, US. Senior advisor to Essex Woodlands Health Ventures Ltd., UK. Special competences: Medical qualifications and extensive executive background within the international pharmaceutical industry. Education: Specialism in general medicine (1978) and degree in medicine (1973), both from Linköping Medical University, Sweden. |
Chief executive officer of Fondsmæglerselskabet
Maj Invest A/S, Denmark. Vice chair of the Board of Novo Nordisk A/S since
2013. Management duties: Member of the boards of Novo A/S, Haldor Topsøe A/S, KIRKBI A/S and Symphogen A/S, all in Denmark. Special competences: Extensive background and experience within the financial sector, in particular in relation to financial and capital market issues, as well as insight into the investor perspective. Education: MSc in Economics (1985) from the University of Copenhagen, Denmark. |
Formerly executive vice president of
AstraZeneca (retired). Member of the Board of Novo Nordisk A/S since 2011
and member of the Nomination Committee since 2013. Management duties: Member of the boards of Smiths Group plc and Vectura Group plc, both in the UK, and Wolters Kluwer, the Netherlands. Member of the Global Advisory Board at Takeda Pharmaceutical Company Limited, Japan. Special competences: Extensive global experience with two companies in the fields of pharmaceuticals and medical devices, and in-depth knowledge of strategy, sales, marketing and governance of major companies. Education: AMP (1993) from Harvard Business School and MBA (1978) from Kellogg School of Management at Northwestern University, both in the US. Law degree (1973) from Reims University and BA in Business Administration (1971) from École Supérieure de Commerce de Reims, both in France. |
 |
 |
 |
||
| Henrik Gürtler | Liz Hewitt | Ulrik Hjulmand-Lassen | ||
|
|
|
|
||
|
President and CEO of Novo
A/S, Denmark, since 2000. Formerly a member of Corporate Management of
Novo Nordisk A/S with special responsibility for Corporate Staffs. Member
of the Board of Novo Nordisk A/S since 2005. |
Formerly Group Director Corporate Affairs
of Smith & Nephew plc, UK (retired). Member of the Board of Novo Nordisk
A/S since 2012, and member of the Audit Committee since 2012 and the Nomination
Committee since 2013. Management duties: Member of the board, audit committee (chair), remuneration committee and nomination committee of Synergy Health plc and member of the board of Melrose Industries plc, both in the UK. External member of the audit committee of the House of Lords, UK. Special competences: Extensive experience within the field of medical devices, significant financial knowledge and knowledge of how large international companies operate. Education: BSc (Econ) (Hons) (1977) from University College London, UK, and FCA (UK Institute of Chartered Accountants) (1982). |
Advanced IT quality advisor in the IT
QA Office. Member of the Board of Novo Nordisk A/S since 2010. Education: CISM (2011). Trained as an MCSA/IT Security (2009) and as an ISO 9001 lead auditor (2006). BSc (1985) from the Technical University of Denmark/DIA-E. |
| Name (male/female) |
First elected
|
Term
|
Nationality
|
Born
|
Independence1
|
|
|
|
|
|
|
|
| Göran Ando (m) |
2005
|
2014
|
Swedish
|
March 1949
|
Not independent2
|
| Jeppe Christiansen (m) |
2013
|
2014
|
Danish
|
November 1959
|
Not independent2
|
| Bruno Angelici (m) |
2011
|
2014
|
French
|
April 1947
|
Independent
|
| Henrik Gürtler (m) |
2005
|
2014
|
Danish
|
August 1953
|
Not independent2
|
| Liz Hewitt (f) |
2012
|
2014
|
British
|
November 1956
|
Independent4,5
|
| Ulrik Hjulmand-Lassen3 (m) |
2010
|
2014
|
Danish
|
April 1962
|
Not independent
|
|
|
|
|
|
|
|
1. As designated by NASDAQ OMX Copenhagen in accordance with section 3.2.1 of Recommendations on Corporate Governance (2013). 2. Member of Management or the Board of Novo A/S. 3. Elected by employees of Novo Nordisk.
NOVO NORDISK ANNUAL REPORT 2013
|
GOVERNANCE, LEADERSHIP
AND SHARES
|
53
|
 |
 |
 |
||
| Thomas Paul Koestler | Anne Marie Kverneland | Søren Thuesen Pedersen | ||
|
|
|
|
||
| Executive with Vatera Holdings LLC,
US. Member of the Board of Novo Nordisk A/S since 2011. Management duties: Melinta Therapeutics Inc. (chair), US. Member of the boards of Momenta Pharmaceuticals Inc., ImmusanT Inc. and Arisaph Pharmaceuticals Inc., all in the US. Special competences: Extensive R&D knowledge, both generally and within the field of regulatory affairs. Significant know-how about the pharmaceutical industry in general and how large international corporations operate. Additional knowledge of the US market. Education: PhD in Medicine & Pathology (1982) from the Roswell Park Memorial Institute and BSc in Biology (1975) from Daemen College, both in the US. |
Laboratory technician and full-time
shop steward. Member of the Board of Novo Nordisk A/S since 2000 and member
of the Nomination Committee since 2013. Education: Degree in Medical Laboratory Technology (1980) from Copenhagen University Hospital, Denmark. |
External affairs director in Quality
Intelligence. Member of the Board of Novo Nordisk A/S since 2006. Management duties: Member of the board of the Novo Nordisk Foundation since 2002. Education: BSc in Chemical Engineering (1988) from the Engineering Academy of Denmark. |
 |
 |
|||
| Hannu Ryöppönen | Stig Strøbæk | |||
|
|
|
|||
| Formerly CFO and deputy
CEO of Stora Enso Oyj, Finland (retired). Member of the Board of Novo Nordisk
A/S since 2009 and chair of the Audit Committee since 2012 (member since
2009). Management duties: Private equity funds Altor 2003 GP Limited (chair), Altor Fund II GP Limited (chair) and Altor III GP Limited (chair), all in Jersey, Channel Islands. BillerudKorsnäs AB (chair), Sweden. Member of the boards of Amer Sports Oyj, Finland, and the private equity fund Value Creation Investments Limited, Jersey, Channel Islands. Chair of the audit committee of Amer Sports Oyj, Finland. Special competences: International executive background and thorough understanding of managing finance operations in global organisations, in particular in relation to accounting, financial and capital market issues, but also experience in private equity and mergers & acquisitions (M&A). Education: BA in Business Administration (1976) from Hanken School of Economics, Helsinki, Finland. |
Electrician and full-time
shop steward. Member of the Board of Novo Nordisk A/S since 1998 and member
of the Audit Committee since 2013. Management duties: Member of the board of the Novo Nordisk Foundation since 1998. Education: Diploma as an electrician. Diploma in further training for board members (2003) from the Danish Employees’ Capital Pension Fund (LD). |
| Name (male/female) |
First elected
|
Term
|
Nationality
|
Born
|
Independence1
|
|
|
|
|
|
|
|
| Thomas Paul Koestler (m) |
2011
|
2014
|
American
|
June 1951
|
Independent
|
| Anne Marie Kverneland3 (f) |
2000
|
2014
|
Danish
|
July 1956
|
Not independent
|
| Søren Thuesen Pedersen3 (m) |
2006
|
2014
|
Danish
|
December 1964
|
Not independent
|
| Hannu Ryöppönen (m) |
2009
|
2014
|
Finnish
|
March 1952
|
Independent4,5
|
| Stig Strøbæk3 (m) |
1998
|
2014
|
Danish
|
January 1964
|
Not independent
|
|
|
|
|
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|
|
4. Mr Ryöppönen and Ms Hewitt qualify as independent Audit Committee members as defined by the US Securities and Exchange Commission (SEC). 5. Mr Ryöppönen and Ms Hewitt qualify as independent Audit Committee members as defined under part 8 of the Danish Act on Approved Auditors and Audit Firms.
NOVO NORDISK ANNUAL REPORT 2013
| 54 | GOVERNANCE, LEADERSHIP AND SHARES |
|
Lars Rebien Sørensen | |||
| President and chief executive officer* | ||||
|
|
|
|
||
| Lars Rebien Sørensen joined Novo Nordisk’s Enzymes Marketing in 1982. Over the years, he has completed several overseas postings, including in the Middle East and the US. He was appointed a member of Corporate Management in May 1994, and in December 1994 was given special responsibility within Corporate Management for | Health Care. He was appointed
president and chief executive officer in November 2000. Other management duties: Member of the boards of Danmarks Nationalbank, Denmark, and Thermo Fisher Scientific Inc., US. Member of the Bertelsmann AG Supervisory Board, Germany. Born: October 1954. |
 |
 |
 |
||
| Kåre Schultz | Jesper Brandgaard | Lars Fruergaard Jørgensen | ||
| Chief operating officer* | Chief financial officer | Chief information officer | ||
|
|
|
|
||
| Kåre Schultz joined Novo Nordisk
in 1989 as an economist in Health Care, Economy & Planning. In November
2000, he was appointed executive vice president and chief of staffs. In
March 2002, he took over the position of executive vice president and chief
operating officer. Other management duties: Chair of the board of Royal Unibrew A/S and member of the board of LEGO A/S, both in Denmark. Born: May 1961. |
Jesper Brandgaard joined Novo Nordisk
in 1999 as senior vice president of Corporate Finance. He was appointed
executive vice president and chief financial officer in November 2000. Other management duties: Chair of the boards of SimCorp A/S and NNIT A/S, both in Denmark. Born: October 1963. |
Lars Fruergaard Jørgensen joined
Novo Nordisk in 1991 as an economist in Health Care, Economy & Planning
and has over the years completed overseas postings in the US and Japan.
In 2004, he was appointed senior vice president for IT & Corporate Development.
In January 2013, he was appointed executive vice president and chief information
officer, assuming responsibility for IT, Quality & Corporate Development. Other management duties: Vice chair of the board of NNE Pharmaplan A/S and member of the board of NNIT A/S, both in Denmark. Born: November 1966. |
 |
 |
 |
||
| Lise Kingo | Jakob Riis | Mads Krogsgaard Thomsen | ||
| Chief of staffs | Executive vice president of Marketing & Medical Affairs | Chief science officer | ||
|
|
|
|
||
| Lise Kingo joined Novo Industry A/S in
1988 and worked over the years to build up the company’s Triple Bottom
Line business principle. In 1999, she was appointed senior vice president,
Stakeholder Relations. In 2002, she was appointed executive vice president
and chief of staffs, assuming global responsibility for Corporate Relations.
She is adjunct professor at the Medical Faculty, Vrije Universiteit, Amsterdam,
the Netherlands. Other management duties: Chair of the board of Steno Diabetes Center A/S, Denmark, and member of the board of Grieg Star Group AS, Norway. Chair of the Danish Council for Corporate Responsibility. Born: August 1961. |
Jakob Riis joined Novo Nordisk in 1996
as a health economist. From 2001 to 2005, he worked first in the US sales
force and then as head of marketing in Japan. In 2005, he was appointed
senior vice president for International Marketing. In January 2013, he was
appointed executive vice president, assuming responsibility for Marketing
& Medical Affairs. Other management duties: Chair of the board of Copenhagen Institute of Interaction Design and member of the board and audit committee of ALK-Abelló A/S, both in Denmark. Born: April 1966. |
Mads Krogsgaard Thomsen joined Novo Nordisk
in 1991 as head of Growth Hormone Research. He was appointed executive vice
president and chief science officer in November 2000. He is a member of
the editorial boards of international journals. He has served as president
of the National Academy of Technical Sciences (ATV), Denmark. He is adjunct
professor of pharmacology at the Royal Veterinary and Agricultural University
(now the Faculty of Health and Medical Sciences of the University of Copenhagen),
Denmark. Other management duties: Member of the board of the University of Copenhagen, Denmark. Born: December 1960. |
* Effective 30 January 2014, Kåre Schultz is appointed president and chief operating officer. Lars Rebien Sørensen continues as chief executive officer.
NOVO NORDISK ANNUAL REPORT 2013
Consolidated
financial,
social and environmental
statements 2013
|
Consolidated financial
statements
|
||
|
|
|
|
|
|
||
|
|
||
|
Consolidated social
statement
(supplementary information)
|
||
|
|
|
|
|
|
||
|
|
||
|
Consolidated environmental
statement
(supplementary information)
|
||
|
|
|
|
|
. |
||
| As Novo Nordisk’s
business continues to develop, the company remains committed to documenting
its performance via its integrated reporting. The Consolidated financial,
social and environmental statements are structured to increase focus on
what drives the company’s performance in accordance with the Triple
Bottom Line business principle.
Within each of the financial, social and environmental statements, the notes are grouped into sections based on how Novo Nordisk views its business. Each of the statements includes an overview of the sections and notes, and each of the sections has an introduction explaining the link between how the company does business and how this is reflected in Novo Nordisk’s financial, social and environmental statements. The disclosures in the notes are structured to provide full transparency on the disclosed amounts, describing the relevant accounting policy, key accounting estimates and numerical disclosure for each note |
||
Juan Jenny Li works as
a
chemistry professional in Novo
Nordisk’s Research and
Development Centre in Beijing.
| 56 | CONSOLIDATED FINANCIAL STATEMENTS |
Income
statement
and Statement of comprehensive
income for the year ended 31 December
| DKK million |
 Note |
2013
|
2012
|
2011
|
||||
|
|
|
|
|
|
|
|
|
|
| Income statement | ||||||||
| Net sales | 2.1, 2.2 | 83,572 | 78,026 | 66,346 | ||||
| Cost of goods sold | 2.2, 2.3 | 14,140 | 13,465 | 12,589 | ||||
|
|
|
|
|
|
|
|
|
|
| Gross profit | 69,432 | 64,561 | 53,757 | |||||
| Sales and distribution costs | 2.2, 2.3 | 23,380 | 21,544 | 19,004 | ||||
| Research and development costs | 2.2, 2.3 | 11,733 | 10,897 | 9,628 | ||||
| Administrative costs | 2.2, 2.3 | 3,508 | 3,312 | 3,245 | ||||
| Licence income and other operating income, net | 2.2, 2.3, 5.6 | 682 | 666 | 494 | ||||
|
|
|
|
|
|
|
|
|
|
| Operating profit | 31,493 | 29,474 | 22,374 | |||||
| Financial income | 4.7 | 1,702 | 125 | 514 | ||||
| Financial expenses | 4.7 | 656 | 1,788 | 963 | ||||
|
|
|
|
|
|
|
|
|
|
| Profit before income taxes | 32,539 | 27,811 | 21,925 | |||||
| Income taxes | 2.4 | 7,355 | 6,379 | 4,828 | ||||
|
|
|
|
|
|
|
|
|
|
| Net profit for the year | 25,184 | 21,432 | 17,097 | |||||
|
|
|
|
|
|
|
|
|
|
| Earnings per share | ||||||||
| Basic earnings per share (DKK)1 | 4.1 | 9.40 | 7.82 | 6.05 | ||||
| Diluted earnings per share (DKK)1 | 4.1 | 9.35 | 7.77 | 6.00 | ||||
|
|
|
|
|
|
|
|
|
| DKK million |
Note |
2013
|
2012
|
2011
|
||||
|
|
|
|
|
|
|
|
|
|
| Statement of comprehensive income | ||||||||
| Net profit for the year | 25,184 | 21,432 | 17,097 | |||||
| Other comprehensive income: | ||||||||
| Items that will not be reclassified subsequently to the Income statement: | ||||||||
| Remeasurements of defined benefit plans |
3.7
|
54 | (281 | ) | – | |||
| Items that will be reclassified subsequently to the Income statement | ||||||||
| when specific conditions are met: | ||||||||
| Exchange rate adjustments of investments in subsidiaries | (435 | ) | (172 | ) | (173 | ) | ||
| Cash flow hedges, realisation of previously deferred (gains)/losses | (809 | ) | 1,182 | 658 | ||||
| Cash flow hedges, deferred gains/(losses) incurred during the period | 1,195 | 849 | (1,170 | ) | ||||
| Other items | 75 | 35 | (20 | ) | ||||
| Tax on other comprehensive income, income/(expense) |
2.4
|
(211 | ) | (587 | ) | 190 | ||
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income for the year, net of tax | (131 | ) | 1,026 | (515 | ) | |||
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income for the year | 25,053 | 22,458 | 16,582 | |||||
|
|
|
|
|
|
|
|
|
1. Comparative figures have been restated to reflect the change in trading unit from DKK 1 to DKK 0.20.
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
57
|
| DKK million |
Note |
2013
|
2012
|
|||
|
|
|
|
|
|
|
|
| Assets | ||||||
| Intangible assets | 3.1 | 1,615 | 1,495 | |||
| Property, plant and equipment | 3.2 | 21,882 | 21,539 | |||
| Deferred income tax assets | 2.4 | 4,231 | 2,244 | |||
| Other financial assets | 4.6 | 551 | 228 | |||
|
|
|
|
|
|
|
|
| Total non-current assets | 28,279 | 25,506 | ||||
|
|
|
|
|
|
|
|
| Inventories | 3.3 | 9,552 | 9,543 | |||
| Trade receivables | 3.4 | 10,907 | 9,639 | |||
| Tax receivables | 3,155 | 1,240 | ||||
| Other receivables and prepayments | 3.5 | 2,454 | 2,705 | |||
| Marketable securities | 4.2, 4.6 | 3,741 | 4,552 | |||
| Derivative financial instruments | 4.3 | 1,521 | 931 | |||
| Cash at bank and on hand | 4.2, 4.4 | 10,728 | 11,553 | |||
|
|
|
|
|
|
|
|
| Total current assets | 42,058 | 40,163 | ||||
|
|
|
|
|
|
|
|
| Total assets | 70,337 | 65,669 | ||||
|
|
|
|
|
|
|
|
| Equity and liabilities | ||||||
| Share capital | 4.1 | 550 | 560 | |||
| Treasury shares | 4.1 | (21 | ) | (17 | ) | |
| Retained earnings | 41,137 | 39,001 | ||||
| Other reserves | 903 | 1,088 | ||||
|
|
|
|
|
|
|
|
| Total equity | 42,569 | 40,632 | ||||
|
|
|
|
|
|
|
|
| Deferred income tax liabilities | 2.4 | 672 | 732 | |||
| Retirement benefit obligations | 3.7 | 688 | 760 | |||
| Provisions | 3.6 | 2,183 | 1,907 | |||
|
|
|
|
|
|
|
|
| Total non-current liabilities | 3,543 | 3,399 | ||||
|
|
|
|
|
|
|
|
| Current debt | 4.6 | 215 | 500 | |||
| Trade payables | 4.6 | 4,092 | 3,859 | |||
| Tax payables | 2,222 | 593 | ||||
| Other liabilities | 3.8 | 9,386 | 8,982 | |||
| Derivative financial instruments | 4.3 | – | 48 | |||
| Provisions | 3.6 | 8,310 | 7,656 | |||
|
|
|
|
|
|
|
|
| Total current liabilities | 24,225 | 21,638 | ||||
|
|
|
|
|
|
|
|
| Total liabilities | 27,768 | 25,037 | ||||
|
|
|
|
|
|
|
|
| Total equity and liabilities | 70,337 | 65,669 | ||||
|
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
| 58 | CONSOLIDATED FINANCIAL STATEMENTS |
Statement
of cash flows
for the year ended 31 December
| DKK million |
Note |
2013
|
2012
|
2011
|
||||
|
|
|
|
|
|
|
|
|
|
| Net profit for the year | 25,184 | 21,432 | 17,097 | |||||
| Adjustment for non-cash items | 5.3 | 10,738 | 11,253 | 9,117 | ||||
| Change in working capital | 4.5 | (265 | ) | 274 | 434 | |||
| Interest received | 131 | 207 | 332 | |||||
| Interest paid | (39 | ) | (61 | ) | (215 | ) | ||
| Income taxes paid | 2.4 | (9,807 | ) | (10,891 | ) | (5,391 | ) | |
|
|
|
|
|
|
|
|
|
|
| Net cash generated from operating activities | 25,942 | 22,214 | 21,374 | |||||
|
|
|
|
|
|
|
|
|
|
| Proceeds from sale of other financial assets | 29 | – | – | |||||
| Purchase of intangible assets and other financial assets | 3.1, 4.6 | (406 | ) | (250 | ) | (259 | ) | |
| Proceeds from sale of property, plant and equipment | 31 | 53 | 70 | |||||
| Purchase of property, plant and equipment | 3.2 | (3,238 | ) | (3,372 | ) | (3,073 | ) | |
| Net sale/(purchase) of marketable securities | 811 | (501 | ) | (197 | ) | |||
|
|
|
|
|
|
|
|
|
|
| Net cash used in investing activities | (2,773 | ) | (4,070 | ) | (3,459 | ) | ||
|
|
|
|
|
|
|
|
|
|
| Repayment of loans | – | (502 | ) | (507 | ) | |||
| Purchase of treasury shares, net | 4.1 | (13,924 | ) | (11,896 | ) | (10,595 | ) | |
| Dividends paid | 4.1 | (9,715 | ) | (7,742 | ) | (5,700 | ) | |
|
|
|
|
|
|
|
|
|
|
| Net cash used in financing activities | (23,639 | ) | (20,140 | ) | (16,802 | ) | ||
|
|
|
|
|
|
|
|
|
|
| Net cash generated from activities | (470 | ) | (1,996 | ) | 1,113 | |||
| Cash and cash equivalents at the beginning of the year | 11,053 | 13,057 | 11,960 | |||||
| Exchange gains/(losses) on cash and cash equivalents | (70 | ) | (8 | ) | (16 | ) | ||
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents at the end of the year | 4.4 | 10,513 | 11,053 | 13,057 | ||||
|
|
|
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
59
|
Statement
of changes in equity
at 31 December
| Other reserves | ||||||||||||||||
|
|
||||||||||||||||
| DKK million |
Share
capital |
Treasury
shares |
Retained
earnings |
Exchange
rate adjust- ment |
Cash
flow hedges |
Tax
and
other items |
Total
other reserves |
Total
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2013 | ||||||||||||||||
| Balance at the beginning of the year | 560 | (17 | ) | 39,001 | 226 | 847 | 15 | 1,088 | 40,632 | |||||||
| Net profit for the year | 25,184 | 25,184 | ||||||||||||||
| Other comprehensive income for the year | 54 | (435 | ) | 386 | (136 | ) | (185 | ) | (131 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income for the year | 25,238 | (435 | ) | 386 | (136 | ) | (185 | ) | 25,053 | |||||||
| Transactions with owners: | ||||||||||||||||
| Dividends (note 4.1) | (9,715 | ) | (9,715 | ) | ||||||||||||
| Share-based payments (note 5.1) | 409 | 409 | ||||||||||||||
| Tax credit related to share option scheme | 114 | 114 | ||||||||||||||
| Purchase of treasury shares (note 4.1) | (15 | ) | (13,974 | ) | (13,989 | ) | ||||||||||
| Sale of treasury shares (note 4.1) | 1 | 64 | 65 | |||||||||||||
| Reduction of the B share capital (note 4.1) | (10 | ) | 10 | – | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at the end of the year | 550 | (21 | ) | 41,137 | (209 | ) | 1,233 | (121 | ) | 903 | 42,569 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2012 | ||||||||||||||||
| Balance at the beginning of the year | 580 | (24 | ) | 37,111 | 398 | (1,184 | ) | 567 | (219 | ) | 37,448 | |||||
| Net profit for the year | 21,432 | 21,432 | ||||||||||||||
| Other comprehensive income for the year | (281 | ) | (172 | ) | 2,031 | (552 | ) | 1,307 | 1,026 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income for the year | 21,151 | (172 | ) | 2,031 | (552 | ) | 1,307 | 22,458 | ||||||||
| Transactions with owners: | ||||||||||||||||
| Dividends (note 4.1) | (7,742 | ) | (7,742 | ) | ||||||||||||
| Share-based payments (note 5.1) | 308 | 308 | ||||||||||||||
| Tax credit related to share option scheme | 56 | 56 | ||||||||||||||
| Purchase of treasury shares (note 4.1) | (15 | ) | (12,147 | ) | (12,162 | ) | ||||||||||
| Sale of treasury shares (note 4.1) | 2 | 264 | 266 | |||||||||||||
| Reduction of the B share capital (note 4.1) | (20 | ) | 20 | – | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at the end of the year | 560 | (17 | ) | 39,001 | 226 | 847 | 15 | 1,088 | 40,632 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2011 | ||||||||||||||||
| Balance at the beginning of the year | 600 | (28 | ) | 36,097 | 571 | (672 | ) | 397 | 296 | 36,965 | ||||||
| Net profit for the year | 17,097 | 17,097 | ||||||||||||||
| Other comprehensive income for the year | (173 | ) | (512 | ) | 170 | (515 | ) | (515 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income for the year | 17,097 | (173 | ) | (512 | ) | 170 | (515 | ) | 16,582 | |||||||
| Transactions with owners: | ||||||||||||||||
| Dividends (note 4.1) | (5,700 | ) | (5,700 | ) | ||||||||||||
| Share-based payments (note 5.1) | 319 | 319 | ||||||||||||||
| Purchase of treasury shares (note 4.1) | (18 | ) | (10,821 | ) | (10,839 | ) | ||||||||||
| Sale of treasury shares (note 4.1) | 2 | 242 | 244 | |||||||||||||
| Tax on sale of treasury shares | (123 | ) | (123 | ) | ||||||||||||
| Reduction of the B share capital (note 4.1) | (20 | ) | 20 | – | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at the end of the year | 580 | (24 | ) | 37,111 | 398 | (1,184 | ) | 567 | (219 | ) | 37,448 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
| 60 | CONSOLIDATED FINANCIAL STATEMENTS |
Notes
Sections in the Consolidated financial statements
| Section 1 Basis of preparation | |
| Read this section to get an overview of the financial accounting policies in general and an overview of Management’s key accounting estimates. | |
| 1.1 | Summary of significant accounting policies, p 61 |
| 1.2 | Summary of key accounting estimates, p 62 |
| 1.3 | Changes in accounting policies and disclosures, p 62 |
| 1.4 | General accounting policies, p 62 |
| Section 2 Results for the year | |
| Read this section to get more details on the results for the year, including operating segments, taxes and employee costs. | |
| 2.1 | Net sales and sales deductions, p 63 |
| 2.2 | Segment information, p 65 |
| 2.3 | Employee costs, p 68 |
| 2.4 | Income and deferred income taxes, p 68 |
| Section 3 Operating assets and liabilities | |
| Read this section to get more details on the assets that form the basis for the activities of Novo Nordisk, and the related liabilities. | |
| 3.1 | Intangible assets, p 71 |
| 3.2 | Property, plant and equipment, p 72 |
| 3.3 | Inventories, p 73 |
| 3.4 | Trade receivables, p 73 |
| 3.5 | Other receivables and prepayments, p 74 |
| 3.6 | Provisions and contingent liabilities, p 74 |
| 3.7 | Retirement benefit obligations, p 76 |
| 3.8 | Other liabilities, p 77 |
| Section 4 Capital structure and financing items | |
| Read this section to gain an insight into the capital structure, cash flow and financing items. | |
| 4.1 | Share capital, distribution to shareholders and earnings per share, p 78 |
| 4.2 | Financial risks, p 79 |
| 4.3 | Derivative financial instruments, p 81 |
| 4.4 | Cash and cash equivalents, financial resources and free cash flow, p 83 |
| 4.5 | Change in working capital, p 83 |
| 4.6 | Financial assets and liabilities, p 84 |
| 4.7 | Financial income and expenses, p 85 |
| Section 5 Other disclosures | |
| Read this section for more details on the statutory notes that have secondary importance from the perspective of Novo Nordisk. | |
| 5.1 | Share-based payment schemes, p 86 |
| 5.2 | Management’s holdings of Novo Nordisk shares, p 88 |
| 5.3 | Adjustments for non-cash items, p 89 |
| 5.4 | Commitments, p 90 |
| 5.5 | Related party transactions, p 91 |
| 5.6 | Licence income and other operating income, net, p 91 |
| 5.7 | Fee to statutory auditors, p 91 |
| 5.8 | Companies in the Novo Nordisk Group, p 92 |
| 5.9 | Financial definitions, p 93 |
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
61
|
Section 1
Basis of preparation of the Consolidated financial
statements
|
All entities in the Novo Nordisk Group follow the same Group accounting policies. This section gives a summary of the significant accounting policies, Management’s key accounting estimates, new IFRS requirements and other accounting policies in general. A detailed description of accounting policies and key accounting estimates related to specific reported amounts is presented in each note to the relevant financial items. |
||
Novo
Nordisk presents its Consolidated financial statements on the basis of
the latest developments in international financial reporting and strives
for early adoption of EU-endorsed IFRS accounting standards.| 1.1 |
Summary of significant
accounting
policies |
The Consolidated financial statements included in this Annual Report have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), in accordance with IFRS as endorsed by the European Union and also in accordance with additional Danish disclosure requirements for annual reports of listed companies.
Measurement basis
The Consolidated financial statements have
been prepared on the historical cost basis except for derivative financial instruments,
equity investments and marketable securities measured at fair value.
The principal accounting policies set out below have been applied consistently in the preparation of the Consolidated financial statements for all the years presented.
Principal accounting policies
Novo Nordisk’s accounting policies are
described in each of the individual notes to the Consolidated financial statements.
Considering all the accounting policies applied, Management regards the following
as the most significant accounting policies for the recognition and measurement
of reported amounts:
| • | Net sales and sales deductions
(notes 2.1 and 3.6) Revenue is only recognised when, in Management’s judgement, the significant risks and rewards of ownership have been transferred and when the Group does not retain managerial involvement in or effective control over the goods sold. To arrive at net sales, rebates and discounts to retail customers, government agencies, wholesalers, health insurance companies and managed healthcare organisations are deducted from gross sales. These deductions include estimates of unsettled obligations, requiring the use of judgement when estimating the effect of these sales deductions on gross sales for a reporting period. |
| • | Research and development
(note 3.1 and 3.2) Internal research costs are fully charged to the consolidated income statement in the period in which they are incurred, consistent with industry practice. Novo Nordisk considers that regulatory and other uncertainties inherent in the development of new products preclude the capitalisation of internal development costs as an intangible asset until marketing approval from the regulatory authority in a relevant major market is obtained or highly probable. The same principles are applied to plant and equipment with no alternative use developed as part of a research and development project. However, plant and equipment with alternative use or used for general research and development purposes is capitalised and depreciated over its estimated useful life as research and development costs. |
| For acquired in-process
research and development projects, the probability effect is reflected in
the cost of the asset, and the probability recognition criteria are therefore
always considered satisfied. As the cost of acquired in-process research
and development projects can often be measured reliably, these projects
fulfil the capitalisation criteria as intangible assets upon acquisition.
However, further internal development costs subsequent to acquisition are
treated in the same way as other internal development costs. |
|
| • | Derivative financial instruments
(note 4.3) Novo Nordisk hedges commercial exposures, with foreign exchange risk being the principal financial risk for the Group. The overall objective of foreign exchange risk management is to limit the short-term negative impact on net profit and cash flow from exchange rate fluctuations, thereby increasing the predictability of the financial results. The purpose of hedge accounting is to match the impact of the hedged item and the hedging instrument in the Consolidated income statement. Management has chosen to classify the result of hedging activities as part of financial items. Thus, as the majority of Novo Nordisk’s sales are in EUR, USD, JPY, CNY, GBP and CAD, net sales will be impacted by exchange rate fluctuations whereas the impact of exchange rate fluctuations on Profit before income taxes depends on the results of the hedging activities and the development in non-hedged currencies. |
In addition, the following other accounting policies are considered relevant to an understanding of the Consolidated financial statements:
| • | Income taxes (note 2.4) |
| • | Property, plant and equipment including impairment (note 3.2) |
| • | Inventories (note 3.3) |
| • | Trade receivables and allowance for doubtful trade receivables (note 3.4) |
| • | Provisions for legal disputes (note 3.6). |
Defining 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. When aggregated,
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.
There are substantial disclosure requirements throughout IFRS. Management provides specific disclosures required by IFRS unless the information is considered immaterial to the economic decision-making of the users of these financial statements or not applicable.
NOVO NORDISK ANNUAL REPORT 2013
| 62 | CONSOLIDATED FINANCIAL STATEMENTS |
| 1.2 |
Summary of key accounting
estimates |
The use of reasonable estimates is an essential part of the preparation of the Consolidated financial statements. Given the uncertainties inherent in Novo Nordisk’s business activities, Management must make certain estimates and judgements that affect the application of accounting policies and reported amounts of assets, liabilities, sales, costs, cash flows and related disclosures at the date(s) of the Consolidated financial statements.
Management bases its estimates on historical experience and various other assumptions that are held to be reasonable under the circumstances. The estimates and underlying assumptions are reviewed on an ongoing basis and, if necessary, changes are recognised in the period in which the estimate is revised. Management considers the carrying amounts recognised in relation to the key accounting estimates mentioned below to be reasonable and appropriate based on currently available information. However, the actual amounts may differ from the amounts estimated as more detailed information becomes available.
Management regards the following as the key accounting estimates and assumptions used in the preparation of the Consolidated financial statements:
| • | Sales deductions and provisions for sales rebates (notes 2.1 and 3.6) |
| • | Indirect production costs (note 3.3) |
| • | Allowance for doubtful trade receivables (note 3.4) |
| • | Income taxes (note 2.4) |
| • | Provisions for legal disputes (note 3.6). |
Please refer to the specific notes for further information on the key accounting estimates and assumptions applied.
| 1.3 |
Changes in accounting
policies
and disclosures |
Early adoption of new or amended
IFRSs
With effect from 1 January 2013, Novo Nordisk
has implemented the new standards IFRS 10 ‘Consolidated Financial Statements’,
IFRS 11 ‘Joint Arrangements’ and IFRS 12 ‘Disclosure of Interests
in Other Entities’. These new standards have no material impact on the
Consolidated financial statements in 2013, nor is a significant impact expected
on future periods.
Adoption of new or amended IFRSs
IAS 19R ‘Employee benefits’ effective
for annual periods beginning on or after 1 July 2012 was early adopted in 2012.
As retrospective application of these changes only had an immaterial impact
on each previous financial year, Management fully adopted the revised standard
in 2012 without restating previous years’ comparative amounts and disclosures.
Please refer to note 3.7 for a detailed description of the accounting policy
for retirement benefit obligations.
Furthermore, amendment to IAS 1 ‘Presentation of financial statements’, effective for annual periods beginning on or after 1 July 2012, was early adopted in 2012 with no material impact on the Consolidated financial statements. For a further description please refer to the Annual Report 2012.
Based on an assessment of new or amended and revised accounting standards and interpretations (‘IFRSs’) issued by IASB and IFRSs endorsed by the European Union effective on or after 1 January 2013, it has been assessed that the application of these new IFRSs has not had a material impact on the Consolidated financial statements in 2013 and Management does not anticipate any significant impact on future periods from the adoption of these new IFRSs.
New or amended IFRSs that have been
issued but have not yet come into effect and have not been early adopted
In addition to the above, IASB has issued a
number of new or amended and revised accounting standards and interpretations
that have not yet come into effect. The following standards are in general expected
to change current accounting regulation most significantly:
| • | IASB has issued IFRS 9 ‘Financial Instruments’, which awaits final effective date and EU endorsement. IFRS 9 is part of the IASB’s project to replace IAS 39, and the new standard will substantially change the classification and measurement of financial instruments and hedging requirements. Novo Nordisk has assessed the impact of the standard and determined that it will not have any significant impact on the Consolidated financial statements in its current wording. |
| • | IASB has issued re-exposure drafts on IAS 17 ‘Leasing’ and IAS 18 ‘Revenue’. The revised IAS 18 is expected to have only immaterial impact on the Consolidated financial statements. Depending on the wording of the final standard, the change in lease accounting is expected to require capitalisation of the majority of the Group’s operational lease contracts, representing less than 10% of total assets, with a minor impact on the Group’s assets, liabilities and financial ratios, and no significant impact on net profit. |
Changes in classification
With effect from 1 January 2013, Novo Nordisk
has changed the classification of uncertain tax positions. Previously these
were presented net as part of deferred tax liabilities. As of 2013 these are
presented gross as part of deferred tax assets, tax receivables and tax payables.
Refer to note 2.4 for further description.
| 1.4 |
General
accounting
policies |
Principles of consolidation
The Consolidated financial statements incorporate
the financial statements of Novo Nordisk A/S and entities controlled by Novo
Nordisk A/S. Control exists when Novo Nordisk own more than 50% of the voting
rights or has the power to govern the entity in some other way.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with Novo Nordisk group policies. All intra-Group transactions, balances, income and expenses are eliminated in full when consolidated.
Translation of foreign currencies
Functional and presentation currency
Items included in the financial statements
of each of Novo Nordisk’s entities are measured using the currency of
the primary economic environment in which the entity operates (functional
currency). The Consolidated 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 exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement
of such trans actions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised
in the Income statement.
Translation differences on non-monetary items, such as financial assets classified as available for sale including equity investments, are recognised in Other comprehensive income.
Translation of Group companies
Financial statements of foreign subsidiaries
are translated into Danish kroner at the exchange rates prevailing at the end
of the reporting period for balance sheet items, and at average exchange rates
for income statement items.
All effects of exchange rate adjustment are recognised in the Income statement, with the exception of exchange rate adjustments of investments in subsidiaries arising from:
| • | the translation of foreign subsidiaries’ net assets at the beginning of the year at the exchange rates at the end of the reporting period |
| • | the translation of foreign subsidiaries’ statement of comprehensive income from average exchange rates to exchange rates at the end of the reporting period |
| • | the translation of non-current intra-Group receivables that are considered to be an addition to net investments in subsidiaries. |
These specific exchange rate adjustments are recognised in Other comprehensive income.
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
63
|
Section 2
Results for the year
|
Continued growth in the number of patients, a global commercial presence and innovative products drive Novo Nordisk’s growth in sales. Over the last five years, growth in operating profit has been higher than sales growth, resulting in an increasing operating margin. The gross margin expansion has primarily been driven by a positive product mix and a favourable pricing development. The operating margin expansion has also been supported by a modest development in administrative costs and economy of scale advantages within sales and marketing, whereas research and development costs have been growing in line with sales. Novo Nordisk continues to invest in innovation while contributing to society by paying corporate taxes in the countries where it operates. The Management review section ‘2013 performance and 2014 outlook’ on p 6 gives a detailed description of the results for the year. |
||
| 2.1 |
Net sales and
sales deductions |
Accounting
policies
Revenue from goods sold is recognised when
Novo Nordisk has transferred the significant risks and rewards to the buyer,
and the amount of revenue can be measured reliably.
Sales are measured at the fair value of the consideration received or receivable. When sales are recognised, Novo Nordisk also records estimates for a variety of sales deductions, including rebates, discounts, refunds,
incentives and product returns. Sales deductions are recognised as a reduction
of gross sales to arrive at net sales. Where contracts contain customer acceptance
provisions, Novo Nordisk recognises sales when the acceptance criteria are
satisfied.
Revenue recognition for new product launches is based on specific facts and circumstances relating to those products, including estimated demand and acceptance rates for well-established products with similar market characteristics. Where shipments of new products are made on a sale or return basis, without sufficient historical experience for estimating sales returns, revenue is only recorded when there is evidence of consumption or when the right of return has expired.
Overall sales performance
The sales performance for a five-year period
is presented below in respect of business performance and geographical areas:
Financial performance
|
DKK million
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
||||||||||
|
Modern
insulins (insulin analogues)
|
38,153
|
34,821
|
28,765
|
26,601
|
21,471
|
|||||
|
Human
insulins
|
10,869
|
11,302
|
10,785
|
11,827
|
11,315
|
|||||
|
Victoza®
|
11,633
|
9,495
|
5,991
|
2,317
|
87
|
|||||
|
Protein-related
products
|
2,555
|
2,511
|
2,309
|
2,214
|
1,977
|
|||||
|
Oral
antidiabetic products (OAD)
|
2,246
|
2,758
|
2,575
|
2,751
|
2,652
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Diabetes
care total
|
65,456
|
60,887
|
50,425
|
45,710
|
37,502
|
|||||
|
|
||||||||||
|
NovoSeven®
|
9,256
|
8,933
|
8,347
|
8,030
|
7,072
|
|||||
|
Norditropin®
|
6,114
|
5,698
|
5,047
|
4,803
|
4,401
|
|||||
|
Other
biopharmaceuticals
|
2,746
|
2,508
|
2,527
|
2,233
|
2,103
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Biopharmaceuticals
total
|
18,116
|
17,139
|
15,921
|
15,066
|
13,576
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales by
business segment
|
83,572
|
78,026
|
66,346
|
60,776 | 51,078 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
39,024
|
34,220
|
26,586
|
23,609 | 18,279 | |||||
|
Europe
|
20,063
|
19,707
|
19,168
|
18,664 | 17,540 | |||||
|
International
Operations
|
12,007
|
11,080
|
9,367
|
8,335 | 6,835 | |||||
|
Japan
& Korea
|
5,317
|
6,617
|
6,223
|
5,660 | 4,888 | |||||
|
Region
China
|
7,161
|
6,402
|
5,002
|
4,508 | 3,536 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales by
geographical segment
|
83,572
|
78,026
|
66,346
|
60,776 | 51,078 | |||||
|
|
|
|
|
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
| 64 | CONSOLIDATED FINANCIAL STATEMENTS |
| 2.1 |
Net sales and
sales deductions
(continued) |
Key
accounting estimates – Sales deductions
Sales discounts and sales rebates are predominantly
issued in Region North America. In this region, significant sales rebates
are paid in connection with US public healthcare insurance programmes, namely
Medicare and Medicaid, as well as rebates to managed healthcare plans. The
most significant discounts are offered under contracts with institutions,
mostly hospitals and government agencies. In addition, political pressure
to contain healthcare costs has led several other countries to impose significant
price reductions on pharmaceutical products. As such, concerted austerity
measures have been implemented by governments in countries in Region Europe,
while government-mandated price cuts have been introduced in Region China,
Japan and major countries in Region International Operations.
US Medicaid and Medicare rebates
Medicaid and Medicare rebates have been calculated
using a combination of historical experience, product and population growth,
price increases, the impact of contracting strategies and specific terms in
the individual agreements. For Medicaid, the calculation of rebates also involves
interpretation of relevant regulations that are subject to changes in interpretative
guidance from government authorities. Although accruals are made for Medicaid
and Medicare rebates at the time sales are recorded, the actual rebates related
to the specific sale will typically be invoiced to Novo Nordisk up to nine months
later. Due to the time lag, the rebate adjustments to sales in any particular
period may incorporate adjustments of accruals for prior periods.
US managed healthcare rebates
Rebates are offered to a number of managed
healthcare plans. These rebate programmes allow the customer to receive a rebate
after attaining certain performance parameters relating to formulary status
and pre-established market share milestones relative to competitors. Rebates
are estimated according to the specific terms in each agreement, historical
experience, anticipated channel mix, product growth rates and market share information.
Novo Nordisk adjusts the provision periodically to reflect actual sales performance.
US wholesaler charge-backs
Wholesaler charge-backs relate to contractual
arrangements between Novo Nordisk and indirect customers in the US, whereby
products are sold at contract prices lower than the list price originally charged
to wholesalers. A wholesaler charge-back represents the difference between the
invoice price to the wholesaler and the indirect customer’s contract price.
Provisions are calculated for estimated charge-backs using a combination of
factors such as historical experience, current wholesaler inventory levels,
contract terms and the value of claims received but not yet processed. Wholesaler
charge-backs are generally settled within 10 to 30 days of the liability being
incurred.
Discounts, sales returns and other
rebates
Other discounts are provided to wholesalers,
hospitals, pharmacies etc, and are usually linked to sales volume or provided
as cash discounts. Sales returns are related to damaged or expired products.
Accruals are calculated based on historical data, and recorded as a reduction
in gross sales at the time the related sales are recorded.
Arrangements with certain healthcare providers may require Novo Nordisk to make refunds to the healthcare providers if anticipated treatment outcomes do not meet predefined targets.
Gross-to-net sales reconciliation
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Gross sales |
115,906
|
103,948
|
84,386
|
|||
|
|
|
|
|
|
|
|
| US Medicaid and Medicare rebates |
(9,959
|
)
|
(7,519
|
)
|
(5,075
|
)
|
| US managed healthcare rebates |
(5,481
|
)
|
(4,390
|
)
|
(2,551
|
)
|
| US wholesaler charge-backs |
(10,126
|
)
|
(8,196
|
)
|
(5,894
|
)
|
| US discounts and sales returns |
(2,978
|
)
|
(2,620
|
)
|
(1,886
|
)
|
| Non-US rebates, discounts and sales returns |
(3,790
|
)
|
(3,197
|
)
|
(2,634
|
)
|
|
|
|
|
|
|
|
|
| Total gross-to-net sales adjustments |
(32,334
|
)
|
(25,922
|
)
|
(18,040
|
)
|
|
|
|
|
|
|
|
|
| Net sales |
83,572
|
78,026 | 66,346 | |||
|
|
|
|
|
|
|
Provisions for sales rebates are adjusted to actual amounts as rebates and discounts are processed. Please refer to note 3.6 for further information on sales-related provisions.
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
65
|
| 2.2 |
Segment
information |
Accounting
policies
Operating segments are reported in a manner
consistent with the internal reporting provided to Management and the Board
of Directors.
Business segments
Novo Nordisk operates in two business segments based on therapies: Diabetes care and Biopharmaceuticals.
The Diabetes care business segment includes research, development, manufacturing and marketing of products within the areas of insulin, GLP-1 and related delivery systems, oral antidiabetic products (OAD) and obesity.
The Biopharmaceuticals business segment includes research, development, manufacturing and marketing of products within the areas of haemophilia, growth hormone therapy, hormone replacement therapy, inflammation therapy and other therapy areas.
Segment performance is evaluated on the basis of operating profit consistent with the Consolidated financial statements. Financial income and expenses and income taxes are managed at Group level and are not allocated to business segments.
There are no sales or other transactions between the business segments. Costs have been split between business segments according to a specific allocation with the addition of a minor number of corporate overhead costs allocated systematically between the segments. Licence income and other operating income has been allocated to the two segments based on the same principle. Segment assets comprise the assets that are applied directly to the activities of the segment, including intangible assets, property, plant and equipment, other financial assets, inventories, trade receivables, and other receivables and prepayments.
No single customer represents more than 10% of the total sales and no operating segments have been aggregated to form the reported business segments.
Business segments
| DKK million |
2013
|
2012
|
2011
|
2013
|
2012
|
2011
|
2013
|
2012
|
2011
|
|||||||||
|
|
|
|
|
|
|
|||||||||||||
| Segment sales |
Diabetes care
|
Biopharmaceuticals |
Total
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NovoRapid® / NovoLog® |
16,848
|
15,693
|
12,804
|
|||||||||||||||
| NovoMix® / NovoLog® Mix |
9,759
|
9,342
|
8,278
|
|||||||||||||||
| Levemir® |
11,546
|
9,786
|
7,683
|
|||||||||||||||
| Total modern insulins |
38,153
|
34,821
|
28,765
|
|||||||||||||||
| Human insulins |
10,869
|
11,302
|
10,785
|
|||||||||||||||
| Victoza® |
11,633
|
9,495
|
5,991
|
|||||||||||||||
| Protein-related products |
2,555
|
2,511
|
2,309
|
|||||||||||||||
| Oral antidiabetic products (OAD) |
2,246
|
2,758
|
2,575
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diabetes care total sales |
65,456
|
60,887
|
50,425
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NovoSeven® | 9,256 |
8,933
|
8,347 | |||||||||||||||
| Norditropin® | 6,114 |
5,698
|
5,047 | |||||||||||||||
| Other products | 2,746 |
2,508
|
2,527 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Biopharmaceuticals total sales | 18,116 |
17,139
|
15,921 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment key figures | ||||||||||||||||||
| Total net sales |
65,456
|
60,887
|
50,425
|
18,116 |
17,139
|
15,921 | 83,572 | 78,026 | 66,346 | |||||||||
| Change in DKK (%) |
7.5%
|
20.7%
|
10.3%
|
5.7% |
7.7%
|
5.7% | 7.1% | 17.6% | 9.2% | |||||||||
| Change in local currencies (%) |
12.0%
|
14.5%
|
12.6%
|
11.5% |
2.4%
|
7.6% | 11.9% | 11.6% | 11.4% | |||||||||
| Cost of goods sold |
11,909
|
11,435
|
10,762
|
2,231 |
2,030
|
1,827 | 14,140 | 13,465 | 12,589 | |||||||||
| Sales and distribution costs |
20,584
|
18,894
|
16,476
|
2,796 |
2,650
|
2,528 | 23,380 | 21,544 | 19,004 | |||||||||
| Research and development costs |
7,786
|
7,322
|
6,402
|
3,947 |
3,575
|
3,226 | 11,733 | 10,897 | 9,628 | |||||||||
| Administrative costs |
2,767
|
2,604
|
2,485
|
741 |
708
|
760 | 3,508 | 3,312 | 3,245 | |||||||||
| Licence income and other operating income, net |
510
|
464
|
285
|
172 |
202
|
209 | 682 | 666 | 494 | |||||||||
| Operating profit |
22,920
|
21,096
|
14,585
|
8,573 |
8,378
|
7,789 | 31,493 | 29,474 | 22,374 | |||||||||
| Operating margin |
35.0%
|
34.6%
|
28.9%
|
47.3% |
48.9%
|
48.9% | 37.7% | 37.8% | 33.7% | |||||||||
| Depreciation, amortisation and impairment losses expensed |
2,209
|
2,167
|
2,051
|
590 |
526
|
686 | 2,799 | 2,693 | 2,737 | |||||||||
| Additions to Intangible assets and Property, plant and equipment |
2,651
|
2,800
|
2,654
|
990 |
770
|
678 | 3,641 | 3,570 | 3,332 | |||||||||
| Assets allocated to business segments |
36,436
|
36,030
|
34,853
|
10,525 |
9,119
|
8,998 | 46,961 | 45,149 | 43,851 | |||||||||
| Assets not allocated to business segments1 | 23,376 | 20,520 | 20,847 | |||||||||||||||
| Total assets | 70,337 | 65,669 | 64,698 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1. | The part of total assets that remains unallocated to either of the two business segments includes Cash at bank and on hand, Marketable securities, Derivative financial instruments deferred tax assets and tax receivables. |
NOVO NORDISK ANNUAL REPORT 2013
| 66 | CONSOLIDATED FINANCIAL STATEMENTS |
| 2.2 |
Segment information
(continued) |
Information about geographical areas
Novo Nordisk operates in five geographical regions:
| • | North America: the US and Canada |
| • | Europe: the EU, EFTA, Albania, Bosnia-Hercegovina, Macedonia, Serbia, Montenegro and Kosovo |
| • | Japan & Korea: Japan and Korea |
| • | Region China: China, Hong Kong and Taiwan |
| • | International Operations: all other countries. |
Sales are attributed to geographical regions according to the location of the customer. Allocation of property, plant and equipment, trade receivables, allowance for trade receivables and total assets are based on the location of the assets.
The country of domicile is Denmark, which is part of Region Europe. Denmark is immaterial to Novo Nordisk’s activities in terms of geographical size and the operational business segments. More than 99.4% of total sales are realised outside Denmark. Sales to external customers attributed to the US are collectively the most material to the Group. The US is the only country where sales contribute more than 10% of total sales. Sales to the US represent more than 90% of sales in Region North America.
For patent expiry in key markets, please refer to note 2.5 in the social statements, where the various marketed products are listed.
Geographical areas
|
DKK million
|
2013
|
2012
|
2011
|
2013
|
2012
|
2011
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
Europe
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales by business segment:
|
||||||||||||
|
NovoRapid®
/ NovoLog®
|
9,953
|
9,033
|
6,934
|
3,819
|
3,707
|
3,464
|
||||||
|
NovoMix®
/ NovoLog® Mix
|
2,694
|
2,488
|
2,088
|
2,450
|
2,544
|
2,623
|
||||||
|
Levemir®
|
6,823
|
5,290
|
3,711
|
2,909
|
2,833
|
2,577
|
||||||
|
Modern
insulins (insulin analogues)
|
19,470
|
16,811
|
12,733
|
9,178
|
9,084
|
8,664
|
||||||
|
Human
insulins
|
1,976
|
1,959
|
1,762
|
2,427
|
2,642
|
3,032
|
||||||
|
Victoza®
|
7,537
|
5,930
|
3,716
|
2,896
|
2,427
|
1,620
|
||||||
|
Other
diabetes care
|
1,590
|
1,998
|
1,705
|
885
|
965
|
1,210
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diabetes
care total
|
30,573
|
26,698
|
19,916
|
15,386
|
15,118
|
14,526
|
||||||
|
|
||||||||||||
|
NovoSeven®
|
4,459
|
4,397
|
3,951
|
2,294
|
2,206
|
2,310
|
||||||
|
Norditropin®
|
2,273
|
1,721
|
1,394
|
1,729
|
1,741
|
1,705
|
||||||
|
Other
biopharmaceuticals
|
1,719
|
1,404
|
1,325
|
654
|
642
|
627
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biopharmaceuticals
total
|
8,451
|
7,522
|
6,670
|
4,677
|
4,589
|
4,642
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales by business
and geographical segment
|
39,024
|
34,220
|
26,586
|
20,063
|
19,707
|
19,168
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying sales growth
in local currencies1
|
17.8%
|
19.2%
|
17.9%
|
2.5%
|
2.0%
|
2.4%
|
||||||
|
Currency effect (local
currency impact)
|
(3.8%
|
) |
9.5%
|
(5.3%
|
) |
(0.7%
|
) |
0.8%
|
0.3%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales growth
as reported
|
14.0%
|
28.7%
|
12.6%
|
1.8%
|
2.8%
|
2.7%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
1,571
|
1,500
|
1,329
|
16,801
|
16,200
|
15,681
|
||||||
|
Trade receivables
|
3,076
|
2,278
|
2,081
|
3,779
|
3,688
|
3,652
|
||||||
|
Allowance for doubtful
trade receivables
|
(20
|
) |
(18
|
) |
(22
|
) |
(245
|
) |
(239
|
) |
(333
|
) |
|
Total assets
|
7,057
|
5,867
|
5,465
|
51,205
|
47,663
|
47,202
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Additional non-IFRS measure; please refer to p 93 for definition.
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
67
|
| 2.2 |
Segment information
(continued) |
Geographical areas
|
DKK million
|
2013
|
2012
|
2011
|
2013
|
2012
|
2011
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
International Operations |
Japan & Korea
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales by business segment:
|
||||||||||||
|
NovoRapid®
/ NovoLog®
|
1,639
|
1,408
|
1,100
|
951
|
1,175
|
1,057
|
||||||
|
NovoMix®
/ NovoLog® Mix
|
1,875
|
1,708
|
1,482
|
789
|
1,028
|
970
|
||||||
|
Levemir®
|
1,290
|
1,106
|
942
|
288
|
386
|
363
|
||||||
|
Modern
insulins (insulin analogues)
|
4,804
|
4,222
|
3,524
|
2,028
|
2,589
|
2,390
|
||||||
|
Human
insulins
|
2,954
|
3,073
|
2,581
|
490
|
768
|
960
|
||||||
|
Victoza®
|
741
|
613
|
322
|
331
|
455
|
327
|
||||||
|
Other
diabetes care
|
692
|
632
|
583
|
471
|
493
|
430
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diabetes
care total
|
9,191
|
8,540
|
7,010
|
3,320
|
4,305
|
4,107
|
||||||
|
|
||||||||||||
|
NovoSeven®
|
1,716
|
1,526
|
1,485
|
629
|
646
|
482
|
||||||
|
Norditropin®
|
853
|
780
|
651
|
1,246
|
1,442
|
1,285
|
||||||
|
Other
biopharmaceuticals
|
247
|
234
|
221
|
122
|
224
|
349
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biopharmaceuticals
total
|
2,816
|
2,540
|
2,357
|
1,997
|
2,312
|
2,116
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales by business
and geographical segment
|
12,007
|
11,080 | 9,367 | 5,317 | 6,617 | 6,223 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying sales growth
in local currencies1
|
17.0% | 16.2% | 17.1% | (0.1% | ) | (1.5% | ) | 5.1% | ||||
|
Currency effect (local
currency impact)
|
(8.6% | ) | 2.1% | (4.7% | ) | (19.5% | ) | 7.8% | 4.8% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales growth
as reported
|
8.4% | 18.3% | 12.4% | (19.6% | ) | 6.3% | 9.9% | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
1,292 | 1,508 | 1,672 | 140 | 174 | 207 | ||||||
|
Trade receivables
|
2,196 | 2,177 | 2,052 | 269 | 335 | 377 | ||||||
|
Allowance for doubtful
trade receivables
|
(716 | ) | (710 | ) | (535 | ) | (8 | ) | (3 | ) | (2 | ) |
|
Total assets
|
5,945 | 6,660 | 6,419 | 1,022 | 989 | 1,388 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| DKK million |
2013
|
2012
|
2011
|
2013
|
2012
|
2011
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Region China | Total sum of the five regions | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sales by business segment: | ||||||||||||
|
NovoRapid®
/ NovoLog®
|
486
|
370
|
249
|
16,848
|
15,693
|
12,804
|
||||||
|
NovoMix®
/ NovoLog® Mix
|
1,951
|
1,574
|
1,115
|
9,759
|
9,342
|
8,278
|
||||||
|
Levemir®
|
236
|
171
|
90
|
11,546
|
9,786
|
7,683
|
||||||
|
Modern
insulins (insulin analogues)
|
2,673
|
2,115
|
1,454
|
38,153
|
34,821
|
28,765
|
||||||
|
Human
insulins
|
3,022
|
2,860
|
2,450
|
10,869
|
11,302
|
10,785
|
||||||
|
Victoza®
|
128
|
70
|
6
|
11,633
|
9,495
|
5,991
|
||||||
|
Other
diabetes care
|
1,163
|
1,181
|
956
|
4,801
|
5,269
|
4,884
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diabetes
care total
|
6,986
|
6,226
|
4,866
|
65,456
|
60,887
|
50,425
|
||||||
|
|
||||||||||||
|
NovoSeven®
|
158
|
158
|
119
|
9,256
|
8,933
|
8,347
|
||||||
|
Norditropin®
|
13
|
14
|
12
|
6,114
|
5,698
|
5,047
|
||||||
|
Other
biopharmaceuticals
|
4
|
4
|
5
|
2,746
|
2,508
|
2,527
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biopharmaceuticals
total
|
175
|
176
|
136
|
18,116
|
17,139
|
15,921
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total sales by business and geographical segment | 7,161 | 6,402 | 5,002 | 83,572 | 78,026 | 66,346 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Underlying sales growth in local currencies1 | 12.7% | 16.3% | 11.7% | 11.9% | 11.6% | 11.4% | ||||||
| Currency effect (local currency impact) | (0.8% | ) | 11.7% | (0.7% | ) | (4.8% | ) | 6.0% | (2.2% | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total sales growth as reported | 11.9% | 28.0% | 11.0% | 7.1% | 17.6% | 9.2% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment | 2,078 | 2,157 | 2,042 | 21,882 | 21,539 | 20,931 | ||||||
| Trade receivables | 1,587 | 1,161 | 1,187 | 10,907 | 9,639 | 9,349 | ||||||
| Allowance for doubtful trade receivables | 0 | (54 | ) | 0 | (989 | ) | (1,024 | ) | (892 | ) | ||
| Total assets | 5,108 | 4,490 | 4,224 | 70,337 | 65,669 | 64,698 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Additional non-IFRS measure; please refer to p 93 for definition.
NOVO NORDISK ANNUAL REPORT 2013
| 68 | CONSOLIDATED FINANCIAL STATEMENTS |
| 2.3 |
Employee
costs |
Accounting
policies
Wages, salaries, social security contributions,
annual leave and sick leave, bonuses and non-monetary 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.
Employee costs
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Wages and salaries |
19,077
|
17,301
|
16,127
|
|||
| Share-based payment costs (note 5.1) |
409
|
308
|
319
|
|||
| Pensions – defined contribution plans |
1,428
|
1,302
|
1,155
|
|||
| Pensions – retirement benefit | ||||||
| obligations (note 3.7) |
113
|
150
|
(2
|
)
|
||
| Other social security contributions |
1,489
|
1,358
|
1,189
|
|||
| Other employee costs |
1,891
|
1,779
|
1,491
|
|||
|
|
|
|
|
|
|
|
| Total employee costs for the year |
24,407
|
22,198
|
20,279
|
|||
| Employee costs included in property, plant and equipment1 |
(772
|
)
|
(533
|
)
|
(496
|
)
|
| Change in employee costs included in inventories |
(29
|
)
|
(70
|
)
|
(37
|
)
|
|
|
|
|
|
|
|
|
| Total employee costs |
23,606
|
21,595 | 19,746 | |||
|
|
|
|
|
|
|
|
| Included in the Income statement: | ||||||
| Cost of goods sold |
5,160
|
4,627 | 4,302 | |||
| Sales and distribution costs |
9,831
|
8,784 | 7,961 | |||
| Research and development costs |
4,680
|
4,298 | 3,980 | |||
| Administrative costs |
2,250
|
2,205 | 1,993 | |||
| Licence income and other operating income, net | 1,685 | 1,681 | 1,510 | |||
|
|
|
|
|
|
|
|
| Total employee costs | 23,606 | 21,595 | 19,746 | |||
|
|
|
|
|
|
|
| 1. | This reflects annual gross employee costs included in property, plant and equipment, which subsequently will be included in depreciation and impairment losses. |
| Average number of full-time employees |
36,144
|
33,061
|
31,499
|
|||
| Year-end number of full-time employees |
37,978
|
34,286
|
32,136
|
|||
|
|
|
|
|
|
|
Remuneration to Executive Management and Board of Directors
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Salary and cash-based incentive |
58
|
37
|
35
|
|||
| Pension |
15
|
9
|
9
|
|||
| Other benefits |
2
|
1
|
1
|
|||
|
|
|
|
|
|
|
|
| Executive Management in total1 |
75
|
47
|
45
|
|||
|
|
|
|
|
|
|
|
| Fee to Board of Directors2 |
9
|
9
|
9
|
|||
|
|
|
|
|
|
|
| 1. | Excluding share-based payments, as these are allocated in the joint pool between Executive Management and other members of the Senior Management Board. Please refer to note 5.1 and ’Remuneration’, pp 49–51, for further information. |
| 2. | Excluding social security taxes paid amounting to less than DKK 1 million (less than DKK 1 million in 2012). |
| 2.4 |
Income and deferred
income taxes |
Income taxes
Accounting
policies
The tax expense for the period comprises current
and deferred tax and interest on tax cases ongoing or settled during the year,
including adjustments to previous years and changes in provision for uncertain
tax positions. Tax is recognised in the Income statement, except to the extent
that it relates to items recognised in Other comprehensive income.
Following developments in ongoing tax disputes primarily related to transfer pricing cases, uncertain tax positions previously presented net as part of deferred tax liabilities are as of 2013 presented individually as part of deferred tax assets, tax receivables and tax payables. As retrospective application of this change in classification would have only an immaterial impact on comparative amounts, Novo Nordisk has applied the reclassification in 2013 without restating previous years’ comparative amounts and disclosures. Had comparative amounts been restated for 2012, deferred tax liabilities would decrease by DKK 716 million, deferred tax assets increase by DKK 614 million, tax receivables increase by DKK 425 million and tax payables increase by DKK 1,755 million. In 2013 uncertain tax positions of DKK 1,705 million is presented as DKK 760 million in deferred tax assets, DKK 2,317 million in tax receivables and DKK 1,372 million in tax payables.
Key
accounting estimate – Income taxes
Novo Nordisk is subject to income taxes around
the world. Significant judgement is required in determining the worldwide accrual
for income taxes, deferred income tax assets and liabilities, and provision
for uncertain tax positions. Novo Nordisk recognises deferred income tax assets
if it is probable that sufficient taxable income will be available in the future
against which the temporary differences and unused tax losses can be utilised.
Management has considered future taxable income in assessing whether deferred
income tax assets should be recognised. In the course of conducting business
globally, transfer pricing disputes with tax authorities may occur, and Management
judgement is applied to assess the possible outcome of such disputes. Novo Nordisk
believes that the provision made for uncertain tax positions not yet settled
with local tax authorities is adequate. However, the actual obligation may deviate
and is dependent on the result of litigations and settlements with the relevant
tax authorities.
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
69
|
| 2.4 |
Income and deferred
income taxes
(continued) |
Income taxes expensed
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Current tax on profit for the year |
8,540
|
6,001
|
4,534
|
|||
| Deferred tax on profit for the year |
(682
|
)
|
645
|
257
|
||
|
|
|
|
|
|
|
|
| Tax on profit for the year |
7,858
|
6,646
|
4,791
|
|||
| Adjustments recognised for current tax of prior periods |
(74
|
)
|
4,042
|
277
|
||
| Adjustments recognised for deferred tax of prior periods |
(429
|
)
|
(4,309
|
)
|
(240
|
)
|
|
|
|
|
|
|
|
|
| Income taxes in the Income statement | 7,355 | 6,379 | 4,828 | |||
|
|
|
|
|
|
|
Adjustments recognised for prior periods include adjustments caused by events that occurred in the current year related to current and deferred tax of prior periods. Such adjustments predominantly arise from tax payments on tax disputes related to transfer pricing and reversal of associated tax liability recognised in prior periods.
| Computation of effective tax rate: | ||||||
| Statutory corporate income tax rate in Denmark |
25.0%
|
25.0%
|
25.0%
|
|||
| Deviation in foreign subsidiaries’ tax rates compared with the Danish tax rate (net) |
(2.0%
|
)
|
(2.1%
|
)
|
(3.0%
|
)
|
| Non-taxable income less non-tax- deductible expenses (net) |
–
|
0.1%
|
|
(0.2%
|
)
|
|
| Effect on deferred tax related to change in the Danish corporate tax rate |
(0.3%
|
)
|
–
|
–
|
||
| Other |
(0.1%
|
)
|
(0.1%
|
)
|
0.2%
|
|
|
|
|
|
|
|
|
|
| Effective tax rate | 22.6% | 22.9% | 22.0% | |||
|
|
|
|
|
|
|
|
| Tax on other comprehensive income for the year, (income)/expense | 211 | 587 | (190 | ) | ||
|
|
|
|
|
|
|
Tax on other comprehensive income for the year relates to tax on deferred (gains)/losses on cash flow hedges and internal profit in inventories. This is offset by DKK 48 million (DKK 12 million in 2012) recognised as current tax in Other comprehensive income in 2013.
Income taxes paid
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Income taxes paid in Denmark |
7,363
|
7,895
|
2,825
|
|||
| Income taxes paid outside Denmark |
2,444
|
2,996
|
2,566
|
|||
|
|
|
|
|
|
|
|
| Total income taxes paid | 9,807 | 10,891 | 5,391 | |||
|
|
|
|
|
|
|
The income taxes of DKK 7,363 million paid in Denmark in 2013 (DKK 7,895 million in 2012) include adjustments arising from ongoing tax disputes primarily related to transfer pricing from prior periods.
Deferred income taxes
Accounting
policies
Deferred income taxes arise from temporary
differences between the accounting and taxable values of the individual consolidated
companies and from realisable tax-loss carry-forwards using the liability method.
The tax value of tax-loss carry-forwards is included in deferred tax assets
to the extent that the tax losses and other tax assets are expected to be utilised
in future taxable income. The deferred income taxes are measured according to
current tax rules and at the tax rates expected to be in force on elimination
of the temporary differences. No provision is made for income taxes that would
be payable upon the distribution of unremitted earnings unless a concrete distribution
of earnings is planned.
Development in deferred income tax assets and liabilities
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| At the beginning of the year |
1,512
|
(792
|
)
|
|
| Reclassification to Tax receivables/Tax payables |
1,330
|
–
|
||
| Reclassification from Other liabilities (note 3.8) |
–
|
(739
|
)
|
|
| Deferred tax on profit for the year |
682
|
(645
|
)
|
|
| Adjustment relating to previous years |
429
|
4,309
|
||
| Deferred tax on items recognised in | ||||
| Other comprehensive income |
(259
|
)
|
(575
|
)
|
| Exchange rate adjustments |
(135
|
)
|
(46
|
)
|
|
|
|
|
|
|
| Total deferred tax assets/(liabilities), net |
3,559
|
1,512 | ||
|
|
|
|
|
| 70 | CONSOLIDATED FINANCIAL STATEMENTS |
| 2.4 |
Income and deferred
income taxes
(continued) |
Development in deferred income tax assets and liabilities
DKK million |
Property,
plant and equipment |
Intangible assets |
Inventories |
Tax-loss
carry- forward |
Other |
Offset
within countries |
Total |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2013 | ||||||||||||||
| Net deferred tax asset/(liability) at 1 January | (997 | ) | 133 | 1,336 | 66 | 974 | – | 1,512 | ||||||
| Reclassification to Tax receivables/Tax payables | 1,330 | 1,330 | ||||||||||||
| Income/(charge) to the Income statement1 | 141 | (44 | ) | 593 | (7 | ) | 428 | 1,111 | ||||||
| Income/(charge) to Other comprehensive income | (168 | ) | (91 | ) | (259 | ) | ||||||||
| Exchange rate adjustment | 3 | (25 | ) | – | (5 | ) | (108 | ) | (135 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net deferred tax asset/(liability) at 31 December | (853 | ) | 64 | 1,761 | 54 | 2,533 | – | 3,559 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Classified as follows: | ||||||||||||||
| Deferred tax asset at 31 December | 109 | 378 | 2,637 | 54 | 3,567 | (2,514 | ) | 4,231 | ||||||
| Deferred tax liability at 31 December | (962 | ) | (314 | ) | (876 | ) | – | (1,034 | ) | 2,514 | (672 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1. Including effect related to change in the Danish corporate tax rate. |
| 2012 | ||||||||||||||
| Net deferred tax asset/(liability) at 1 January | (1,060 | ) | 244 | 1,599 | 87 | (1,662 | ) | – | (792 | ) | ||||
| Reclassification from Other liabilities | (739 | ) | (739 | ) | ||||||||||
| Income/(charge) to the Income statement | 66 | (106 | ) | (185 | ) | (17 | ) | 3,906 | 3,664 | |||||
| Income/(charge) to Other comprehensive income | (78 | ) | (497 | ) | (575 | ) | ||||||||
| Exchange rate adjustment | (3 | ) | (5 | ) | – | (4 | ) | (34 | ) | (46 | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net deferred tax asset/(liability) at 31 December | (997 | ) | 133 | 1,336 | 66 | 974 | – | 1,512 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Classified as follows: | ||||||||||||||
| Deferred tax asset at 31 December | 176 | 436 | 2,560 | 66 | 1,421 | (2,415 | ) | 2,244 | ||||||
| Deferred tax liability at 31 December | (1,173 | ) | (303 | ) | (1,224 | ) | – | (447 | ) | 2,415 | (732 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Further to the above, the tax value of the tax-loss carry-forward of DKK 182 million (DKK 208 million in 2012) has not been recognised in the Balance sheet due to the likelihood that the tax losses will not be realised in the future. None of the unrecognised tax-loss carry-forward expires within one year. DKK 8 million expires within two to five years and DKK 174 million after more than five years.
NOVO NORDISK ANNUAL REPORT 2013|
CONSOLIDATED FINANCIAL
STATEMENTS
|
71
|
Section 3
Operating assets
and liabilities
|
Novo Nordisk generates a relatively high OPAT/NOA due to a low level of acquired intangible assets and a stable operating asset base despite significant business growth. This is driven by Novo Nordisk’s organic growth strategy with limited acquisition of rights or businesses, and reflects the fact that, in line with industry practice, Novo Nordisk does not capitalise internal development costs until regulatory approval is highly probable. The overall approach to managing operating assets is to retain assets for research, development and production activities under the company’s own control, and generally to lease non-core assets related to administration and distribution. Furthermore, to maintain high quality in the company’s products and the capability at all times to deliver products to customers, Novo Nordisk ensures that the total production capacity and inventory levels reflect this priority. |
||
| 3.1 | Intangible assets |
Accounting policies
Patents and licences, including
acquired patents and licences for in-process research and development projects,
are carried at historical cost less accumulated amortisation and any impairment
loss. Amortisation is based on the straight-line method over the estimated useful
life, which is the shorter of the legal duration and the economic useful life
not exceeding 10 years. The amortisation of patents and licences begins, at
the earliest, on production of pre-launch inventory or after regulatory approval
has been obtained.
Internal development of computer software and other development costs related to major IT projects for internal use that are directly attributable to the design and testing of identifiable and unique software products controlled by Novo Nordisk are recognised as intangible assets if the recognition criteria are met, ie a significant business system where the expenditure leads to the creation of a durable asset. Amortisation is based on the straight-line method over the estimated useful life of 3–10 years. The amortisation begins when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by Management.
Impairment of assets
Intangible assets with an indefinite
useful life and intangible assets not yet available for use are not subject
to amortisation but are tested annually for impairment irrespective of whether
there is any indication that they may be impaired.
Assets that are subject to amortisation, such as intangible assets in use or with definite useful life, and other non-current assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Factors considered material that could trigger an impairment test include the following:
| • | Development of a competing drug |
| • | Changes in the legal framework covering patents, rights and licences |
| • | Advances in medicine and/or technology that affect the medical treatments |
| • | Lower-than-predicted sales |
| • | Adverse impact on reputation and/or brand names |
| • | Changes in the economic lives of similar assets |
| • | Relationship with other intangible assets or property, plant and equipment |
| • | Changes or anticipated changes in participation rates or reimbursement policies. |
If the carrying amount of intangible assets exceeds the recoverable amount based upon the existence of one or more of the above indicators of impairment, any impairment is measured based on discounted projected cash fl ows. Impairments are reviewed at each reporting date for possible reversal.
Intangible assets
| DKK million | 2013 | 2012 | ||
|
|
|
|
|
|
| Cost at the beginning of the year | 2,712 | 2,538 | ||
| Additions during the year | 403 | 198 | ||
| Disposals during the year | – | (18) | ||
| Effect of exchange rate adjustment | (16) | (6) | ||
|
|
|
|
|
|
| Cost at the end of the year | 3,099 | 2,712 | ||
|
|
|
|
|
|
| Amortisation and impairment losses at the beginning of the year | 1,217 | 1,049 | ||
| Amortisation for the year | 166 | 160 | ||
| Impairment losses for the year | 113 | 32 | ||
| Amortisation and impairment losses reversed on disposals during the year | – | (18) | ||
| Effect of exchange rate adjustment | (12) | (6) | ||
|
|
|
|
|
|
| Amortisation and impairment losses at the end of the year | 1,484 | 1,217 | ||
|
|
|
|
|
|
| Carrying amount at the end of the year | 1,615 | 1,495 | ||
|
|
|
|
|
|
| Specified as: | ||||
| Patents and licences | 810 | 762 | ||
| Internally developed software and software under development | 805 | 733 | ||
|
|
|
|
|
|
| Total | 1,615 | 1,495 | ||
|
|
|
|
|
Intangible assets not yet in use amount to DKK 831 million (DKK 669 million in 2012), primarily patents and licences in relation to development projects.
In 2013, an impairment loss of DKK 113 million (DKK 32 million in 2012) related to patents has been recognised due to discontinuation of development projects. Impairment tests in 2013 and 2012 of assets not yet in use were based upon Management’s projections and anticipated net present value of future cash flows from cash-generating units. Management has used a pre-tax discount rate (WACC) of 8% based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values used are based on the expected life of products, forecasted life cycle and cash flow over that period, and the useful life of the underlying assets.
Amortisation and impairment losses
| DKK million | 2013 | 2012 | 2011 | |||
|
|
|
|
|
|
|
|
| Cost of goods sold | 97 | 81 | 47 | |||
| Sales and distribution costs | 41 | 50 | 35 | |||
| Research and development costs | 126 | 47 | 139 | |||
| Licence income and other operating income, net | 15 | 14 | 11 | |||
|
|
|
|
|
|
|
|
| Total amortisation and impairment losses | 279 | 192 | 232 | |||
|
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
| 72 | CONSOLIDATED FINANCIAL STATEMENTS |
| 3.2 | Property, plant and equipment |
Accounting policies
Property, plant and equipment is measured at historical cost less accumulated depreciation and any impairment loss. The cost of self-constructed assets includes costs directly and indirectly attributable to the
construction of the assets. Subsequent cost is included in the asset’s carrying amount or recognised as a separate asset only when it is probable that future economic benefits associated with the item will flow to Novo Nordisk and the cost of
the item can be measured reliably. In general, constructions of major investments are self-financed and thus no interest on loans is capitalised as part of the cost. Depreciation is based on the straight-line method over the estimated useful lives
of the assets:
| • | Buildings: 12– 50 years |
| • | Plant and machinery: 5 –16 years |
| • | Other equipment: 3 –10 years |
| • | Land: not depreciated. |
The depreciation commences when the asset is available for use, ie when it is in the location and condition necessary for it to be capable of operating in the manner intended by Management.
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at the end of each reporting period. An asset’s carrying amount is written down to its recoverable amount if the asset’s carrying amount is higher than its estimated recoverable amount (please refer to note 3.1 for a description of impairment of assets). Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Income statement.
| Property, plant and equipment |
Payments on
|
|||||||||
|
account and
|
||||||||||
|
assets in
|
||||||||||
|
Land and
|
Plant and
|
Other
|
course of
|
|||||||
| DKK million |
buildings
|
machinery
|
equipment
|
construction
|
Total
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| 2013 | ||||||||||
| Cost at the beginning of the year | 15,345 | 18,022 | 3,359 | 5,878 | 42,604 | |||||
| Additions during the year | 521 | 581 | 230 | 1,906 | 3,238 | |||||
| Disposals during the year | (195 | ) | (655 | ) | (259 | ) | – | (1,109 | ) | |
| Transfer from/(to) other items | 804 | 1,283 | 186 | (2,273 | ) | 0 | ||||
| Effect of exchange rate adjustment | (291 | ) | (267 | ) | (59 | ) | (79 | ) | (696 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| Cost at the end of the year | 16,184 | 18,964 | 3,457 | 5,432 | 44,037 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and impairment losses at the beginning of the year | 5,881 | 12,975 | 2,209 | – | 21,065 | |||||
| Depreciation for the year | 688 | 1,464 | 337 | – | 2,489 | |||||
| Impairment losses for the year | 4 | 22 | 5 | – | 31 | |||||
| Depreciation and impairment losses reversed on disposals during the year | (192 | ) | (643 | ) | (243 | ) | – | (1,078 | ) | |
| Effect of exchange rate adjustment | (114 | ) | (204 | ) | (34 | ) | – | (352 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and impairment losses at the end of the year | 6,267 | 13,614 | 2,274 | – | 22,155 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| Carrying amount at the end of the year | 9,917 | 5,350 | 1,183 | 5,432 | 21,882 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| 2012 | ||||||||||
| Cost at the beginning of the year | 14,600 | 17,845 | 3,080 | 4,815 | 40,340 | |||||
| Additions during the year | 171 | 136 | 220 | 2,845 | 3,372 | |||||
| Disposals during the year | (287 | ) | (350 | ) | (111 | ) | – | (748 | ) | |
| Transfer from/(to) other items | 1,020 | 553 | 192 | (1,765 | ) | – | ||||
| Effect of exchange rate adjustment | (159 | ) | (162 | ) | (22 | ) | (17 | ) | (360 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| Cost at the end of the year | 15,345 | 18,022 | 3,359 | 5,878 | 42,604 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and impairment losses at the beginning of the year | 5,525 | 11,888 | 1,996 | – | 19,409 | |||||
| Depreciation for the year | 655 | 1,445 | 313 | – | 2,413 | |||||
| Impairment losses for the year | 18 | 68 | 2 | – | 88 | |||||
| Depreciation and impairment losses reversed on disposals during the year | (263 | ) | (315 | ) | (91 | ) | – | (669 | ) | |
| Effect of exchange rate adjustment | (54 | ) | (111 | ) | (11 | ) | – | (176 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and impairment losses at the end of the year | 5,881 | 12,975 | 2,209 | – | 21,065 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| Carrying amount at the end of the year | 9,464 | 5,047 | 1,150 | 5,878 | 21,539 | |||||
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
73
|
| 3.2 | Property, plant and equipment
(continued) |
Depreciation and impairment losses
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Cost of goods sold |
1,984
|
1,909
|
1,833
|
|||
| Sales and distribution costs |
37
|
46
|
60
|
|||
| Research and development costs |
340
|
416
|
494
|
|||
| Administrative costs |
59
|
53
|
58
|
|||
| Licence income and other operating | ||||||
| income, net |
100
|
77
|
60
|
|||
|
|
|
|
|
|
|
|
| Total depreciation and | ||||||
| impairment losses |
2,520
|
2,501
|
2,505
|
|||
|
|
|
|
|
|
|
|
| 3.3 | Inventories |
Accounting policies
Inventories are stated at the lower of cost
and net realisable value. Cost is determined using the first-in, first-out method.
Cost comprises direct production costs such as raw materials, consumables and
labour as well as indirect production costs. Production costs for work in progress
and 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 (pre-launch inventory) is capitalised but immediately provided for, until there is a high probability of regulatory approval of the product. Before that point, a provision is made against the carrying amount of inventory to its recoverable amount and recorded as research and development costs. At the point when a high probability of regulatory approval is obtained, the provision recorded is reversed, up to no more than the original cost.
Key
accounting estimate – Indirect production costs
Indirect production costs account for more than 50% of the net inventory value reflecting a lengthy production process compared with low direct raw material cost. The production of both diabetes care and biopharma products is highly complex from fermentation to purification and formulation, including quality control of all production processes. Furthermore, the process is very sensitive to manufacturing conditions. These factors all influence the parameters for capitalisation of indirect production costs in Novo Nordisk and full cost of the products. Indirect production costs is measured using a standard cost method, which is reviewed regularly to ensure relevant measures of capacity utilisation, production lead time, cost base and other relevant factors. When calculating total inventory, Management must make certain judgements about cost of production and idle capacity when estimating indirect production costs for capitalisation. Changes in the parameters for calculation of indirect production costs could have an impact on the gross margin and the overall valuation of inventories.
Inventories
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| Raw materials |
1,660
|
1,512
|
||
| Work in progress |
6,227
|
4,910
|
||
| Finished goods |
2,625
|
3,985
|
||
|
|
|
|
|
|
| Total inventories (gross) |
10,512
|
10,407
|
||
| Inventory write-downs at year-end |
960
|
864
|
||
|
|
|
|
|
|
| Total inventories (net) | 9,552 | 9,543 | ||
|
|
|
|
|
|
| Carrying amount of inventory carried | ||||
| at net realisable value | 0 | 0 | ||
| Indirect production costs included in work | ||||
| in progress and finished goods (net) | 4,834 | 4,894 | ||
| Share of total inventories (net) | 51% | 51% | ||
|
|
|
|
|
|
| Movements in the inventory | ||||
| write-downs | ||||
| Inventory write-downs at the beginning of the year | 864 | 815 | ||
| Inventory write-downs during the year | 465 | 845 | ||
| Utilisation of inventory write-downs | (156 | ) | (532 | ) |
| Reversal of inventory write-downs | (213 | ) | (264 | ) |
|
|
|
|
|
|
| Inventory write-downs at the end of the year | 960 | 864 | ||
|
|
|
|
|
| 3.4 | Trade receivables |
Accounting policies
Trade receivables are recognised initially
at fair value and subsequently measured at amortised cost using the effective
interest method, less allowance for doubtful trade receivables.
The allowance is deducted from the carrying amount of Trade receivables and the amount of the loss is recognised in the Income statement under Sales and distribution costs. Subsequent recoveries of amounts previously written off are credited against Sales and distribution costs.
Key
accounting estimate –
Allowance for doubtful trade receivables
The customer base of Novo Nordisk comprises government agencies, wholesalers, retail pharmacies, managed care and other customers. Management makes allowance for doubtful trade receivables in anticipation of estimated losses resulting from the subsequent inability of customers to make required payments. If the financial circumstances of customers were to deteriorate, resulting in an impairment of their ability to make payments, an additional allowance could be required in future periods. When evaluating the adequacy of the allowance for doubtful trade receivables, Management analyses trade receivables and examines historical bad debt, customer concentrations, customer creditworthiness and payment history, current economic trends and changes in customer payment terms. Please refer to note 4.2 for a general description of credit risk.
As a result of the generally troubled economic climate in Europe and the Eurozone countries, Novo Nordisk has increased its focus on the development in the outstanding trade receivables from this region. Payment history as well as current economic conditions and indicators are taken into account in the valuation of trade receivables. Furthermore, as a result of the significant increase in sales to countries within Region International Operations, and the fact that many of these countries have low credit ratings, the relative impact of Region International Operations on the allowance for doubtful trade receivables is increasing. Hence, Novo Nordisk continues to monitor the credit exposure related to this region.
Please refer to note 2.2 for a geographical split of trade receivables and allowance for doubtful trade receivables.
NOVO NORDISK ANNUAL REPORT 2013
| 74 | CONSOLIDATED FINANCIAL STATEMENTS |
| 3.4 | Trade receivables (continued) |
Trade receivables
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| Trade receivables (gross) |
11,896
|
10,663
|
||
| Allowance for doubtful trade receivables |
989
|
1,024
|
||
|
|
|
|
|
|
| Trade receivables (net) | 10,907 |
9,639
|
|
|
|
|
|
| Trade receivables (net) are equal to an average | ||||
| credit period of 48 days (45 days in 2012). | ||||
| Age analysis of trade receivables | ||||
| Non-impaired trade receivables | ||||
| – Not yet due | 9,985 |
8,950
|
||
| – Overdue by between 1 and 179 days | 844 |
629
|
||
| – Overdue by between 180 and 360 days | 78 |
60
|
||
| – Overdue by more than 360 days | 0 |
0
|
||
|
|
|
|
|
|
| Trade receivables with credit risk exposure | 10,907 |
9,639
|
||
| Allowance for doubtful trade receivables | 989 |
1,024
|
||
|
|
|
|
|
|
| Trade receivables (gross) | 11,896 |
10,663
|
||
|
|
|
|
|
|
| Movement in allowance for | ||||
| doubtful trade receivables | ||||
| Carrying amount at the beginning of the year | 1,024 |
892
|
||
| Confirmed losses | (8 | ) |
(35
|
) |
| Reversal of allowance for confirmed losses | (10 | ) |
(13
|
) |
| Allowance for possible losses during the year | 51 |
189
|
||
| Effect of exchange rate adjustment | (68 | ) |
(9
|
) |
|
|
|
|
|
|
| Allowance at the end of the year | 989 |
1,024
|
||
|
|
|
|
|
|
| 3.5 | Other receivables and prepayments |
Accounting
policies
Other receivables and prepayments is recognised
initially at fair value and subsequently measured at amortised cost using
the effective interest method. Other receivables comprise miscellaneous duties
and work in progress for third parties etc. Prepayments relate to ongoing
research and development activities such as clinical trials and costs concerning
subsequent financial years.
Other receivables and prepayments
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| Prepayments |
1,110
|
1,033
|
||
| Interest receivable |
75
|
87
|
||
| Amounts owed by related parties |
141
|
184
|
||
| Deposit |
232
|
524
|
||
| VAT receivable |
197
|
185
|
||
| Other receivables |
699
|
692
|
||
|
|
|
|
|
|
| Total other receivables and prepayments |
2,454
|
2,705
|
||
|
|
|
|
|
|
| 3.6 | Provisions and contingent liabilities |
Accounting
policies
Provisions for sales rebates and discounts
granted to government agencies, wholesalers, retail pharmacies, managed care
and other customers are recorded at the time the related revenues are recorded
or when the incentives are offered. Provisions are calculated based on the
historical experience and the specific terms in the individual agreements.
Provisions for legal disputes are recognised where a legal or constructive obligation has been incurred as a result of past events and it is probable that there will be an outflow of resources that can be reliably estimated. In this case, Novo Nordisk arrives at an estimate on the basis of an evaluation of the most likely outcome. Disputes for which no reliable estimate can be made are disclosed as contingent liabilities.
Novo Nordisk issues credit notes for expired goods as a part of normal business. Where there is historical experience or a reasonably accurate estimate of expected future returns can otherwise be made, a provision for estimated product returns is recorded. The provision is measured at gross sales value.
Provisions are measured at the present value of the anticipated expenditure for settlement of the legal or constructive obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as financial expense.
Key
accounting estimate – Provisions for sales rebates
Novo Nordisk records provisions for expected
sales rebates, wholesaler charge-backs and other rebates, including Medicaid
and Medicare in the US.
Such estimates are based on analyses of existing contractual or legal obligations, historical trends and the Group’s experience. Provisions are calculated on the basis of a percentage of sales for each product as 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. Please refer to note 2.1 for further information on sales rebates and provisions.
Novo Nordisk considers the provisions established for sales rebates to be reasonable and appropriate based on currently available information. However, the actual amount of rebates and discounts may differ from the amounts estimated by Management as more detailed information becomes available.
Key
accounting estimate – Provisions for legal disputes
Provisions for legal disputes consist of
various types of provision linked to ongoing legal disputes. Management makes
judgements about provisions and contingencies, including the probability of
pending and potential future litigation outcomes which, by their very nature,
are dependent on inherently uncertain future events. When determining likely
outcomes of litigations etc, Management considers the input of external counsels
on each case, as well as known outcomes in case law.
Although Management believes that the total provisions for legal pro ceedings are adequate based upon currently available information, there can be no assurance that there will not be any changes in facts or matters or that any future lawsuits, claims, proceedings or investigations will not be material.
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
75
|
| 3.6 | Provisions and contingent liabilities
(continued) |
Provisions
|
Provisions
|
Provisions
|
Provisions
|
||||||||||
|
for sales
|
for legal
|
for product
|
Other
|
2013
|
2012
|
|||||||
| DKK million |
rebates
|
disputes
|
returns
|
provisions1
|
Total
|
Total
|
||||||
|
|
|
|||||||||||
| At the beginning of the year | 7,352 | 1,057 | 582 | 572 | 9,563 | 8,264 | ||||||
| Additional provisions, including increases to existing provisions | 16,277 | 206 | 298 | 297 | 17,078 | 13,419 | ||||||
| Amount used during the year | (15,069 | ) | (3 | ) | (335 | ) | (86 | ) | (15,493 | ) | (11,255 | ) |
| Adjustments, including unused amounts reversed during the year | (289 | ) | (54 | ) | 138 | (62 | ) | (267 | ) | (768 | ) | |
| Effect of exchange rate adjustment | (321 | ) | (55 | ) | (2 | ) | (10 | ) | (388 | ) | (97 | ) |
|
|
|
|||||||||||
| At the end of the year | 7,950 | 1,151 | 681 | 711 | 10,493 | 9,563 | ||||||
|
|
|
|||||||||||
| Non-current liabilities | – | 1,151 | 409 | 623 | 2,183 | 1,907 | ||||||
| Current liabilities | 7,950 | – | 272 | 88 | 8,310 | 7,656 | ||||||
|
|
|
| 1. | Other provisions consist of various types of provisions, including employee benefits such as jubilee benefits, company-owned life insurance etc. Assets related to company-owned life insurance are presented as part of other financial assets. |
Contingent liabilities
Novo Nordisk is currently involved in pending
litigations, claims and investigations arising out of the normal conduct of
its business. While provisions that Management deems to be reasonable and
appropriate have been made for probable losses, there are uncertainties connected
with these estimates. Novo Nordisk does not expect the pending litigations,
claims and investigations, individually and in the aggregate, to have a material
impact on Novo Nordisk’s fi nancial position, operating profit or cash
flow in addition to the amounts accrued as provision for legal disputes.
Pending litigation against Novo Nordisk
Along with a majority of the hormone therapy
product manufacturers in the US, Novo Nordisk is a defendant in product liability
lawsuits related to hormone therapy products. There are currently 2 cases
against Novo Nordisk involving individuals who allege to have used a Novo
Nordisk hormone therapy product. These products (Activella®
and Vagifem®) have been sold and
marketed in the US since 2000. Until July 2003, the products were sold and
marketed exclusively in the US by Pharmacia & Upjohn Company (now Pfizer
Inc.). According to information received from Pfizer, one individual (compared
with 45 individuals in 2012) currently allege, in relation to similar lawsuits
against Pfizer Inc., that they too have used a Novo Nordisk hormone therapy
product. Novo Nordisk does not expect the pending claims to have a material
impact on Novo Nordisk’s financial position, operating profit or cash
flow.
In November 2006, Novo Nordisk A/S and the Italian affiliate Novo Nordisk Farmaceutici S.p.A. were sued by A. Menarini Industrie Farmaceutiche Riunite s.r.l. and Laboratori Guidotti S.p.A. (‘Menarini’) in the Civil Court in Rome. Menarini claims that Novo Nordisk breached an alleged contract with Menarini for the sale and distribution of insulin and insulin analogues in the Italian market or, alternatively, has incurred a pre-contractual or extra-contractual liability arising from negotiations between the parties. Novo Nordisk disputes the claims made by Menarini. On 8 October 2013 a hearing was conducted for final conclusions. On 8 January 2014 the trial court dismissed the case against Novo Nordisk. Menarini has the right to appeal the decision of the trial court. Novo Nordisk does not expect the pending claim to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow.
In August 2013, a number of claims alleging pancreatic cancer and pancreatitis have been filed against various incretin-class manufactures in U.S. courts, including Novo Nordisk. Novo Nordisk is currently named in 34 product liability cases related to Victoza®, predominantly related to pancreatic cancer. On 26 August 2013, the request for centralisation of all federal pancreatic cancer cases has been granted, and a single multidistrict litigation (MDL) court is now presiding over all federal cases. Novo Nordisk does not expect the pending claims to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow.
Novo Nordisk, along with 93 other defendants, has been named in a lawsuit filed in 2009 in the United States by the Republic of Iraq. The lawsuit alleges damages related to the defendants’ participation in the United Nations’ defunct Oil for Food Program. Nordisk does not expect the pending claim to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow.
In addition to the above, the Novo Nordisk Group is engaged in certain litigation proceedings. In the opinion of Management, settlement or continuation of these proceedings is not expected to have a material effect on Novo Nordisk’s financial position, operating profit or cash flow.
Pending claims against Novo Nordisk
and investigations involving Novo Nordisk
In February 2011, the office of the US Attorney
for the District of Massachusetts served Novo Nordisk with a subpoena calling
for the production of documents regarding potential civil and criminal offences
relating to the company’s marketing and promotional practices for the
following products: NovoLog®,
Levemir® and Victoza®.
This matter is now being conducted by the US Attorney for the District of
Columbia. Novo Nordisk is cooperating with the US Attorney in this investigation.
Novo Nordisk does not expect the pending claims to have a material impact
on Novo Nordisk’s financial position, operating profit or cash flow.
In June 2005 Novo Nordisk filed a patent infringement lawsuit against Caraco Pharmaceutical Laboratories, Ltd. (‘Caraco’), a generic pharmaceutical company, and its Indian parent, Sun Pharmaceutical Industries, Ltd., in the US District Court for the Eastern District of Michigan regarding Caraco’s abbreviated new drug application (‘ANDA’) for a generic version of Prandin® (repaglinide). In January 2011, the District Court ruled that Novo Nordisk’s US Patent No. 6,677,358 (the ‘358 patent’), which is directed toward the use of repaglinide in combination with metformin for the treatment of type 2 diabetes, is invalid and unenforceable. Novo Nordisk immediately appealed this decision on the merits to the US Court of Appeals for the Federal Circuit. Following briefing and oral argument, the US Court of Appeals for the Federal Circuit reversed the District Court finding of patent unenforceability and affirmed the patent invalidity decision. Novo Nordisk’s request for rehearing en banc of the invalidity affirmance was denied on 18 September 2013.
NOVO NORDISK ANNUAL REPORT 2013
| 76 | CONSOLIDATED FINANCIAL STATEMENTS |
| 3.6 | Provisions and contingent liabilities
(continued) |
Novo Nordisk has been involved in patent infringement litigation with three additional ANDA applicants for generic versions of Prandin®: Paddock Laboratories, Aurobindo Pharma Ltd. and Sandoz Inc., and ANDA applicant Lupin Ltd. for PrandiMet®. Following the 18 September US Court of Appeals for the Federal Circuit denial of Novo Nordisk’s en banc request, the cases are concluding.
Also before the District Court for the Eastern District of Michigan is a consolidated class action where a putative class of direct purchasers of Prandin® asserts that Novo Nordisk has violated US antitrust laws in delaying the entry of generic versions of Prandin®.
Novo Nordisk does not expect the pending claims related to Prandin® to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow.
In addition to the above, the Novo Nordisk Group is engaged in various ongoing tax audits and investigations. In the opinion of Management, these pending audits and investigations are not expected to have a material effect on Novo Nordisk’s financial position, operating profit or cash flow.
| 3.7 | Retirement benefit obligations |
Accounting
policies
Novo Nordisk operates a number of defined
contribution plans throughout the world. Novo Nordisk’s contributions
to the defined contribution plans are charged to the Income statement in the
year to which they relate. In a few countries, Novo Nordisk still operates
defined benefit plans. The costs for the year for defined benefit plans are
determined using the projected unit credit method. This reflects services
rendered by employees to the valuation dates and is based on actuarial assumptions
primarily regarding discount rates used in determining the present value of
benefits and projected rates of remuneration growth. Discount rates are based
on the market yields of high-rated corporate bonds in the country concerned.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to Other comprehensive income in the period in which they arise. Past service costs are recognised immediately in the Income statement.
Pension assets are only recognised to the extent that Novo Nordisk is able to derive future economic benefits such as refunds from the plan or reductions of future contributions.
The Group’s defined benefit plans are pension plans and medical plans and are usually funded by payments from Group companies and by employees to funds independent of Novo Nordisk. Where a plan is unfunded, a liability for the retirement obligation is recognised in the Balance sheet. Costs recognised for post-employment benefits are included in Cost of goods sold, Sales and distribution costs, Research and development costs, and Administrative costs.
Other post-employment benefits mostly comprise post-retirement healthcare plans, principally in the US.
The net obligation recognised in the Balance sheet is reported as non-current liabilities.
Retirement benefit obligations
|
2013
|
2012
|
|||||||||||||
| DKK million |
Germany
|
Switzerland
|
Japan
|
US
|
Other
|
Total
|
Total
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At the beginning of the year |
476
|
319
|
336
|
294
|
239
|
1,664
|
1,363
|
|||||||
| Current service costs |
20
|
35
|
29
|
23
|
22
|
129
|
132
|
|||||||
| Settlements |
–
|
(120
|
)
|
–
|
–
|
(7
|
)
|
(127
|
)
|
–
|
||||
| Interest costs |
18
|
5
|
5
|
10
|
6
|
44
|
47
|
|||||||
| Remeasurement (gains)/losses1 |
9
|
(17
|
)
|
5
|
(23
|
)
|
(7
|
)
|
(33
|
)
|
223
|
|||
| Plan participant contributions etc |
–
|
11
|
–
|
–
|
5
|
16
|
19
|
|||||||
| Benefits paid |
(4
|
)
|
(15
|
)
|
(14
|
)
|
(6
|
)
|
(13
|
)
|
(52
|
)
|
(80
|
)
|
| Exchange rate adjustment |
–
|
(5
|
)
|
(73
|
)
|
(13
|
)
|
(6
|
)
|
(97
|
)
|
(40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At the end of the year |
519
|
213
|
288
|
285
|
239
|
1,544
|
2
|
1,664
|
2
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fair value of plan assets | ||||||||||||||
| At the beginning of the year |
388
|
219
|
229
|
–
|
68
|
904
|
859
|
|||||||
| Interest income |
15
|
4
|
2
|
–
|
2
|
23
|
31
|
|||||||
| Settlements |
–
|
(90
|
)
|
–
|
–
|
(2
|
)
|
(92
|
)
|
–
|
||||
| Remeasurement gains/(losses) |
(8
|
)
|
–
|
30
|
–
|
(1
|
)
|
21
|
7
|
|||||
| Employer contributions |
21
|
28
|
24
|
6
|
10
|
89
|
93
|
|||||||
| Plan participant contributions etc |
2
|
11
|
–
|
–
|
5
|
18
|
17
|
|||||||
| Benefits paid to employees |
(4
|
)
|
(15
|
)
|
(14
|
)
|
(6
|
)
|
(13
|
)
|
(52
|
)
|
(80
|
)
|
| Exchange rate adjustment |
–
|
(3
|
)
|
(50
|
)
|
–
|
(2
|
)
|
(55
|
)
|
(23
|
)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At the end of the year |
414
|
154
|
221
|
–
|
67
|
856
|
904
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net retirement benefit obligations | ||||||||||||||
| at the end of the year |
105
|
59
|
67
|
285
|
172
|
688
|
760
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1. | Remeasurement relates primarily to change in financial assumptions. |
| 2. | Present value of partly funded retirement benefit obligations amounts to DKK 1,115 million (DKK 1,229 million in 2012). Present value of unfunded retirement benefit obligations amounts to DKK 429 million (DKK 435 million in 2012). |
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
77
|
| 3.7 | Retirement benefit obligations (continued) |
Net retirement benefit obligations
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| At the beginning of the year |
760
|
439
|
||
| Costs recognised in the Income statement1 |
113
|
150
|
||
| Remeasurements recognised in | ||||
| Other comprehensive income2 |
(54
|
)
|
281
|
|
| Exchange rate adjustment recognised in | ||||
| Other comprehensive income3 |
(42
|
)
|
(17
|
)
|
| Employer contributions |
(89
|
)
|
(93
|
)
|
|
|
|
|
|
|
| At the end of the year |
688
|
760
|
||
|
|
|
|
|
| 1. | Service costs, net interest, settlements and other. |
| 2. | 2012 includes effect of change in accounting policy amounting to DKK 65 million related to prior periods. |
| 3. | Exchange rate adjustments of investments in subsidiaries. |
Please refer to note 5.4 for maturity analysis of net retirement benefit obligation.
Novo Nordisk does not expect the contributions over the next five years to differ significantly from current contributions.
Weighted average asset allocation of funded retirement obligations
|
2013
|
2012
|
|||||||
|
DKK
|
DKK
|
|||||||
|
million
|
%
|
million
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
| Coverage insurance1 |
584
|
68%
|
607
|
67%
|
||||
| Equities |
78
|
9%
|
67
|
7%
|
||||
| Bonds |
167
|
20%
|
214
|
24%
|
||||
| Cash at bank |
17
|
2%
|
9
|
1%
|
||||
| Property |
10
|
1%
|
7
|
1%
|
||||
|
|
|
|
|
|
|
|
|
|
| Total |
856
|
100%
|
904
|
100%
|
||||
|
|
|
|
|
|
|
|
|
| 1. | Novo Nordisk’s defined benefit plans in Germany and Switzerland are reimbursed by the international insurer Allianz regardless of the value of the plan assets. The risk related to the funding in these countries is therefore counterparty risk against Allianz. |
Assumptions used for valuation
|
2013
|
2012
|
|||
| Weighted | Weighted | |||
| average | average | |||
|
|
|
|
|
|
| Discount rate | 3% | 3% | ||
| Projected future remuneration increases | 2% | 2% | ||
| Medical cost trend rate | 4% | 3% | ||
| Inflation rate | 2% | 2% | ||
|
|
|
Actuarial valuations are performed annually for all major defined benefit plans. Assumptions regarding future mortality are based on actuarial advice in accordance with published statistics and experience in each country.
Significant actuarial assumptions for the determination of the retirement benefit obligation are discount rate and expected future remuneration increases. The sensitivity analyses below have been determined based on reasonably likely changes in the assumptions occurring at the end of the period.
|
1%-point
|
1%-point
|
|||
| DKK million |
increase
|
decrease
|
||
|
|
|
|
|
|
|
Discount rate
|
(216
|
)
|
274
|
|
|
Future remuneration
|
62
|
(54
|
)
|
|
|
|
The sensitivities above consider the single change shown with the other assumptions assumed to be unchanged. In practice, changes in one assumption may be accompanied by offsetting changes in another assumption (although this is not always the case).
| 3.8 | Other liabilities |
Other liabilities
DKK million |
2013
|
2012
|
|||
|
|
|
|
|
|
|
|
Employee costs payable
|
3,962
|
3,748
|
|||
|
Accruals
|
3,685
|
3,697
|
|||
|
VAT and duties payable
|
761
|
703
|
|||
|
R&D clinical trials
|
410
|
229
|
|||
|
Other payables1
|
568
|
605
|
|||
|
|
|
|
|
||
|
Total other liabilities
|
9,386
|
8,982
|
|||
|
|
|
|
|
||
| 1. Primarily relates to royalty payments and deferred income. |
NOVO NORDISK ANNUAL REPORT 2013
| 78 | CONSOLIDATED FINANCIAL STATEMENTS |
Section 4
Capital structure
and financing items
|
Novo Nordisk’s capital structure is characterised by a substantial equity ratio. This reflects the long-term investment horizon that is generally applied in the pharmaceutical industry, where a development time of more than ten years is usual. The main financial risk is foreign exchange exposure, where Novo Nordisk aims to reduce the short-term impact from the movement in key currencies by hedging future cash flows. |
||
| 4.1 | Share capital, distribution to shareholders
and earnings per share |
Share capital
| DKK million |
A share
capital
|
|
B share
capital
|
|
Total share
capital
|
||
|
|
|
|
|
|
|
|
|
| Development in share capital: | |||||||
| 2009 | 107 | 513 | 620 | ||||
| 2010 | – | (20 | ) | (20 | ) | ||
| 2011 | – | (20 | ) | (20 | ) | ||
| 2012 | – | (20 | ) | (20 | ) | ||
|
|
|
|
|
|
|
|
|
| At the beginning of the year | 107 | 453 | 560 | ||||
| 2013 | – | (10 | ) | (10 | ) | ||
|
|
|
|
|
|
|
|
|
| At the end of the year | 107 | 443 | 550 | ||||
|
|
|
|
|
|
|
|
With effect 2 January 2014 a stock split of the company’s B shares was conducted changing the trading unit from DKK 1 to DKK 0.20. At the end of 2013, the share capital amounted to DKK 107 million in A share capital and DKK 443 million in B share capital (equal to 2,213 million B shares of DKK 0.20).
Treasury shares
Accounting policies
Treasury shares are deducted from the share capital at their nominal value of DKK 0.20 per share. Differences between this amount and the amount paid to acquire or received for disposing of treasury shares are deducted directly in equity.
|
Market value
DKK million
|
As % of share
capital before
cancellation
|
As % of share
capital after
cancellation
|
2013
Number of
B shares
of DKK 0.20
(million)
|
2012
Number of
B shares
of DKK 0.20
(million)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Holding at the beginning of the year | 15,962 | 3.1% | 87 | 1 | 122 | 1 | ||||
| Cancellation of treasury shares | (9,165 | ) | (1.8% | ) | (50 | ) | (100 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
| Holding of treasury shares, adjusted for cancellation | 6,797 | 1.3% | 1.3% | 37 | 22 | |||||
| Transfer regarding options and restricted stock units | (618 | ) | (0.1% | ) | (3 | ) | (4 | ) | ||
| Purchase during the year | 13,989 | 2.7% | 73 | 73 | ||||||
| Sale during the year | (65 | ) | (0.2% | ) | (4 | ) | (4 | ) | ||
| Value adjustment | 343 | – | – | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Holding at the end of the year | 20,446 | 3.7% | 103 | 87 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1. Comparative figures have been restated to reflect the change in trading unit from DKK 1 to DKK 0.20. |
The purchase of treasury shares during the year relates to the remaining part of the 2012 share repurchase programme totalling DKK 1.0 billion and the DKK 14 billion share repurchase programme of Novo Nordisk B shares for 2013 of which DKK 1 billion remains at year-end. The programme ends on 28 January 2014. The purpose of the programmes is to reduce the company’s share capital. Transfer of treasury shares relates to exercised share options, long-term share-based incentive programme and employee share-savings programmes.
At year-end the holding of treasury shares amounts to 102,852,025 shares corresponding to DKK 21 million of the share capital (87,083,380 shares in 2012 or DKK 17 million of the share capital). At year-end 13.3 million shares of the holding of treasury B shares are regarded as hedges for the long-term share-based incentive programme and share options to employees.
NOVO NORDISK ANNUAL REPORT 2013|
CONSOLIDATED FINANCIAL
STATEMENTS
|
79
|
| 4.1 | Share capital, distribution
to shareholders and earnings per share (continued) |
Net cash distribution to shareholders
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Dividends |
9,715
|
7,742
|
5,700
|
|||
| Share repurchases |
13,924
|
11,896
|
10,595
|
|||
|
|
|
|
|
|
|
|
| Total |
23,639
|
19,638
|
16,295
|
|||
|
|
|
|
|
|
|
At the end of 2013, proposed dividends (not yet declared) of DKK 11,866 million (DKK 4.50 per share) are included in Retained earnings.
The declared dividend included in Retained earnings was DKK 9,715 million (DKK 3.60 per share) in 2012 and DKK 7,742 million (DKK 2.80 per share) in 2011. No dividend is declared on treasury shares.
Earnings per share
Accounting policies
Earnings per share is presented as both basic and diluted earnings per share. Basic earnings per share is calculated as net profit divided by the average number of shares outstanding. Diluted earnings per share is calculated as net profit divided by the sum of average number of shares outstanding, including the dilutive effect of outstanding share bonus pool and options ‘in the money’. The dilutive effect of share options ‘in the money’ is calculated as the difference between the following:
1) the number of shares that would have been
transferred assuming the exercise of the share options and share bonus pool.
2) the number of shares that could have been
acquired at fair value with proceeds from the exercise of the share options.
The difference (the dilutive effect) is added to the denominator as an issue of shares for no consideration.
| DKK million | 2013 | 2012 | 2011 | |||||
|
|
|
|
|
|
|
|
|
|
| Net profit for the year | 25,184 | 21,432 | 17,097 | |||||
|
|
|
|
|
|
|
|
|
|
| Average number of shares outstanding1 |
in 1,000 shares
|
2,679,362 | 2,741,690 | 2,827,165 | ||||
| Dilutive effect of outstanding share bonus pool and options ‘in the money’1, 2 |
in 1,000 shares
|
14,263 | 16,650 | 23,495 | ||||
|
|
|
|
|
|
|
|
|
|
| Average number of shares outstanding, including dilutive effect of options ‘in the money’ |
in 1,000 shares
|
2,693,625 | 2,758,340 | 2,850,660 | ||||
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share1 |
DKK
|
9.40 | 7.82 | 6.05 | ||||
| Diluted earnings per share1 |
DKK
|
9.35 | 7.77 | 6.00 | ||||
|
|
|
|
|
|
|
|
|
| 1. | Comparative figures have been restated to reflect the change in trading unit from DKK 1 to DKK 0.20. |
| 2. | For further information on outstanding share bonus pool and options, refer to note 5.1. |
| 4.2 | Financial risks |
Novo Nordisk has centralised management of the Group’s financial risks. The overall objectives and policies for the company’s financial risk management are outlined in an internal Treasury Policy, which is approved by the Board of Directors. The Treasury Policy consists of the Foreign Exchange Policy, the Investment Policy, the Financing Policy and the Policy regarding Credit Risk on Financial Counterparts, and includes a description of permitted 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. All positions are marked-to-market based on real-time quotes, and risk is assessed using generally accepted standards.
Foreign exchange risk
Foreign exchange risk is the principal financial risk for Novo Nordisk and as such has a significant impact on the Income statement, Other comprehensive income, the Balance sheet and the Statement of cash fl ows.
The overall objective of foreign exchange risk management is to reduce the short-term negative impact of exchange rate fluctuations on earnings and cash flow, thereby increasing the predictability of the financial results.
The majority of Novo Nordisk’s sales are in EUR, USD, JPY, CNY, GBP and CAD. Consequently, Novo Nordisk’s foreign exchange risk is most significant in USD, JPY, CNY, GBP and CAD, while the EUR exchange rate risk is regarded as low due to Denmark’s fixed-rate policy towards EUR.
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. During 2013, the hedging horizon varied between 8 and 14 months for USD, JPY, CNY, GBP and CAD. Currency hedging is based upon expectations of future exchange rates and mainly uses foreign exchange forwards and foreign exchange options matching the due dates of the hedged items. Expected cash flows are continually assessed using historical inflows, budgets and monthly sales forecasts. Hedge effectiveness is assessed on a regular basis.
NOVO NORDISK ANNUAL REPORT 2013
| 80 | CONSOLIDATED FINANCIAL STATEMENTS |
| 4.2 | Financial risk (continued) |
Key currencies
| Exchange rate DKK per 100 |
USD
|
JPY
|
CNY
|
GBP
|
CAD
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| 2013 | ||||||||||
| Average | 562 | 5.77 | 91 | 878 | 545 | |||||
| Year-end | 541 | 5.14 | 89 | 892 | 505 | |||||
| Year-end change | (4.4% | ) | (21.8% | ) | (2.2% | ) | (2.3% | ) | (11.2% | ) |
| 2012 | ||||||||||
| Average | 579 | 7.27 | 92 | 918 | 580 | |||||
| Year-end | 566 | 6.57 | 91 | 913 | 569 | |||||
| Year-end change | (1.6% | ) | (11.5% | ) | 0.0% | 2.6% | 1.1% | |||
|
|
|
|
|
|
|
|
|
|
|
The financial contracts existing at the end of the year cover the expected future cash flow for the following number of months:
|
2013
|
2012
|
|||
|
|
|
|
|
|
| USD |
12 months
|
12 months
|
||
| JPY |
14 months
|
13 months
|
||
| CNY1 |
12 months
|
12 months
|
||
| GBP |
12 months
|
12 months
|
||
| CAD |
10 months
|
8 months
|
||
|
|
|
|
|
1. USD used as proxy when hedging Novo Nordisk’s CNY currency exposure.
Foreign exchange sensitivity analysis:
A 5% increase/decrease in the following currencies will impact Novo Nordisk’s operating profit as outlined in the table below:
|
Estimated for
|
||||
| DKK million | 2014 | 2013 | ||
|
|
|
|
|
|
| USD | 1,300 | 975 | ||
| JPY | 145 | 200 | ||
| CNY | 220 | 110 | ||
| GBP | 75 | 85 | ||
| CAD | 60 | 55 | ||
|
|
|
|
|
A 5% increase/decrease in all other currencies versus EUR and DKK would affect the hedging instruments’ impact on Other comprehensive income and the Income statement as outlined in the table below:
| DKK million |
5% increase in
all
currencies against
DKK and EUR
|
5% decrease in
all
currencies against
DKK and EUR
|
||
|
|
|
|
|
|
| 2013 | ||||
| Other comprehensive income | (1,318 | ) | 1,397 | |
| Income statement | (76 | ) | 54 | |
|
|
|
|
|
|
| Total | (1,394 | ) | 1,451 | |
|
|
|
|
|
|
| 2012 | ||||
| Other comprehensive income | (1,313 | ) | 1,376 | |
| Income statement | (117 | ) | 106 | |
|
|
|
|
|
|
| Total | (1,430 | ) | 1,482 | |
|
|
|
|
|
The foreign exchange sensitivity analysis comprises effects from the Group’s Cash, Trade receivables and Trade payables, Current and non-current loans, Current and non-current financial investments and Foreign exchange forwards and Foreign exchange options.
Not included are anticipated currency transactions, investments and non-current assets.
Interest rate risk
Changes in interest rates affect Novo Nordisk’s
financial instruments. At the end of 2013, a 1 percentage point increase in
the interest rate level would, all else being equal, result in a decrease
in the fair value of Novo Nordisk’s financial instruments of DKK 20 million
(a decrease in the fair value of DKK 20 million in 2012).
The financial instruments included in the sensitivity analysis consist of marketable securities, current and non-current loans. Not included are foreign exchange forwards and foreign exchange options due to the limited effect that a parallel shift in interest rates in all currencies has on these instruments.
Liquidity risk
Novo Nordisk ensures availability of required
liquidity through a com bination of cash management, highly liquid investment
portfolios and uncommitted as well as committed facilities. Novo Nordisk uses
cash pools for optimisation and centralisation of cash management.
Credit risk
Credit risk arises from the possibility that
transactional counterparties may default on their obligations, causing financial
losses for the Group. Novo Nordisk considers its maximum credit risk on financial
counterparties to be DKK 15,990 million (2012: DKK 17,036 million). In addition,
Novo Nordisk considers its maximum credit risk on Trade receivables, Other
receivables less prepayments and Other financial assets to be DKK 12,802 million
(2012: DKK 11,539 million). Please refer to note 4.6 for details of the Group’s
total financial assets.
To manage credit risk on 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 two out of the three selected ratings agencies: Standard and Poor’s, Moody’s and Fitch. Furthermore, maximum credit lines defined for each counterparty diversify the overall counterparty risk. The credit risk on bonds is limited as investments are made in highly liquid bonds with solid credit ratings. The table below shows Novo Nordisk’s credit exposure on cash, fixed-income marketable securities and financial derivatives.
Credit exposure on Cash at bank or on hand, Marketable securities and Derivative financial instruments (market value)
| DKK million |
Cash at
bank or
on hand
|
Marketable
securities1
|
Derivative
financial
instruments
|
Total
|
||||
|
|
|
|
|
|
|
|
|
|
| 2013 | ||||||||
| AAA-range | 2,726 | 2,726 | ||||||
| AA-range | 6,497 | 1,013 | 544 | 8,054 | ||||
| A-range | 3,999 | 977 | 4,976 | |||||
| BBB-range | 141 | 141 | ||||||
| Not rated or | ||||||||
| below BBB-range | 91 | 2 | 93 | |||||
|
|
|
|
|
|
|
|
|
|
| Total | 10,728 | 3,741 | 1,521 | 15,990 | ||||
|
|
|
|
|
|
|
|
|
|
| 2012 | ||||||||
| AAA-range | 4,544 | 4,544 | ||||||
| AA-range | 6,930 | 466 | 7,396 | |||||
| A-range | 4,011 | 180 | 4,191 | |||||
| BBB-range | 469 | 285 | 754 | |||||
| Not rated or | ||||||||
| below BBB-range | 143 | 8 | 151 | |||||
|
|
|
|
|
|
|
|
|
|
| Total | 11,553 | 4,552 | 931 | 17,036 | ||||
|
|
|
|
|
|
|
|
|
1. Redemption yield on the bond portfolio is 0.41% (0.73% in 2012).
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
81
|
| 4.2 | Financial risk
(continued) |
Credit risk on Trade receivables and Other receivables and prepayments is less material as Novo Nordisk has no significant concentration of credit risk, with exposure being spread over a large number of counterparties and customers. However, due to the troubled economic climate in the Eurozone, the Group continues to focus on the development in the outstanding trade receivables from this region. Novo Nordisk also continues to monitor the credit exposure in Region International Operations due to the increasing sales and low credit ratings of many countries in this region.
Please refer to note 2.2 for split of allowance for trade receivables by geographical segment.
Capital structure
Novo Nordisk’s capital structure is
characterised by a substantial equity ratio. This is in line with the general
capital structure of the pharmaceutical industry and reflects the inherent
long-term investment horizons in an industry with typically more than 10 years’
development time for pharmaceutical products. Novo Nordisk’s equity ratio,
calculated as equity to total liabilities, was 60.5% at the end of the year
(61.9% at the end of 2012).
| 4.3 | Derivative
financial instruments |
Accounting policies
The derivative financial instruments are
used to manage the exposure to market risk. None of the derivatives are held
for trading. However, not all derivatives are designated for hedge accounting.
Novo Nordisk uses forward exchange contracts and currency options to hedge forecast transactions, assets and liabilities. Currently, net investments in foreign subsidiaries are not hedged.
Upon initiation of the contract, Novo Nordisk designates each derivative financial contract that qualifies for hedge accounting as one of:
| • | hedges of the fair value of a recognised asset or liability or a firm commitment (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 their fair values based on current bid prices at the end of the reporting period.
Value adjustments of fair value hedges are recognised in the Income statement along with any value adjustments of the hedged asset or liability that is attributable to the hedged risk.
Value adjustments of cash flow hedges are recognised directly in Other comprehensive income, given hedge effectiveness. The cumulative value adjustment of these contracts is transferred from Other comprehensive income to the Income statement as a reclassification adjustment under Financial income or Financial expenses when the hedged transaction is recognised in the Income statement.
Furthermore, Novo Nordisk uses currency option hedges of forecast trans actions. Currency options are initially recognised at cost, which equals fair value of considerations paid, and subsequently remeasured at their fair values at the end of the reporting period. The cumulative value adjustment of the currency options for which hedge accounting is applied, which is the intrinsic value of the options, is transferred from Other comprehensive income to the Income statement as a reclassification adjustment under Financial income or Financial expenses when the hedged transaction is recognised in the Income statement. Gains and losses on currency options that do not meet the criteria for hedge accounting are recognised directly in the Income statement under Financial income or Financial expenses.
The fair value of derivative financial instruments is measured on the basis of quoted market prices of financial instruments traded in active markets. If an active market exists, fair value is based on the most recently observed market price at the end of the reporting period.
If a 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 that are assumed to be motivated by normal business considerations.
If an active market does not exist, the fair value of standard and simple financial instruments, such as foreign exchange forward contracts, interest rate swaps, currency swaps and unlisted bonds, is measured according to generally accepted valuation techniques. Market-based parameters are used to measure fair value.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the Income statement under Financial income or Financial expenses.
NOVO NORDISK ANNUAL REPORT 2013
| 82 | CONSOLIDATED FINANCIAL STATEMENTS |
| 4.3 | Derivative
financial instruments
(continued) |
Hedging
activities
|
2013
|
2012
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DKK million |
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
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Forward contracts, cash flow hedges |
26,982
|
1,104
|
25,639
|
732
|
||||||||
| Currency options, cash flow hedges |
2,195
|
148
|
2,755
|
134
|
||||||||
| Forward contracts, fair value hedges |
3,508
|
365
|
2,521
|
95
|
48
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total hedging activities |
32,685
|
1,617
|
–
|
30,915
|
961
|
48
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total derivatives included in: | ||||||||||||
| Derivative financial instruments (current assets) |
1,521
|
931
|
||||||||||
| Derivative financial instruments (current liabilities) |
–
|
48
|
||||||||||
| Equity, Other reserves |
96
|
30
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Presentation in the Income statement and Other comprehensive income
|
2013
|
2012
|
|||||||
|
|
|
|
|
|
|
|||
DKK million |
Positive
fair value
at year-end
|
Negative
fair value
at year-end
|
Positive
fair value
at year-end
|
Negative
fair value
at year-end
|
||||
|
|
|
|
|
|
|
|
|
|
| Cash flow hedges for which hedge accounting is not applied |
19
|
19
|
||||||
| Fair value hedges |
365
|
95
|
48
|
|||||
|
|
|
|
|
|
|
|
|
|
| Total fair value adjustments through the Income statement |
384
|
–
|
114
|
48
|
||||
|
|
|
|
|
|
|
|
|
|
| Cash flow hedges for which hedge accounting is applied |
1,233
|
847
|
||||||
|
|
|
|
|
|
|
|
|
|
| Total fair value adjustments through Other comprehensive income |
1,233
|
–
|
847
|
–
|
||||
|
|
|
|
|
|
|
|
|
|
| Total fair value adjustments |
1,617
|
–
|
961
|
48
|
||||
|
|
|
|
|
|
|
|
|
|
Hedging of forecast transactions (cash flow hedge)
| 2013 | 2012 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||
DKK million |
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
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Hedging of forecast transactions qualifying | ||||||||||||
| for hedge accounting | ||||||||||||
| USD | 22,020 | 742 | 19,939 | 409 | ||||||||
| JPY, GBP and other currencies | 4,962 | 362 | 5,700 | 323 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total forward contracts (forecasted cash flow) | 26,982 | 1,104 |
–
|
25,639 | 732 |
–
|
||||||
| USD | 1,739 | 33 | 2,402 | 72 | ||||||||
| JPY | 456 | 96 | 353 | 43 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total currency options (forecasted cash flow) | 2,195 | 129 |
–
|
2,755 | 115 |
–
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total cash flow hedges for which hedge accounting is applied | 29,177 | 1,233 |
–
|
28,394 | 847 |
–
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other forecast transaction hedges for which | ||||||||||||
| hedge accounting is not applied | ||||||||||||
| Currency options for which hedge accounting is not applied | – | 19 |
–
|
– | 19 |
–
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total contracts of forecast transactions | 29,177 | 1,252 |
–
|
28,394 | 866 |
–
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
83
|
| 4.3 | Derivative
financial instruments
(continued) |
Hedging of assets and liabilities (fair value hedge)
| 2013 | 2012 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||
DKK million |
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
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| USD |
1,355
|
141 |
–
|
698
|
– |
30
|
||||||
| JPY, GBP and other currencies |
2,153
|
224 |
–
|
1,823
|
95 |
18
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total forward contracts |
3,508
|
365 |
–
|
2,521
|
95 |
48
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table above shows the fair value of fair value-hedging activities for 2013 and 2012 specified by hedging instrument and the major currencies.
All changes in fair values are recognised in the Income statement, amounting to a net gain of DKK 365 million in 2013 (a net gain of DKK 47 million in 2012). As the hedges are highly effective, the net gain or loss on the hedged items is similar to the net loss or gain on the hedging instruments.
The financial contracts existing at the end of the year hedge the currency exposure on assets and liabilities in the Group’s major currencies excluding DKK and EUR. Contract amount of other currencies at year-end are JPY at DKK 539 million (DKK 444 million in 2012), GBP at DKK 449 million (DKK 365 million in 2012), ‘other’ comprises AUD at DKK 525 million (DKK 475 million in 2012), CAD at DKK 208 million (DKK 138 million in 2012) and PLN at DKK 432 million (DKK 401 million in 2012).
| 4.4 | Cash and cash
equivalents, financial
resources and free cash flow |
Accounting
policies
Cash and cash equivalents consist of cash
offset by short-term bank loans. Financial resources consist of cash and cash
equivalents, marketable securities with original maturity of less than three
months and undrawn committed credit facilities expiring after more than one
year. The Statement of cash flows is presented in accordance with the indirect
method commencing with Net profit for the year.
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Cash and cash equivalents | ||||||
| Cash at bank and on hand (note 4.2) | 10,728 | 11,553 | 13,408 | |||
| Current debt (bank overdrafts) | (215 | ) | (500 | ) | (351 | ) |
|
|
|
|
|
|
|
|
| Cash and cash equivalents | ||||||
| at the end of the year | 10,513 | 11,053 | 13,057 | |||
|
|
|
|
|
|
|
|
| Financial resources | ||||||
| Cash and cash equivalents | 10,513 | 11,053 | 13,057 | |||
| Marketable securities | 3,741 | 4,552 | 4,094 | |||
| Undrawn committed credit facilities1 | 4,849 | 4,849 | 4,832 | |||
|
|
|
|
|
|
|
|
| Total financial resources | 19,103 | 20,454 | 21,983 | |||
|
|
|
|
|
|
|
| 1. | The undrawn committed credit facility in 2013, 2012 and 2011 is a EUR 650 million facility committed by a portfolio of international banks. The facility matures in 2016. |
Free cash flow
| Net cash generated from | ||||||
| operating activities |
25,942
|
22,214
|
21,374
|
|||
| Net cash used in investing activities |
(2,773
|
)
|
(4,070
|
)
|
(3,459
|
)
|
| Net purchase of marketable securities |
(811
|
)
|
501
|
197
|
||
|
|
|
|
|
|
|
|
| Free cash flow2 | 22,358 | 18,645 | 18,112 | |||
|
|
|
|
|
|
|
|
| 2. Additional non-IFRS measure; please refer to p 93 for definitions. |
| 4.5 | Change in working
capital |
Accounting
policies
Working capital is defined as current assets less current liabilities and measures the liquid assets Novo Nordisk has available for the business.
Change in working capital
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Trade receivables |
(1,268
|
)
|
(290
|
)
|
(849
|
)
|
| Other receivables and prepayments |
251
|
(329
|
)
|
27
|
||
| Inventories |
(9
|
)
|
(110
|
)
|
256
|
|
| Trade payables |
233
|
568
|
385
|
|||
| Other liabilities |
404
|
448
|
580
|
|||
| Exchange rate adjustments |
124
|
(13
|
)
|
35
|
||
|
|
|
|
|
|
|
|
| Total change in working capital | (265 | ) | 274 | 434 | ||
|
|
|
|
|
|
|
| 84 | CONSOLIDATED FINANCIAL STATEMENTS |
| 4.6 | Financial assets and
liabilities |
Accounting policies
Depending on the purpose of each investment,
Novo Nordisk classifies these into the following categories:
| • | Available-for-sale financial assets |
| • | Loans and receivables |
| • | Financial assets at fair value through the Income statement (derivatives). |
Management determines the classification of its investments on initial recognition and re-evaluates this at the end of every reporting period to the extent that such a classification is permitted and required.
Recognition and measurement
Purchases and sales of investments are
recognised on the settlement date. Investments are initially recognised at fair
value.
Available-for-sale financial assets and financial assets at fair value are subsequently carried at fair value. Loans and receivables are carried at amortised cost based on the effective interest method.
Fair value disclosures are made separately for each class of financial instruments at the end of the reporting period.
Derecognition
Investments are derecognised
when the rights to receive cash flows from the investments have expired or
have been transferred, and Novo Nordisk has transferred substantially all
risks and rewards of ownership.
Available-for-sale financial assets
Available-for-sale financial
assets consist of equity investments and marketable securities. Equity investments
are included in Other financial assets unless Management intends to dispose
of the investment within 12 months of the end of the reporting period. If that
is the case, the current part is included in Other receivables and prepayments.
Unrealised gains and losses arising from changes in the fair value of financial assets classified as available for sale are recognised in Other comprehensive income. When financial assets classified as available for sale are sold or impaired, the accumulated fair value adjustments are included in the Income statement.
The fair values of quoted investments (including marketable securities) are based on current bid prices at the end of the reporting period. Financial assets for which no active market exists are carried at fair value based on a valuation methodology or at cost if no reliable valuation model can be applied.
Loans and receivables
Loans and receivables are non-derivative
financial assets with fixed or deter minable payments that are not quoted in
an active market. If collection is expected within one year (or in the normal
operating cycle of the business if longer), they are classified as Current assets.
If not, they are presented as Non-current assets.
Trade receivables and Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for allowance. Provision for allowance is made for Trade receivables when there is objective evidence that Novo Nordisk will not be able to collect all amounts due according to the original terms of the receivables.
The provision for allowance is deducted from the carrying amount of Trade receivables and the amount of the loss is recognised in the Income statement under Sales and distribution costs. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against Sales and distribution costs in the Income statement.
Financial assets by category
| DKK million |
Available-
for-sale
financial
assets at
fair value
|
Financial
assets
measured at
fair value
through the
Income
statement
|
Loans
and
receivables
|
Cash
and cash
equivalents
|
Total
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| 2013 | ||||||||||
| Other financial assets | 175 | 376 | 551 | |||||||
| Trade receivables (note 3.4) | 10,907 | 10,907 | ||||||||
| Other receivables (note 3.5) | 2,454 | 2,454 | ||||||||
| – less prepayments (note 3.5) | (1,110 | ) | (1,110 | ) | ||||||
| Marketable securities (bonds) (note 4.2) | 3,741 | 3,741 | ||||||||
| Derivative financial instruments (note 4.3) | 1,521 | 1,521 | ||||||||
| Cash at bank and on hand (note 4.4) | 10,728 | 10,728 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Total financial assets at the end of the year by category | 3,916 | 1,521 | 12,627 | 10,728 | 28,792 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| Total financial assets at the end of the year by category, 2012 | 4,699 | 931 | 11,392 | 11,553 | 28,575 | |||||
|
|
|
|
|
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
85
|
| 4.6 | Financial
assets and liabilities (continued) |
Financial liabilities by category
| DKK million |
Financial
liabilities
measured at
fair value
through the
Income
statement
|
Financial
liabilities
measured at
amortised
cost
|
Financial
liabilities
measured at
fair value
through Other
comprehensive
income
|
Total
|
||||
|
|
|
|
|
|
|
|
|
|
| 2013 | ||||||||
| Current debt | 215 | 215 | ||||||
| Trade payables | 4,092 | 4,092 | ||||||
| Other liabilities (note 3.8) | 9,386 | 9,386 | ||||||
| – less VAT and duties payable (note 3.8) | (761 | ) | (761 | ) | ||||
|
|
|
|
|
|
|
|
|
|
| Total financial liabilities at the end of the year by category2 | – | 12,932 | – | 12,932 | ||||
|
|
|
|
|
|
|
|
|
|
| 2012 | ||||||||
| Current debt | 500 | 500 | ||||||
| Trade payables | 3,859 | 3,859 | ||||||
| Other liabilities (note 3.8) | 8,982 | 8,982 | ||||||
| – less VAT and duties payable (note 3.8) | (703 | ) | (703 | ) | ||||
| Derivative financial instruments (note 4.3) | 48 | 48 | ||||||
|
|
|
|
|
|
|
|
|
|
| Total financial liabilities at the end of the year by category2 | 48 | 12,638 | – | 12,686 | ||||
|
|
|
|
|
|
|
|
|
2. All financial liabilities are due within one year.
For a description of the credit quality of financial assets such as Trade receivables, Cash at bank and on hand, Marketable securities, Current debt and Derivative financial instruments, refer to notes 4.2 and 4.3.
Fair value measurement hierarchy
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| Active market data |
3,908
|
4,625
|
||
| Directly or indirectly observable market data |
1,521
|
931
|
||
| Not based on observable market data |
8
|
74
|
||
|
|
|
|
|
|
| Total financial assets at fair value | 5,437 | 5,630 | ||
|
|
|
|
|
|
| Active market data | – | – | ||
| Directly or indirectly observable market data | – | 48 | ||
| Not based on observable market data | – | – | ||
|
|
|
|
|
|
| Total financial liabilities at fair value | – | 48 | ||
|
|
|
|
|
Financial assets and liabilities measured at fair value can be categorised using the fair value measurement hierarchy above. There have not been any transfers between the categories ’Active market data’ and ’Directly or indirectly observable market data’ during 2013 or 2012.
| 4.7 | Financial income and expenses |
Accounting policies
The activity of the financial assets and
liabilities and borrowings generates the financial income and expenses in
Novo Nordisk. As of 2012, ‘Share of profit or loss of associated companies’
has been reclassified as part of financial income, disclosed as ‘Income
from other financial assets’. The net financials in the Income statement
are mainly related to foreign exchange elements and can be specified as follows:
Financial income
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Interest income |
56
|
124
|
274
|
|||
| Foreign exchange gain on forward | ||||||
| contracts (net) |
822
|
–
|
240
|
|||
| Cash flow hedge transferred from | ||||||
| Other comprehensive income (net) |
809
|
–
|
–
|
|||
| Income from other financial assets |
15
|
1
|
–
|
|||
|
|
|
|
|
|
|
|
| Total financial income | 1,702 | 125 | 514 | |||
|
|
|
|
|
|
|
Financial expenses
|
DKK million
|
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Interest expenses |
55
|
58
|
275
|
|||
| Foreign exchange loss (net) |
435
|
161
|
256
|
|||
| Foreign exchange loss on forward | ||||||
| contracts (net) |
–
|
39
|
1,276
|
|||
| Foreign exchange loss on currency | ||||||
| options (net) |
50
|
147
|
200
|
|||
| Loss on investments etc |
20
|
118
|
27
|
|||
| Other financial expenses |
96
|
83
|
99
|
|||
| Cash flow hedge transferred from | ||||||
| Other comprehensive income (net) |
–
|
1,182
|
(1,170
|
)
|
||
|
|
|
|
|
|
|
|
| Total financial expenses | 656 | 1,788 | 963 | |||
|
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
| 86 | CONSOLIDATED FINANCIAL STATEMENTS |
Section 5
Other disclosures
|
|
||
| 5.1 | Share-based payment schemes |
Accounting
policies
Share-based compensation
Novo Nordisk operates equity-settled, share-based
compensation plans. The fair value of the employee services received in exchange
for the grant of the options or shares is recognised as an expense and allocated
over the vesting period.
The total amount to be expensed over the vesting period is determined by reference to the fair value of the options or shares granted, excluding the impact of any non-market vesting conditions. The fair value is fixed at the grant date. Non-market vesting conditions are included in assumptions about the number of options or shares that are expected to vest. At the end of each reporting period, Novo Nordisk revises its estimates of the number of options or shares expected to vest. Novo Nordisk recognises the impact of the revision of the original estimates, if any, in the Income statement and in a corresponding adjustment to Equity (change in proceeds) over the remaining vesting period. Adjustments relating to prior years are included in the Income statement in the year of adjustment.
Share-based payment
Expensed in the Income statement
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Restricted stock units to employees |
188
|
50
|
96
|
|||
| Long-term share-based incentive | ||||||
| programme (Senior Management | ||||||
| Board)1 |
51
|
73
|
57
|
|||
| Long-term share-based incentive | ||||||
| programme (Management group below | ||||||
| Senior Management Board)2 |
170
|
185
|
166
|
|||
|
|
|
|
|
|
||
| Share-based payment expensed | ||||||
| in the Income statement |
409
|
308
|
319
|
|||
|
|
|
|
|
|
| 1. | Expense for the year reflects the full value at launch of the programme for the year. |
| 2. | Expense for the year reflects the value at launch of the last four programmes, amortised over four years. |
Restricted stock units to employees
In 2008 and 2010, a general employee share
programme was implemented. Outside Denmark the programme was structured as
restricted stock units. The cost of the 2008 programme was amortised over
the period 2008–2011. The cost of the 2010 programme has been amortised
over the period 2010–2013.
Following the 90th anniversary in 2013, all employees in the company (excl NNE Pharmaplan and NNIT) were offered 100 restricted stock units. A restricted stock unit gives the right to receive one Novo Nordisk B share free of charge on 1 April 2016 subject to continued employment and average sales growth of at least 5% per year measured in DKK in the period 2012–2015. The cost of the DKK 440 million programme is amortised over the period 2013–2016 at an annual amount of DKK 135 million.
Long-term share-based incentive programme
For a description of the programme, please
refer to ‘Remuneration’ in ‘Governance, leadership and shares’,
pp 49–51.
Senior Management Board
On 29 January 2014, the Board of Directors
approved the establishment, for members of the Senior Management Board, of
a joint pool for the financial year 2013 by allocating a total of 254,417
Novo Nordisk B shares. This allocation amounts on average to 4.75 months of
fixed base salary plus pension contribution per member of Executive Management
and 4.2 months of fixed base salary for Senior Vice Presidents, corresponding
to a value at launch of the programme of DKK 51 million. This amount was expensed
in 2013. The share price used for the conversion was the average share price
(DKK 202.40) for Novo Nordisk B shares on NASDAQ OMX Copenhagen in the period
31 January – 14 February 2013. Based on the split of participants when
the joint pool was established, approximately 40% of the pool will be allocated
to members of Executive Management and 60% to other members of the Senior
Management Board.
The shares allocated to the joint pool for 2010 (842,880 shares) were released to the individual participants subsequent to the approval of the Annual Report 2013 by the Board of Directors and after the announcement of the 2013 full-year financial results on 30 January 2014. The shares allocated correspond to a value at launch of the programme of DKK 64 million, expensed in 2010.
Management group below Senior Management
Board
The management group below the Senior Management
Board has a share-based incentive programme with similar performance criteria.
For 2013, a total of 622,190 shares were allocated to the pool for this group.
The shares allocated to the pool for 2010 (2,744,680 shares) were released to the individual participants subsequent to the approval of the Annual Report 2013 by the Board of Directors and after the announcement of the 2013 full-year financial results on 30 January 2014. The shares allocated correspond to a value at launch of the programme of DKK 208 million amortised over the period 2010–2013. The number of shares to be transferred (2,475,090) is lower than the original number of shares allocated to the share pool as some participants had left the company before the release conditions of the programme were met.
Share options
No share options have been granted since
2006 as the long-term incentive programme from 2007 onwards has been share-based.
The 2005–2006 share options were exercisable three years after the issue date and will expire after eight years. The exercise price for options granted based on performance targets for the financial years 2005–2006 was equal to the market price of the Novo Nordisk B share at the time the plan was established. The options can only be settled in shares. Each option gives the right to purchase one Novo Nordisk B share.
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
87
|
| 5.1 | Share-based payment schemes (continued) |
Assumptions
The fair value of the Novo Nordisk B share
options has been calculated using Black-Scholes option-pricing model.
The expected volatility is calculated as one-year historical volatility (average of daily volatilities).
The assumptions used are shown in the table below:
|
2013
|
2012
|
2011
|
||||
|
|
|
|
|
|
||
| Expected life of the option in years | ||||||
| (average) | 1 | 1 | 2 | |||
| Expected volatility | 21% | 21% | 23% | |||
| Expected dividend per share (in DKK) | 4.50 | 3.60 | 2.80 | |||
| Risk-free interest rate | ||||||
| (based on Danish government bonds) | 0.14% | 0.00% | 0.20% | |||
| Novo Nordisk B share price | ||||||
| at the end of the year (in DKK) | 198.80 | 183.30 | 132.00 | |||
|
|
|
|
|
|
| Outstanding restricted stock units |
2013
|
2012
|
||
|
|
|
|
||
| Outstanding at the beginn ing of the year | 12,374,845 | 13,913,515 | ||
| Released restricted stock units to employees | (1,356,000 | ) | (5,750 | ) |
| Released shares from 2009 | ||||
| Management pools | (3,529,670 | ) | (3,275,030 | ) |
| Cancelled shares from Management pool | (207,410 | ) | (340,155 | ) |
| Issued restricted stock units – NNIT | – | 35,300 | ||
| Issued restricted stock units to employees | 2,370,000 | – | ||
| Shares allocated to Management pools | 876,607 | 2,046,965 | ||
|
|
|
|
||
| Outstanding at the end of the year | 10,528,372 | 12,374,845 | ||
|
|
|
|
Exercisable share options
| Exercisable at the beginning of the year |
5,040,700
|
9,534,920
|
||
| Exercised |
(2,017,700
|
)
|
(4,175,470
|
)
|
| Cancelled |
(221,080
|
)
|
(318,750
|
)
|
|
|
|
|||
| Exercisable at the end of the year |
2,801,920
|
1
|
5,040,700 |
1
|
|
|
|
| 1. | Average exercise price per option (excluding restricted stock units) amounts to DKK 34 (DKK 26 in 2012), and calculated fair value per option amounts to DKK 161 (DKK 152 in 2012). |
| Outstanding restricted stock units |
Amount
|
|||||||||||
| and exercisable share options |
Issued2
|
Released
|
Cancelled
|
Outstanding
|
DKK million
|
Vesting date
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Restricted stock units to employees1 | ||||||||||||
| 2010 Restricted stock units | 1,356,000 | (1,356,000 | ) | – | – | 1/12/13 | ||||||
| 2012 Restricted stock units – NNIT | 35,300 | – | – | 35,300 | 1/12/14 | |||||||
| 2013 Restricted stock units | 2,370,000 | – | – | 2,370,000 | 1/04/16 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Outstanding restricted stock units to | ||||||||||||
| employees at the end of 2013 | 3,761,300 | (1,356,000 | ) | – | 2,405,300 | |||||||
| Shares allocated to joint pools | ||||||||||||
| for Senior Management Board1 | ||||||||||||
| 2010 Shares allocated to joint pool | 842,880 | – | – | 842,880 | 64 | 30/1/14 | ||||||
| 2011 Shares allocated to joint pool | 448,560 | – | – | 448,560 | 57 | Q1 2015 | ||||||
| 2012 Shares allocated to joint pool | 487,730 | – | – | 487,730 | 73 | Q1 2016 | ||||||
| 2013 Shares allocated to joint pool3 | 254,417 | – | – | 254,417 | 51 | Q1 2017 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Outstanding shares in joint pool to | ||||||||||||
| Senior Management Board | 2,033,587 | – | – | 2,033,587 | ||||||||
| Shares allocated to pools | ||||||||||||
| for management group below | ||||||||||||
| Senior Management Board1 | ||||||||||||
| Joint pool related to prior years, not released | 69,640 | – | – | 69,640 | ||||||||
| 2010 Shares allocated to pool | 2,744,680 | – | (269,590 | ) | 2,475,090 | 208 | 30/1/14 | |||||
| 2011 Shares allocated to pool | 1,485,665 | – | (86,565 | ) | 1,399,100 | 188 | Q1 2015 | |||||
| 2012 Shares allocated to pool | 1,559,235 | – | (35,770 | ) | 1,523,465 | 234 | Q1 2016 | |||||
| 2013 Shares allocated to pool3 | 622,190 | – | – | 622,190 | 126 | Q1 2017 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Outstanding shares in pool to management | ||||||||||||
| group below Senior Management Board | 6,481,410 | – | (391,925 | ) | 6,089,485 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
||||||||||||
|
Issued2
|
Exercised
|
Cancelled
|
Exercisable
|
price DKK
|
Exercise period
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exercisable share options1 | ||||||||||||
| 2004 Share options | 8,094,160 | (7,315,830 | ) | (778,330 | ) | – |
26.8
|
31/01/08 – 30/01/13
|
||||
| 2005 Share options | 8,202,340 | (6,918,250 | ) | (829,590 | ) | 454,500 |
30.6
|
31/01/09 – 30/01/14
|
||||
| 2006 Share options | 11,145,420 | (7,862,735 | ) | (935,265 | ) | 2,347,420 |
35.0
|
31/01/10 – 30/01/15
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exercisable share options at the end of 2013 | 27,441,920 | (22,096,815 | ) | (2,543,185 | ) | 2,801,920 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Outstanding/exercisable | ||||||||||||
| at the end of 2013 | 39,718,217 | (23,452,815 | ) | (2,935,110 | ) | 13,330,292 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1. | Comparative figures have been restated throughout the note to reflect the change in trading unit from DKK 1 to DKK 0.20 due to the stock split as of 2 January 2014. |
| 2. | All restricted stock units, shares allocated to Management pools and share options are hedged by treasury shares. |
| 3. | 2013 programme released subsequent to the approval of the Annual Report 2013 on 30 January 2014. |
NOVO NORDISK ANNUAL REPORT 2013
| 88 | CONSOLIDATED FINANCIAL STATEMENTS |
| 5.1 | Share-based payment schemes (continued) |
|
Average
|
Exercised
|
|||
|
market price
|
share
|
|||
| Average market price of Novo Nordisk B shares per trading period in 2013 |
DKK
|
options
|
||
|
|
|
|
|
|
| 31 January – 14 February |
202.40
|
810,325
|
||
| 1 May – 15 May |
197.90
|
243,000
|
||
| 8 August – 22 August |
195.37
|
400,250
|
||
| 31 October – 14 November |
187.82
|
564,125
|
||
|
|
|
|
|
|
| Total exercised options1 |
2,017,700
|
|||
|
|
|
|
|
|
| 1. In addition, 1,356,000 restricted stock units were released in Q4 2013. |
| 5.2 | Management’s holdings of
Novo Nordisk shares and share options |
The internal rules for trading in Novo Nordisk securities by board members, executives and certain employees only permit trading in the 15-calendar-day period following each quarterly announcement.
| Management’s holding of shares |
At the beginning
of the year
|
Additions
during the year
|
Sold/transferred
during the year
|
At the end
of the year
|
Market value1
DKK million
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| Göran Ando | 10,500 | 2,500 | 13,000 | 2.6 | ||||||
| Bruno Angelici | 2,500 | 2,500 | 0.5 | |||||||
| Jeppe Christiansen | – | – | – | |||||||
| Henrik Gürtler | – | – | – | |||||||
| Liz Hewitt | 2,000 | 2,000 | 0.4 | |||||||
| Ulrik Hjulmand-Lassen | 5,405 | 5,405 | 1.1 | |||||||
| Thomas Paul Koestler | 8,000 | 8,000 | 1.6 | |||||||
| Anne Marie Kverneland | 12,225 | 490 | 11,735 | 2.3 | ||||||
| Søren Thuesen Pedersen | 1,615 | 1,615 | 0.3 | |||||||
| Hannu Ryöppönen | 11,250 | 11,250 | 2.2 | |||||||
| Stig Strøbæk | 1,950 | 1,950 | 0.4 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Board of Directors in total | 55,445 | 2,500 | 490 | 57,455 | 11.4 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| Lars Rebien Sørensen | 274,850 | 78,820 | 28,820 | 324,850 | 64.6 | |||||
| Jesper Brandgaard | 168,210 | 52,505 | 22,500 | 198,215 | 39.4 | |||||
| Lars Fruergaard Jørgensen | 79,610 | 26,250 | 15,000 | 90,860 | 18.0 | |||||
| Lise Kingo | 26,970 | 52,505 | 17,505 | 61,970 | 12.3 | |||||
| Jakob Riis | 52,150 | 26,250 | 26,250 | 52,150 | 10.4 | |||||
| Kåre Schultz | 285,120 | 52,505 | 17,625 | 320,000 | 63.6 | |||||
| Mads Krogsgaard Thomsen | 232,240 | 58,505 | 33,325 | 257,420 | 51.2 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| Executive Management in total | 1,119,150 | 347,340 | 161,025 | 1,305,465 | 259.5 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| Other members of the Senior Management Board | 766,055 | 1,066,645 | 1,274,755 | 557,945 | 110.9 | |||||
| Joint pool for Executive Management and other members of the Senior Management Board2 | 2,540,765 | 255,242 | 1,051,098 | 1,744,909 | 3 | 346.9 | ||||
|
|
|
|
|
|
|
|
|
|
|
|
| Total | 4,481,415 | 1,671,727 | 2,487,368 | 3,665,774 | 728.7 | |||||
|
|
|
|
|
|
|
|
|
|
|
| 1. | Calculation of the market value is based on the quoted share price of DKK 198.80 at the end of the year. |
| 2. | The annual allocation to the joint pool is locked up for three years before it is transferred to the participants employed at the end of each three-year period. Based on the split of participants when the joint pool was established, approximately 40% of the pool will be allocated to the members of Executive Management and approximately 60% to other members of the Senior Management Board. In the lock-up period, the joint pool may potentially be reduced in the event of lower-than-planned value creation in subsequent years. |
| 3. | Joint pool includes 2010 programme released on 30 January 2014 and excludes 288,678 shares assigned to retired Senior Management Board members. |
Management’s holding of share options
|
At the
|
Exercised
|
|||||||
|
beginning
|
during
|
At the end
|
Fair value4
|
|||||
| Share options in Novo Nordisk |
of the year
|
the year
|
of the year
|
DKK million
|
||||
|
|
|
|
|
|
|
|
|
|
| Executive Management | – | – | – | – | ||||
| Other members of the Senior Management Board | 283,375 | 121,875 | 161,500 | 26 | ||||
|
|
|
|
|
|
|
|
|
|
| Total | 283,375 | 121,875 | 161,500 | 26 | ||||
|
|
|
|
|
|
|
|
|
|
| 4. The fair value has been calculated using Black-Scholes model with the parameters existing at year-end of the respective year. |
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
89
|
| 5.3 | Adjustments for non-cash items |
For the purpose of presenting the Statement of cash flows, non-cash items with effect on the Income statement must be reversed to identify the actual cash flow effect from the Income statement. The adjustments are specified as follows:
Adjustments for non-cash items
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Reversals of non-cash income statement items | ||||||
| Income taxes (note 2.4) | 7,355 | 6,379 | 4,828 | |||
| Depreciation, amortisation and impairment losses (notes 3.1 and 3.2) | 2,799 | 2,693 | 2,737 | |||
| Interest income and interest expenses, net (note 4.7) | (1 | ) | (66 | ) | 1 | |
| Share-based payment costs (note 5.1) | 409 | 308 | 319 | |||
| Other financial income and expenses | – | – | 4 | |||
| Changes in non-cash balance sheet items | ||||||
| Increase/(decrease) in provisions and retirement benefit obligations (notes 3.6 and 3.7) | 858 | 1,339 | 1,467 | |||
| Other adjustments | ||||||
| (Gains)/losses from sale of property, plant and equipment | (1 | ) | 21 | (3 | ) | |
| Unrealised (gain)/loss from other financial assets | (17 | ) | 43 | 28 | ||
| Reclassification from working capital (other liabilities) | – | 739 | – | |||
| Other, including unrealised exchange (gain)/loss etc | (664 | ) | (203 | ) | (264 | ) |
|
|
|
|
|
|
|
|
| Total adjustments for non-cash items | 10,738 | 11,253 | 9,117 | |||
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
| 90 | CONSOLIDATED FINANCIAL STATEMENTS |
| 5.4 | Commitments |
Commitments
The total contractual obligations and recognised
non-current debt can be specified as follows (payments due by period):
|
2013
|
Less
|
More
|
|||||||||
|
than
|
1–3
|
3–5
|
than
|
||||||||
| DKK million |
1 year
|
years
|
years
|
5 years
|
Total
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Retirement benefit | |||||||||||
| obligations | 28 | 53 | 49 | 558 | 688 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total non-current liabilities recognised in the Balance sheet |
28
|
53
|
49
|
558
|
688
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating leases1 | 924 | 1,452 | 1,072 | 2,426 | 5,874 | ||||||
| Purchase obligations | 1,969 | 369 | 44 | – | 2,382 | ||||||
| Research and development obligations | 2,612 | 1,875 | 789 | – | 5,276 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total obligations not recognised in the Balance sheet |
5,505
|
3,696
|
1,905
|
2,426
|
13,532
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total contractual obligations | 5,533 | 3,749 | 1,954 | 2,984 | 14,220 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
Less
|
More
|
|||||||||
|
than
|
1–3
|
3–5
|
than
|
||||||||
| DKK million |
1 year
|
years
|
years
|
5 years
|
Total
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Retirement benefit | |||||||||||
| obligations | 23 | 44 | 42 | 651 | 760 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total non-current liabilities recognised in the Balance sheet |
23
|
44
|
42
|
651
|
760
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating leases1 | 881 | 1,311 | 884 | 1,968 | 5,044 | ||||||
| Purchase obligations | 1,955 | 1,241 | 34 | – | 3,230 | ||||||
| Research and development obligations | 1,506 | 1,218 | 191 | – | 2,915 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total obligations not recognised in the Balance sheet |
4,342
|
3,770
|
1,109
|
1,968
|
11,189
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total contractual obligations | 4,365 | 3,814 | 1,151 | 2,619 | 11,949 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1. No material finance lease obligations exist in 2013 and 2012. | |||||||||||
The operating lease commitments are related to non-cancellable operating leases primarily related to premises, company cars and office equipment. Approximately 62% of the commitments are related to leases outside Denmark. The lease costs for 2013 and 2012 were DKK 1,175 million and DKK 1,100 million respectively.
The purchase obligations primarily relate to contractual obligations in connection with investments in property, plant and equipment as well as purchase agreements regarding medical equipment and consumer goods. Novo Nordisk expects to fund these commitments with existing cash and cash flow from operations.
Research and development obligations entail uncertainties in relation to the period in which payments are due because a proportion of the obligations are dependent on milestone achievements. The due periods disclosed are based on Management’s best estimate. Novo Nordisk has engaged in research and development projects with a number of external enterprises. Most of these obligations relate to the cardiovascular outcomes study for Tresiba®, the DEVOTE programme.
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| Other guarantees | 830 | 635 | ||
| Other guarantees primarily relate to guarantees | ||||
| issued by Novo Nordisk in relation to rented | ||||
| property | ||||
| Security for debt | 230 | 200 | ||
| Land, buildings and equipment etc at carrying | ||||
| amount | ||||
|
|
|
|
World Diabetes Foundation (WDF)
At the Annual General Meeting of Novo Nordisk
A/S in 2002, the shareholders agreed on a donation to the World Diabetes Foundation
(WDF), obligating Novo Nordisk A/S for a period of 10 years from 2001 to make
annual donations to the Foundation of 0.25% of the net insulin sales of the
Group in the preceding financial year.
At the Annual General Meeting in 2008, a new donation in addition to the existing obligation was agreed to by the shareholders. According to this agreement, Novo Nordisk is obliged to make annual donations to the Foundation in the period 2011–2017 of 0.125% of the net insulin sales of the Group in the preceding financial year.
The annual donation in the period 2012–2017 will not exceed the lower of DKK 80 million or 15% of the taxable income of Novo Nordisk A/S in the financial year in question.
In 2013, the donation amounts to DKK 64 million (DKK 64 million and DKK 65 million in 2012 and 2011 respectively), which is recognised in Administrative costs in the Income statement. The 2012 donation included an extra donation of DKK 11 million to support predetermined WDF activities.
Disclosure regarding change of control
The EU Takeover Bids Directive, as partially
implemented by the Danish Financial Statements Act, contains certain rules
relating to listed companies on disclosure of information that may be of interest
to the market and potential takeover bidders, in particular in relation to
disclosure of change of control provisions.
For information on the ownership structure of Novo Nordisk, please refer to ‘Shares and capital structure’ on pp 44–45. For information on change of control clauses in share option programmes, please refer to note 5.1, ‘Share-based payment schemes’, and in relation to employee contracts for Executive Management of Novo Nordisk, please refer to ‘Remuneration’ on pp 49–51.
In addition, Novo Nordisk discloses that the Group does not have significant agreements to which the Group is a party and which take effect, alter or terminate upon a change of control of the Group following implementation of a takeover bid.
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
91
|
| 5.5 | Related party transactions |
Novo Nordisk A/S is controlled by Novo A/S (incorporated in Denmark), which owns 25.5% of the share capital in Novo Nordisk A/S, representing 74% of the total number of votes, excluding treasury shares. The remaining shares are widely held. The ultimate parent of the Group is the Novo Nordisk Foundation (incorporated in Denmark). Both entities are considered related parties.
Other related parties are considered to be the Novozymes Group and Xellia Pharmaceuticals due to joint ownership, associated companies, the directors and officers of these entities, and Management of Novo Nordisk A/S.
In 2013, Novo Nordisk A/S acquired 12,750,000 B shares, worth DKK 2.5 billion, from Novo A/S as part of the DKK 14.0 billion share repurchase programme. The transaction price was DKK 196.4 per share and was calculated as the average market price from 1 May to 3 May 2013 in the open window following the announcement of the financial results for the first quarter of 2013.
In 2012, Novo Nordisk A/S acquired 25,500,000 B shares, worth DKK 4.2 billion, from Novo A/S as part of the DKK 12.0 billion share repurchase programme. The transaction price was DKK 164.6 per share and was calculated as the average market price from 27 April to 1 May 2012 in the open window following the announcement of the financial results for the first quarter of 2012.
In 2011, Novo Nordisk A/S acquired 25,500,000 B shares, worth DKK 2.9 billion, from Novo A/S as part of the DKK 12.0 billion share repurchase programme. The transaction price was DKK 114.2 per share and was calculated as the average market price from 4 to 10 August 2011 in the open window following the announcement of the financial results for the second quarter of 2011.
The Group has had the following material transactions with related parties, (income)/expense:
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
||
| Novo Nordisk Foundation | ||||||
| Donations to Steno Diabetes | ||||||
| Center A/S via Novo Nordisk | (45 | ) | (46 | ) | (45 | ) |
| Novo A/S | ||||||
| Services provided by Novo Nordisk | (4 | ) | (2 | ) | (2 | ) |
| Purchase of Novo Nordisk B shares | 2,504 | 4,198 | 2,912 | |||
| Novozymes | ||||||
| Services provided by Novo Nordisk | (214 | ) | (255 | ) | (268 | ) |
| Services provided by Novozymes | 109 | 92 | 73 | |||
|
|
|
There have not been any material transactions with any director or officer of Novo Nordisk, Novozymes, Novo A/S, the Novo Nordisk Foundation, Xellia Pharmaceuticals or associated companies. For information on remuneration to the Management of Novo Nordisk, please refer to ‘Remuneration’, pp 49–51, and note 2.3, ‘Employee costs’. There have not been and are no loans to the Board of Directors or Executive Management in 2013, 2012 or 2011.
There are no material unsettled transactions with related parties at the end of the year.
| 5.6 | Licence income and other operating income, net |
Accounting
policies
Licence income and other
operating income, net, comprises licence income and
income of a secondary nature in relation to the main activities of Novo
Nordisk. Licence income is recognised on
an accrual basis in accordance with the terms and substance of the relevant
agreement. Non-Novo Nordisk-related
net profit from the two wholly owned subsidiaries NNIT A/S and
NNE Pharmaplan A/S is recognised as other operating income. Licence
income and other operating income also includes
income from sale of intellectual property
rights.
| 5.7 | Fee to statutory auditors |
| DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
||
| Statutory audit |
24
|
25
|
24
|
|||
| Audit-related services |
4
|
4
|
5
|
|||
| Tax advisory services |
11
|
12
|
|
13
|
||
| Other services |
5
|
6
|
3
|
|||
|
|
|
|
|
|
||
| Total fee to statutory auditors |
44
|
47
|
45
|
|||
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
| 92 | CONSOLIDATED FINANCIAL STATEMENTS |
| 5.8 | Companies in the Novo Nordisk Group |
| Company and country |
Percentage of
shares owned
|
||||||
|
Activity
|
|||||||
|
|
|
|
|
|
|
| |
| Parent company | |||||||
| Novo Nordisk A/S, Denmark | – |
•
|
•
|
•
|
•
|
||
| Subsidiaries by region | |||||||
| Europe | |||||||
| Novo Nordisk Pharma GmbH, Austria | 100 |
•
|
|||||
| SA Novo Nordisk Pharma NV, Belgium | 100 |
•
|
|||||
| Novo Nordisk Pharma d.o.o., Bosnia-Hercegovina | 100 |
•
|
|||||
| Novo Nordisk Pharma EAD, Bulgaria | 100 |
•
|
|||||
| Novo Nordisk Hrvatska d.o.o., Croatia | 100 |
•
|
|||||
| Novo Nordisk s.r.o., Czech Republic | 100 |
•
|
|||||
| FeF Chemicals A/S, Denmark | 100 |
•
|
•
|
||||
| Novo Nordisk Region Europe A/S, Denmark | 100 |
•
|
|||||
| Steno Diabetes Center A/S, Denmark | 100 |
•
|
•
|
||||
| Novo Nordisk Farma OY, Finland | 100 |
•
|
|||||
| Novo Nordisk, France | 100 |
•
|
|||||
| Novo Nordisk Production SAS, France | 100 |
•
|
|||||
| Novo Nordisk Pharma GmbH, Germany | 100 |
•
|
|||||
| Novo Nordisk Hellas Epe., Greece | 100 |
•
|
|||||
| Novo Nordisk Hungária Kft., Hungary | 100 |
•
|
|||||
| Novo Nordisk Limited, Ireland | 100 |
•
|
|||||
| Novo Nordisk S.P.A., Italy | 100 |
•
|
|||||
| UAB Novo Nordisk Pharma, Lithuania | 100 |
•
|
|||||
| Novo Nordisk Farma dooel, Macedonia | 100 |
•
|
|||||
| Novo Nordisk B.V., Netherlands | 100 |
•
|
|||||
| Novo Nordisk Scandinavia AS, Norway | 100 |
•
|
|||||
| Novo Nordisk Pharmaceutical Services Sp. z.o.o., Poland | 100 |
•
|
|||||
| Novo Nordisk Comércio Produtos Farmace˜uticos Lda., | 100 |
•
|
|||||
| Portugal | |||||||
| Novo Nordisk Farma S.R.L., Romania | 100 |
•
|
|||||
| Novo Nordisk Pharma d.o.o. Belgrade (Serbia), Serbia | 100 |
•
|
|||||
| Novo Nordisk Slovakia s.r.o., Slovakia | 100 |
•
|
|||||
| Novo Nordisk, trz enje farmacevtskih izdelkov d.o.o., | 100 |
•
|
|||||
| Slovenia | |||||||
| Novo Nordisk Pharma S.A., Spain | 100 |
•
|
|||||
| Novo Nordisk Scandinavia AB, Sweden | 100 |
•
|
|||||
| Novo Nordisk FemCare AG, Switzerland | 100 |
•
|
•
|
||||
| Novo Nordisk Health Care AG, Switzerland | 100 |
•
|
•
|
||||
| Novo Nordisk Pharma AG, Switzerland | 100 |
•
|
|||||
| Novo Nordisk Holding Limited, United Kingdom | 100 |
•
|
|||||
| Novo Nordisk Limited, United Kingdom | 100 |
•
|
|||||
| North America | |||||||
| Novo Nordisk Canada Inc., Canada | 100 |
•
|
|||||
| Novo Nordisk Region North America II A/S, Denmark | 100 |
•
|
|||||
| Novo Nordisk US Holdings Inc., United States | 100 |
•
|
|||||
| Novo Nordisk Pharmaceutical Industries Inc., United States | 100 |
•
|
|||||
| Novo Nordisk Inc., United States | 100 |
•
|
•
|
||||
| Japan & Korea | |||||||
| Novo Nordisk Region Japan & Korea A/S, Denmark | 100 |
•
|
|||||
| Novo Nordisk Pharma Ltd., Japan | 100 |
•
|
•
|
||||
| Novo Nordisk Pharma Korea Ltd., South Korea | 100 |
•
|
|||||
| Company and country |
Percentage of
shares owned
|
||||||
|
Activity
|
|||||||
|
|
|
|
|
|
|
|
|
| International Operations | |||||||
| Aldaph SpA, Algeria | 100 |
•
|
•
|
||||
| Novo Nordisk Pharma Argentina S.A., Argentina | 100 |
•
|
|||||
| Novo Nordisk Pharmaceuticals Pty. Ltd., Australia | 100 |
•
|
|||||
| Novo Nordisk Pharma (Private) Limited, Bangladesh | 100 |
•
|
|||||
| Novo Nordisk Produção Farmacêutica do Brasil Ltda., | 100 |
•
|
|||||
| Brazil | |||||||
| Novo Nordisk Farmacêutica do Brasil Ltda., Brazil | 100 |
•
|
|||||
| Novo Nordisk Farmacêutica Limitada, Chile | 100 |
•
|
|||||
| Novo Nordisk Colombia SAS, Colombia | 100 |
•
|
|||||
| Novo Nordisk Pharma Operations A/S, Denmark | 100 |
•
|
|||||
| Novo Nordisk Region International Operations A/S, | 100 |
•
|
|||||
| Denmark | |||||||
| Novo Nordisk Egypt LLC, Egypt | 100 |
•
|
|||||
| Novo Nordisk India Private Limited, India | 100 |
•
|
•
|
||||
| Novo Nordisk Service Centre (India) Pvt. Ltd., India | 100 |
•
|
|||||
| PT. Novo Nordisk Indonesia, Indonesia | 100 |
•
|
|||||
| Novo Nordisk Pars, Iran | 100 |
•
|
|||||
| Novo Nordisk Ltd, Israel | 100 |
•
|
|||||
| Novo Nordisk Pharma SARL, Lebanon | 100 |
•
|
|||||
| Novo Nordisk Pharma (Malaysia) Sdn Bhd, Malaysia | 100 |
•
|
|||||
| Novo Nordisk Pharma Operations (BAOS) Sdn Bhd, | 100 |
•
|
|||||
| Malaysia | |||||||
| Novo Nordisk Mexico S.A. de C.V., Mexico | 100 |
•
|
|||||
| Novo Nordisk Servicios Profesionales S.A. de C.V., Mexico | 100 |
•
|
|||||
| Novo Nordisk Farmacéutica S.A. de C.V., Mexico | 100 |
•
|
|||||
| Novo Nordisk Pharma SAS, Morocco | 100 |
•
|
|||||
| Novo Nordisk Pharmaceuticals Ltd., New Zealand | 100 |
•
|
|||||
| Novo Nordisk Pharma Limited, Nigeria | 100 |
•
|
|||||
| Novo Nordisk Pharma (Private) Limited, Pakistan | 100 |
•
|
|||||
| Novo Nordisk Pharmaceuticals (Philippines) Inc., | 100 |
•
|
|||||
| Philippines | |||||||
| Novo Nordisk Limited Liability Company, Russia | 100 |
•
|
|||||
| Novo Nordisk Production Support LLC, Russia | 100 |
•
|
|||||
| Novo Investment Pte Limited, Singapore | 100 |
•
|
|||||
| Novo Nordisk Pharma (Singapore) Pte Ltd., Singapore | 100 |
•
|
|||||
| Novo Nordisk (Pty) Limited, South Africa | 100 |
•
|
|||||
| Novo Nordisk Pharma (Thailand) Ltd., Thailand | 49 |
•
|
|||||
| Novo Nordisk Tunisie SARL, Tunisia | 100 |
•
|
|||||
| Novo Nordisk Saglik Ürünleri Tic. Ltd. Sti., Turkey | 100 |
•
|
|||||
| Novo Nordisk Pharma Gulf FZ-LLC, United Arab Emirates | 100 |
•
|
|||||
| Novo Nordisk Venezuela Casa de Representación C.A., | 100 |
•
|
|||||
| Venezuela | |||||||
| Region China | |||||||
| Novo Nordisk (China) Pharmaceuticals Co., Ltd., China | 100 |
•
|
•
|
||||
| Beijing Novo Nordisk Pharmaceuticals Science & | 100 |
•
|
|||||
| Technology Co., Ltd., China |
•
|
||||||
| Novo Nordisk Region China A/S, Denmark | 100 |
•
|
|||||
| Novo Nordisk Hong Kong Limited, Hong Kong | 100 |
•
|
|||||
| Novo Nordisk Pharma (Taiwan) Ltd., Taiwan | 100 |
•
|
|||||
| Other subsidiaries | |||||||
| NNIT A/S1, Denmark | 100 |
•
|
|||||
| NNE Pharmaplan A/S1, Denmark | 100 |
•
|
| 1. | In addition to the listed companies, NNIT A/S and NNE Pharmaplan A/S have their own subsidiaries. |
| Activity: | |
| • | Production |
| • | Sales and marketing |
| • | Research and development |
| • | Services/investments |
NOVO NORDISK ANNUAL REPORT 2013
|
CONSOLIDATED FINANCIAL
STATEMENTS
|
93
|
| 5.9 | Financial definitions |
ADR
An American Depositary Receipt (or ADR) represents
ownership in the shares of a non-US company and trades in US financial markets.
Basic earnings per share (EPS)
Net profit divided by the average number
of shares outstanding.
Diluted earnings per share
Net profit divided by average number of shares
outstanding, including the dilutive effect of share options ‘in the money’.
The dilutive effect of share options ‘in the money’ is calculated
as the difference between the following:
1) the number of shares that could have been
acquired at fair value with proceeds from the exercise of the share options
2) the number of shares that would have been issued assuming the exercise of
the share options.
The difference (the dilutive effect) is added to the denominator as an issue of shares for no consideration.
Effective tax rate
Income taxes as a percentage of profit before
income taxes.
Equity ratio
Total equity at year-end as a percentage
of total assets at year-end.
Gross margin
Gross profit as a percentage of sales.
Net profit margin
Net profit as a percentage of sales.
Number of shares outstanding
The total number of shares, excluding the
holding of treasury shares.
Operating margin
Operating profit as a percentage of sales.
Other comprehensive income (OCI)
Other comprehensive income comprises all
items recognised in Equity for the year other than those related to transactions
with owners of the com pany. Examples of items that are required to be presented
in OCI are:
| • | Exchange rate adjustments of investments in subsidiaries |
| • | Remeasurements of defined benefit plans |
| • | Changes in fair value of financial instruments in a cash flow hedge. |
Payout ratio
Total dividends for the year as a percentage
of net profit.
Return on equity (ROE)
Net profit for the year as a percentage
of shareholders’ equity (average).
Non-IFRS financial measures
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 thus not be comparable with such measures.
The non-IFRS financial measures presented in the Annual Report are:
| • | Cash to earnings |
| • | Financial resources at the end of the year |
| • | Free cash flow |
| • | Operating profit after tax to net operating assets |
| • | Underlying sales growth in local currencies.. |
Cash to earnings
Cash to earnings is defined as ‘free
cash flow as a percentage of net profit’.
Financial resources at the end of
the year
Financial resources at the end of the year
is defined as the sum of cash and cash equivalents at the end of the year,
bonds with original term to maturity exceeding three months and undrawn committed
credit facilities.
Free cash flow
Novo Nordisk defines free cash flow as ‘net
cash generated from operating activities less net cash used in investing activities’
excluding ‘Net change in marketable securities’.
Net asset value per share
Defined as the company value per share, calculated
by dividing the total net asset value of Novo Nordisk A/S by the number of
shares outstanding.
Operating profit after tax to net
operating assets (OPAT/NOA)
Operating profit after tax to net operating
assets is defined as ‘operating profit after tax (using the effective
tax rate) as a percentage of average inventories, receivables, property, plant
and equipment, intangible assets and deferred tax assets less non-interest-bearing
liabilities including provisions and deferred tax liabilities (where average
is the sum of the above assets and liabilities at the beginning of the year
and at year-end divided by two)’.
Underlying sales growth in local
currencies
Underlying sales growth in local currencies
is defined as sales for the year measured at prior-year average exchange rates
compared with sales for the prior year measured at prior-year average exchange
rates.
NOVO NORDISK ANNUAL REPORT 2013
| 94 | QUARTERLY FINANCIAL FIGURES 2012 AND 2013 |
Part of Management’s
review
|
Quarterly financial figures 2012 and 2013
|
2012
|
2013
|
|||||||||||||||
| DKK million |
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2
|
Q3
|
Q4
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net sales |
17,751
|
19,468
|
19,845
|
20,962
|
19,983
|
21,380
|
20,511
|
21,698
|
||||||||
|
|
||||||||||||||||
|
Sales by business segment:
|
|
|||||||||||||||
|
Modern
insulins (insulin
analogues) |
7,867
|
8,613
|
8,879
|
9,462
|
8,991
|
9,626
|
9,393
|
10,143
|
||||||||
|
Human
insulins
|
2,718
|
2,781
|
2,794
|
3,009
|
2,824
|
2,779
|
2,572
|
2,694
|
||||||||
|
Victoza®
|
1,990
|
2,293
|
2,503
|
2,709
|
2,678
|
2,877
|
2,847
|
3,231
|
||||||||
|
Protein-related
products
|
625
|
621
|
644
|
621
|
606
|
643
|
666
|
640
|
||||||||
|
Oral
antidiabetic products (OAD)
|
716
|
653
|
719
|
670
|
694
|
681
|
504
|
367
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diabetes
care total
|
13,916
|
14,961
|
15,539
|
16,471
|
15,793
|
16,606
|
15,982
|
17,075
|
||||||||
|
|
|
|||||||||||||||
|
NovoSevenn®
|
1,909
|
2,451
|
2,153
|
2,420
|
2,027
|
2,542
|
2,428
|
2,259
|
||||||||
|
Norditropin®
|
1,346
|
1,440
|
1,451
|
1,461
|
1,537
|
1,479
|
1,436
|
1,662
|
||||||||
|
Other
biopharmaceuticals
|
580
|
616
|
702
|
610
|
626
|
753
|
665
|
702
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biopharmaceuticals
total
|
3,835
|
4,507
|
4,306
|
4,491
|
4,190
|
4,774
|
4,529
|
4,623
|
||||||||
|
|
|
|||||||||||||||
|
Sales by geographical
segment:
|
|
|||||||||||||||
|
North
America
|
7,324
|
8,356
|
8,981
|
9,559
|
9,009
|
10,038
|
9,763
|
10,214
|
||||||||
|
Europe
|
4,596
|
5,081
|
4,793
|
5,237
|
4,761
|
5,123
|
4,994
|
5,185
|
||||||||
|
International
Operations
|
2,734
|
2,757
|
2,695
|
2,894
|
3,094
|
3,077
|
2,697
|
3,139
|
||||||||
|
Japan
& Korea
|
1,485
|
1,724
|
1,710
|
1,698
|
1,239
|
1,368
|
1,312
|
1,398
|
||||||||
|
Region
China
|
1,612
|
1,550
|
1,666
|
1,574
|
1,880
|
1,774
|
1,745
|
1,762
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
14,348
|
16,044
|
16,360
|
17,809
|
16,374
|
17,774
|
16,986
|
18,298
|
||||||||
| Sales and distribution costs |
4,850
|
5,203
|
5,299
|
6,192
|
5,530
|
5,834
|
5,529
|
6,487
|
||||||||
| Research and development costs |
2,507
|
2,563
|
2,617
|
3,210
|
2,657
|
2,715
|
2,795
|
3,566
|
||||||||
| Administrative costs |
776
|
779
|
766
|
991
|
801
|
815
|
822
|
1,070
|
||||||||
| Licence income and other operating income, net |
170
|
154
|
186
|
156
|
176
|
175
|
152
|
179
|
||||||||
| Operating profit |
6,385
|
7,653
|
7,864
|
7,572
|
7,562
|
8,585
|
7,992
|
7,354
|
||||||||
| Net financials |
(328
|
)
|
(710
|
)
|
(505
|
)
|
(120
|
)
|
207
|
96
|
307
|
436
|
||||
| Profit before income taxes |
6,057
|
6,943
|
7,359
|
7,452
|
7,769
|
8,681
|
8,299
|
7,790
|
||||||||
| Income taxes |
1,393
|
1,597
|
1,692
|
1,697
|
1,787
|
1,947
|
1,884
|
1,737
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net profit |
4,664
|
5,346
|
5,667
|
5,755
|
5,982
|
6,734
|
6,415
|
6,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation, amortisation and impairment losses |
638
|
656
|
644
|
755
|
691
|
676
|
643
|
789
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
61,210
|
60,978
|
66,620
|
65,669
|
62,447
|
64,289
|
68,134
|
70,337
|
||||||||
| Total equity |
32,358
|
31,334
|
35,660
|
40,632
|
33,801
|
35,357
|
39,125
|
42,569
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
| Financial ratios |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As percentage of sales |
|
|||||||||||||||
| Sales and distribution costs |
27.3%
|
26.7%
|
26.7%
|
29.5%
|
27.7%
|
27.3%
|
27.0%
|
29.9%
|
||||||||
| Research
and development costs |
14.1%
|
13.2%
|
13.2%
|
15.3%
|
13.3%
|
12.7%
|
13.6%
|
16.4%
|
||||||||
| Administrative costs |
4.4%
|
4.0%
|
3.9%
|
4.7%
|
4.0%
|
3.8%
|
4.0%
|
4.9%
|
||||||||
| Gross margin1 |
80.8%
|
82.4%
|
82.4%
|
85.0%
|
81.9%
|
83.1%
|
82.8%
|
84.3%
|
||||||||
| Operating margin1 |
36.0%
|
39.3%
|
39.6%
|
36.1%
|
37.8%
|
40.2%
|
39.0%
|
33.9%
|
||||||||
| Equity ratio1 |
52.9%
|
51.4%%
|
53.5%
|
61.9%
|
54.1%
|
55.0%
|
57.4%
|
60.5%
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
| Share ratios |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share/ADR (in DKK)2 |
1.68
|
1.94
|
2.08
|
2.12
|
2.21
|
2.50
|
2.41
|
2.28
|
||||||||
| Diluted earnings per share/ADR (in DKK)2 |
1.66
|
1.93
|
2.07
|
2.11
|
2.20
|
2.49
|
2.39
|
2.27
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average number of shares outstanding (million) – basic2 |
2,784
|
2,746
|
2,723
|
2,715
|
2,708
|
2,689
|
2,668
|
2,653
|
||||||||
| Average number of shares outstanding (million) – diluted2 |
2,803
|
2,762
|
2,739
|
2,730
|
2,724
|
2,703
|
2,682
|
2,667
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
| Employees |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number of full-time employees at the end of the period |
32,252
|
32,819
|
33,501
|
34,286
|
35,154
|
35,869
|
36,851
|
37,978
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1. | For definitions, please refer to p 93. |
| 2. | Comparative figures have been restated to reflect the change in trading unit from DKK 1 to DKK 0.20. |
NOVO NORDISK ANNUAL REPORT 2013
| Supplementary information |
CONSOLIDATED SOCIAL
STATEMENT
|
95
|
Statement
of social performance
for the year ended
31 December
|
Note |
2013
|
2012
|
2011
|
|||||
|
|
|
|
|
|
|
|
|
|
| Patients | ||||||||
| Patients reached with Novo Nordisk diabetes care products in millions (estimate) |
2.1
|
24.3
|
22.8
|
20.9
|
||||
| Least developed countries where Novo Nordisk sells insulin according | ||||||||
| to the differential pricing policy |
2.2
|
35
|
35
|
36
|
||||
| Donations (DKK million) |
2.3
|
83
|
84
|
81
|
||||
| Animals purchased for research |
2.4
|
72,662
|
73,601
|
66,401
|
||||
| New patent families (first filings) |
2.5
|
77
|
65
|
80
|
||||
| Employees | ||||||||
| Employees (total) |
3.1
|
38,436
|
34,731
|
32,632
|
||||
| Employee turnover |
3.1
|
8.1%
|
9.1%
|
9.8%
|
||||
| Working the Novo Nordisk Way (scale 1–5) |
4.4
|
4.3
|
4.3
|
|||||
| Diverse senior management teams |
3.1
|
70%
|
66%
|
62%
|
||||
| Annual training costs per employee (DKK) |
9,352
|
9,951
|
10,479
|
|||||
| Frequency of occupational accidents (number/million working hours) |
3.2
|
3.5
|
3.6
|
1
|
3.6
|
1
|
||
| Employment impact worldwide (direct and indirect jobs created) |
3.3
|
139,700
|
125,600
|
118,700
|
||||
| Assurance | ||||||||
| Relevant employees trained in business ethics |
97%
|
99%
|
99%
|
|||||
| Business ethics audits |
45
|
48
|
46
|
|||||
| Fulfilment of action points from facilitations of the Novo Nordisk Way |
96%
|
94%
|
93%
|
|||||
| Supplier audits |
4.1
|
221
|
219
|
177
|
||||
| Product recalls |
4.2
|
6
|
6
|
5
|
||||
| Warning Letters and re-inspections |
4.3
|
1
|
1
|
0
|
||||
| Company reputation with external key stakeholders (scale 1–7) |
5.8
|
5.7
|
5.6
|
|||||
|
|
|
|
|
|
|
|
|
|
| 1. Comparative numbers have been restated – read more in note 3.2. |
NOVO NORDISK ANNUAL REPORT 2013
| 96 | CONSOLIDATED SOCIAL STATEMENT |
Supplementary information
|
|
|
||
Sections in the Consolidated social statement
Section 1 Basis of preparation
Read this section to get an overview of the
social accounting policies and standards used for reporting on social performance.
| 1. | Basis of preparation, p 96 |
Section 2 Patients
Read this section to get more information about
efforts related to improving availability, accessibility, affordability and
quality of care through discovery, development and dissemination of medical
treatments and capacity-building.
| 2.1 | Patients reached with Novo Nordisk diabetes care products (estimate), p 98 | |
| 2.2 | Least developed countries where Novo Nordisk sells insulin according to the differential pricing policy, p 98 | |
| 2.3 | Donations (DKK million), p 98 | |
| 2.4 | Animals purchased for research, p 98 | |
| 2.5 | New patent families (fi rst filings), p 99 |
Section 3 Employees
Read this section to get more information
about social responsibility towards employees, ie offering a healthy and engaging
working environment, which lays the foundation for realisation of the company’s
vision and strategic objectives.
| 3.1 | Employees, p 99 | |
| 3.2 | Frequency of occupational accidents, p 100 | |
| 3.3 | Employment impact worldwide (direct and indirect jobs created), p 100 |
Section 4 Assurance
Read this section to get more information
about management processes put in place to ensure that business practices
meet requirements and company standards for ethical performance, which is
a precondition for earning stakeholder confidence and trust.
| 4.1 | Supplier audits, p 100 | |
| 4.2 | Product recalls, p 100 | |
| 4.3 | Warning Letters and re-inspections, p 100 |
Section 1
Basis of preparation
General reporting standards and principles
The Consolidated social statement is prepared
in accordance with the Danish Financial Statements Act (FSA), sections 99a
and 99b. Section 99a requires Novo Nordisk to account for the company’s
activities relating to social responsibility, reporting on business strategies
and activities in the areas of human rights, labour standards, environment,
anti-corruption and climate. Companies that subscribe to the UN Global Compact
and annually submit their Communication on Progress will be in compliance
with the FSA, provided that the annual report includes a reference to where
the information has been made publicly available. Read Novo Nordisk’s
Communication on Progress 2013 at 
novonordisk.com/annualreport and on UN Global Compact’s website
at
unglobalcompact.org/COP. Section 99b requires Novo Nordisk to account
for the gender diversity at Board level by reporting on targets and policies
ensuring increased gender diversity over time – read more in the diversity
report at
novonordisk.com/annualreport.
Novo Nordisk adheres to the following internationally recognised voluntary reporting standards and principles (for overview, read more on p 112):
| • | UN Global Compact. As
a signatory to the UN Global Compact, a strategic policy initiative for
businesses that are committed to aligning their operations and strategies
with 10 universally accepted principles in the areas of human rights,
labour, environment and anti-corruption, Novo Nordisk reports on progress
during 2013 in its Communication on Progress, which can be found at
novonordisk.com/annualreport. As a member of UN Global Compact
LEAD, a platform for a select group of companies to drive leadership to
the next generation of sustainability performance, Novo Nordisk demonstrates
its sustainability governance and management processes through the Blueprint
for Corporate Sustainability Leadership, which is also part of the Communication
on Progress. |
| • | AA1000 framework for accountability. The framework(AA1000APS(2008) and AA1000AS(2008)) states that reporting must provide a complete, accurate, relevant and balanced picture of the organisation’s approach to and impact on society. |
To Novo Nordisk, AA1000APS(2008) is a component in creating a generally applicable approach to assessing and strengthening the credibility of the Group’s public reporting of social and environmental information. Novo Nordisk’s assurance process has been designed to ensure that the qualitative and quantitative information that documents the social and environmental dimensions of performance as well as the systems that underpin the data and performance are assured. The principles outlined in AA1000APS(2008) have been applied as described below.
Inclusivity
As a pharmaceutical business with global
reach, Novo Nordisk is committed to being accountable to those stakeholders
who are impacted by the organisation. Novo Nordisk maps its stakeholders and
has processes in place to ensure inclusion of stakeholder concerns and expectations.
In addition, Novo Nordisk continuously develops its stakeholder engagement
and sustainability capacity at corporate and affiliate levels.
Materiality
Key issues are identified through ongoing
stakeholder engagement and trendspotting and are addressed by programmes or
action plans with clear and measurable targets. Long-term targets are set
to guide performance in strategic areas. The issues presented in the annual
report are deemed to have a significant impact on the Group’s future
business performance and may support stakeholders in their decision-making.
Responsiveness
The report reaches out to a wide range of
stakeholders, each with their specific needs and interests. To most stakeholders,
however, the annual report is just one element of interaction and communication
with the company. The annual report reflects how the company is managing operations
in ways that respond to and consider stakeholder concerns and interests.
NOVO NORDISK ANNUAL REPORT 2013
| Supplementary information |
CONSOLIDATED SOCIAL
STATEMENT
|
97
|
In addition, Novo Nordisk reports with reference to the content elements and guiding principles of the International Integrated Reporting Framework developed by the International Integrated Reporting Council. The framework, which was released in a final version in December, has been piloted by a group of companies, including Novo Nordisk.
In continuation of the efforts to advance integrated reporting, Novo Nordisk will, as of this year, discontinue publishing a separate report in accordance with the Global Reporting Initiative’s (GRI) Sustainability Reporting Guidelines (G3). The disclosures previously referenced in the GRI report continue to be included in the annual report and the UN Global Compact Communication on Progress, and additional contextual information about Management approach and oversight is, as before, available on the corporate website.
Defining materiality
It is Novo Nordisk’s responsibility
to ensure that those areas in which the Group has significant impact are addressed.
Issues with respect to social and environmental reporting are prioritised,
and the issues considered most material are included in the printed annual
report.
In assessing which information to include in the annual report, legal requirements and disclosure commitments made by Novo Nordisk are considered. Furthermore, it is assessed whether information is tied directly or indirectly to Novo Nordisk’s ability to create value. Short- and long-term value creation is taken into consideration.
The outcomes of formal reviews, research, stakeholder engagement and internal materiality discussions are presented as a proposal for annual reporting content to Executive Management and the Board of Directors.
The conclusion from the external assurance provider is available in the Independent assurance report on p 111.
Principles of consolidation
The Consolidated social statement and disclosures
cover the Novo Nordisk Group comprising Novo Nordisk A/S and entities controlled
by Novo Nordisk A/S.
Social accounting policies
The accounting policies set out below and
in the notes have been applied consistently in the preparation of the Consolidated
social statement for all the years presented.
Disclosures taken out
The following disclosures have been taken
out to align with management priorities:
| • | ’Healthcare professionals trained or educated in diabetes’ is expected to be reintroduced in the future in a different format to align with the updated strategy for access to health once implemented in the business. |
| • | ‘People with diabetes trained’ is expected to be reintroduced in the future in a different format to align with the updated strategy for access to health once implemented in the business. |
| • | ‘People participating in clinical trials’ is replaced by reporting on patient years in clinical trials in the Management review – read more on p 10. |
| • | ‘Absence’ has been removed as it is not used as Management information at a consolidated level. |
Other accounting policies
Working the Novo Nordisk Way
Working the Novo Nordisk Way is an employee
assessment measured on a scale of 1–5, with 5 being the best, and is a
simple average of respondents’ answers to all mandatory questions in the
annual employee survey, eVoice, covering the Novo Nordisk Way. For 2013, the
eVoice response rate was 89% compared with 91% in 2012.
Annual training costs per employee
Training costs cover internal and external
training costs as defined by Novo Nordisk and recorded in the financial accounts,
calculated per employee.
Relevant employees trained in business
ethics
The mandatory business ethics training is based
on globally applicable standard operating procedures (SOPs) and related tests
released annually by the Business Ethics Compliance Office. The target groups
for the individual SOPs vary in size but cover all employees in Novo Nordisk
at the end of the reporting period except employees on leave, student assistants,
PhDs and post docs. The percentage of employees completing the training is calculated
as the percentage of completion of both the SOPs and the related tests, based
on internal registrations.
Business ethics audits
The number of business ethics audits is recorded
as the number of conducted business ethics reviews in affiliates, production
sites and headquarter areas. Furthermore, the number includes other business
ethics assurance activities such as trend reports and review of third parties.
Fulfilment of action points from
facilitations of the Novo Nordisk Way
Facilitation is the internal audit process
for assessing compliance with the Novo Nordisk Way. The percentage of fulfilment
of action points arising from facilitations of the Novo Nordisk Way is measured
as an average of timely closure of action points issued in the current year
and the two previous years. The reason for using a three-year average as the
basis for the calculation is that action lead times typically vary from a couple
of months to more than a year.
Company reputation with external
key stakeholders
Company reputation with external key stakeholders
is measured as the mean corporate brand score in the top seven markets (the
US, Canada, China, Japan, Germany, the UK and France), weighted in accordance
with actual sales of diabetes products (excluding oral antidiabetic products).
The mean corporate brand score is based on company ratings (on a scale of 1–7,
with 7 being the best) of peers collected through interviews with primary and
secondary healthcare professionals who are current prescribers of Novo Nordisk
injectable diabetes products. Each market is surveyed every year. The survey
is carried out by an independent external consultancy firm.
NOVO NORDISK ANNUAL REPORT 2013
| 98 | CONSOLIDATED SOCIAL STATEMENT |
Supplementary information
|
Section 2
Patients
| 2.1 | Patients reached with Novo Nordisk
diabetes care products in millions (estimate) |
Accounting
policies
The number of patients reached
with Novo Nordisk diabetes care products, except devices and PrandiMet®,
is estimated by dividing Novo Nordisk’s annual sales volume by the annual
usage dose per patient for each product class as defined by the WHO. PrandiMet®
is not included as no WHO-defined dosage exists.
Development
The estimated number of patients reached with
Novo Nordisk’s diabetes care products increased by 7% from 22.8 million
in 2012 to 24.3 million in 2013. The majority of this growth is driven by the
insulin business and Victoza®.
| 2.2 | Least developed countries where Novo Nordisk sells insulin according to the differential pricing policy |
Accounting
policies
Novo Nordisk has formulated a
differential pricing policy for the least developed countries (LDCs) as defined
by the UN. The differential pricing policy is part of the global initiatives
to promote access to healthcare for all LDCs. The purpose of the policy is
to offer human insulin in vials to all LDCs at or below a market price of
20% of the average prices for human insulin in vials in the western world.
The western world is defined as Europe (the EU, Switzerland and Norway), the
US, Canada and Japan. The number of LDCs where Novo Nordisk sells human insulin
in vials according to the differential pricing policy is measured by direct
or indirect sales by Novo Nordisk via government tender or private market
sales to wholesalers, distributors or non-governmental organisations. In 2013
and 2012, 49 countries were on the UN LDC list, against 48 in 2011.
| Number of LDCs |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| LDCs with insulin sold according | ||||||
| to pricing policy | 35 | 35 | 36 | |||
| LDCs not buying according | ||||||
| to pricing policy | 3 | 2 | 2 | |||
| LDCs with no sales | 11 | 12 | 10 | |||
|
|
|
|
|
|
|
|
| Total | 49 | 49 | 48 | |||
|
|
|
|
|
|
|
Novo Nordisk operated in Laos, Kiribati and Nepal but did not sell insulin at the differential price here. The governments in those three countries were offered the opportunity to buy insulin at the differential price but the insulin sold there in 2013 was sold to the private market. While the number of countries buying insulin in accordance with this policy is stable, the volume sold under this policy increased by 7% from 2012 to 2013.
Novo Nordisk is unable to guarantee that the price at which the company sells the insulin will be reflected in the final price to the consumer. While Novo Nordisk prefers to sell insulin at the differential price through government tenders, the company is willing to sell to private distributors and agents.
In 11 LDCs Novo Nordisk had no sales in 2013 for various reasons. In several cases, the government did not respond to the offer, there were no private wholesalers or other partners to work with, or war or political unrest made it impossible to do business.
| 2.3 | Donations |
Accounting
policies
Donations by Novo Nordisk to the World Diabetes
Foundation and the Novo Nordisk Haemophilia Foundation are recognised as an
expense when the donation is paid out or when an unconditional commitment
to donate has been made. For additional information regarding the World Diabetes
Foundation, please refer to note 5.4 in the Consolidated financial statements.
| Donations in DKK million |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| World Diabetes Foundation | 64 | 64 | 65 | |||
| Novo Nordisk Haemophilia Foundation | 19 | 20 | 16 | |||
|
|
|
|
|
|
|
|
| Total | 83 | 84 | 81 | |||
|
|
|
|
|
|
|
| 2.4 | Animals purchased
for research |
Accounting
policies
Animals purchased for research is recorded
as the number of animals purchased for all research undertaken at Novo Nordisk
either in-house or by external contractors. The number of animals purchased
is based on internal registration of purchased animals and yearly reports
from external contractors.
| Animals purchased |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Mice and rats | 69,741 | 70,668 | 64,056 | |||
| Pigs | 1,177 | 1,170 | 953 | |||
| Rabbits | 1,124 | 691 | 535 | |||
| Dogs | 238 | 434 | 344 | |||
| Non-human primates | 240 | 355 | 186 | |||
| Other rodents1 | 142 | 283 | 327 | |||
|
|
|
|
|
|
|
|
| Total | 72,662 | 73,601 | 66,401 | |||
|
|
|
|
|
|
|
|
| 1. Other rodents are gerbils, guinea pigs and hamsters. | ||||||
The number of animals purchased for research in 2013 was at the same level as in 2012 (1% decrease), reflecting the continued high level of research activity in the area of discovery and development of new pharmaceuticals within diabetes, haemophilia and inflammation. In all, 96% of the animals purchased were rodents.
NOVO NORDISK ANNUAL REPORT 2013
| Supplementary information |
CONSOLIDATED SOCIAL
STATEMENT
|
99
|
| 2.5 | New patent
families (first filings) |
Accounting
policies
New patent families (first filings)
is recorded as the number of new patent applications that were filed during
the year.
Development
A total of 77 new patent
families were established in 2013, an increase of 18% compared with the filing
activity in 2012 when 65 patent families were established. The increase was
driven by a higher level of patent-fi ling activity in the device area. By the
end of 2013, Novo Nordisk had 796 active patent families.
The patent expiry dates for the product portfolio are shown in the table below. The dates provided are for expiry in the US, Germany, China and Japan of patents on the active ingredient, unless otherwise indicated, and include extensions of patent term (including for paediatric extension, where applicable). For several products, in addition to the compound patent, Novo Nordisk holds other patents on manufacturing processes, formulations or uses that may be relevant for exclusivity beyond the expiration of the active ingredient patent. Furthermore, regulatory data protection may apply.
| Marketed products in key markets (active ingredients) |
US
|
Germany
|
China
|
Japan
|
|||||
|
|
|
|
|
|
|
|
|
|
|
| Diabetes care: |
|
|
|
||||||
| NovoRapid® (NovoLog®) |
2014
|
1 |
Expired
|
1 |
Expired
|
1 |
Expired
|
1 | |
| NovoMix® 30 (NovoLog® Mix 70/30) |
2014
|
2015
|
Expired
|
2014
|
|||||
| Levemir® |
2019
|
2018
|
2014
|
2019
|
|||||
| NovoNorm® (Prandin®) |
Expired
|
Expired
|
Expired
|
2016
|
|||||
| PrandiMet® |
2018
|
2 |
Pending
|
N/A
|
Pending
|
||||
| Victoza® |
2022
|
2022
|
2017
|
2022
|
|||||
| Tresiba® |
2030
|
3 |
2028
|
3 |
2024
|
2027
|
3 | ||
| Ryzodeg® |
2030
|
3 |
2028
|
3 |
2024
|
2027
|
3 | ||
|
|
|
||||||||
| Biopharmaceuticals: |
|
||||||||
| Norditropin® (Norditropin® SimpleXx®) |
2015
|
4 |
2017
|
4 |
2017
|
4 |
2017
|
4 | |
| NovoSeven® |
Expired
|
5 |
Expired
|
5 |
Expired
|
5 |
Expired
|
5 | |
| NovoThirteen® |
2021
|
6 |
N/A
|
N/A
|
N/A
|
||||
| Vagifem® 10 mcg |
2022
|
7, 8 |
2021
|
7 |
N/A
|
2021
|
7 | ||
|
|
|
|
|
|
|
|
|
|
| 1. | Formulation patent until 2017. It has been revoked in China, but the decision has been appealed. |
| 2. | Combination patent providing exclusivity to the combined use of two or more different medicines for treatment of a particular disease. |
| 3. | Current estimate. |
| 4. | Formulation patent providing exclusivity to the composition of excipients used in the drug products. |
| 5. | Room temperature-stable formulation patent until 2024. |
| 6. | Data protection runs until 2025. |
| 7. | Patent covers low-dose treatment regimen. |
| 8. | Validity of the US patent is challenged in litigation. |
Section 3
Employees
| 3.1 | Employees |
Accounting
policies
The number of employees is recorded
as all employees except externals, employees on unpaid leave, interns, bachelor
and master thesis employees, and substitutes at year-end.
The rate of turnover is measured as the number of employees, excluding temporary employees, who left the Group during the financial year compared with the average number of employees, excluding temporary employees.
Diverse senior management teams is measured as the percentage of teams that are diverse in terms of both gender and nationality. A senior management team includes all managers and executive assistants reporting directly to an executive vice president/senior vice president.
| Employees |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| North America | 6,162 | 5,758 | 4,870 | |||
| Europe | 20,286 | 18,715 | 18,215 | |||
| – of which in Denmark | 16,027 | 14,792 | 14,064 | |||
| International Operations | 6,054 | 5,143 | 4,549 | |||
| Japan & Korea | 1,084 | 1,071 | 1,010 | |||
| Region China | 4,850 | 4,044 | 3,988 | |||
|
|
|
|
|
|
|
|
| Total employees | 38,436 | 34,731 | 32,632 | |||
|
|
|
|
|
|
|
|
| Employees (FTEs) | 37,978 | 34,286 | 32,136 | |||
|
|
|
|
|
|
|
|
| Employee turnover | 8.1% | 9.1% | 9.8% | |||
|
|
|
|
|
|
|
|
| Increase in employees | 11% | 6% | 7% | |||
|
|
|
|
|
|
|
The growth in headcount is in line with expectations. Employee turnover decreased slightly overall, primarily due to decreases in Brazil, Russia, India and China.
Diversity in the company’s senior management teams increased from 66% (19 of 29 teams) in 2012 to 70% (23 of 33 teams) in 2013. Among employees as a whole, the gender split was 50/50 in 2013, which is the same level as in 2012.
NOVO NORDISK ANNUAL REPORT 2013
| 100 | CONSOLIDATED SOCIAL STATEMENT |
Supplementary information
|
| 3.2 | Frequency of occupational accidents |
Accounting
policies
The frequency of occupational
accidents is measured as the number of accidents reported for all employees,
excluding externals, employees on unpaid leave, interns, bachelor and master
thesis employees, and substitutes, per million nominal working hours. An occupational
accident is any work-related accident causing at least one day of absence
in addition to the day of the accident.
Following the roll-out of uniform occupational health and safety management procedures on a global scale during 2013, a discrepancy related to reporting of occupational accidents in 2011 and 2012 has been identified. Consequently, the comparative figures have been restated from a frequency per million working hours of 3.4 in 2011 and 3.2 in 2012 to 3.6 for both years.
Development
In 2013, as in 2012, there were no work-related
fatalities. The number of occupational accidents with absence increased by 8%
compared with 2012, which is in line with the growth in number of employees.
The frequency of occupational accidents decreased slightly from 3.6 per million
working hours in 2012 to 3.5 per million working hours in 2013.
| 3.3 | Employment impact worldwide
(direct and indirect jobs created) |
Accounting
policies
Employment impact worldwide is
measured as an estimate of the direct and indirect jobs created by Novo Nordisk,
calculated using financial records and general statistics from public sources
such as Statistics Denmark, Economic Multipliers for the US Economy (the Economic
Policy Institute), the Organisation for Economic Co-operation and Development
(OECD) and the China Statistical Yearbook.
The cash value distribution is calculated based on information from the Consolidated financial statements including sales, payments to suppliers, employee costs, payments to the public sector (taxes), payments to investors and reinvestments in the Group.
| Jobs created |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Direct impact | 38,000 | 34,300 | 32,100 | |||
| Indirect impact – production1 | 70,100 | 63,300 | 60,400 | |||
| Indirect impact – employee | ||||||
| consumption1 | 31,600 | 28,000 | 26,200 | |||
|
|
|
|
|
|
|
|
| Total | 139,700 | 125,600 | 118,700 | |||
|
|
|
|
|
|
|
|
| 1. Jobs created in the supply chain. | ||||||
| Cash value distribution |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Suppliers | 30% | 35% | 34% | |||
| Employees | 30% | 28% | 30% | |||
| Investors/funders | 29% | 26% | 26% | |||
| Public sector (taxes) | 12% | 14% | 8% | |||
| Reinvested in the Group | (1% | ) | (3% | ) | 2% | |
|
|
|
|
|
|
|
|
| Total | 100% | 100% | 100% | |||
|
|
|
|
|
|
|
The distribution of cash value to suppliers, employees and investors/funders remained stable in 2013 compared with 2012.
Section 4
Assurance
| 4.1 | Supplier audits |
Accounting
policies
The number of supplier audits concluded (audit
reports received) is recorded as the number of responsible sourcing and quality
audits conducted in the areas of direct and indirect spend on materials.
| By type of audit |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Responsible sourcing audits | 25 | 45 | 32 | |||
| Quality audits | 196 | 174 | 145 | |||
|
|
|
|
|
|
|
|
| Total | 221 | 219 | 177 | |||
|
|
|
|
|
|
|
One critical finding was issued in connection with a responsible sourcing audit regarding excessive overtime. A continuous improvement and engagement programme has been initiated with the supplier in order to address the issue.
| 4.2 | Product recalls |
Accounting
policies
The number of product recalls is recorded
as the number of times Novo Nordisk has instituted a recall and includes recalls
in connection with clinical trials. A recall can affect various countries
but only counts as one recall.
Development
In 2013, Novo Nordisk had six instances of
product recalls, which is the same as in 2012. Five of the recalls were due
to product defects originating from manufacturing, whereas one recall was due
to heat exposure of products in the external distribution chain. Local health
authorities were informed in all six instances to ensure that distributors,
pharmacies, doctors and patients received appropriate information.
| 4.3 | Warning Letters and
re-inspections |
Accounting
policies
The number of Warning Letters is measured
as the number of Warning Letters received from the US Food & Drug Administration
(FDA). The number of re-inspections is measured as the number of failed inspections
by an ISO-certifying body, FDA, EMA or PMDA in connection with GxP-regulated
or ISO-certified areas with global reach and high business impact, ie withdrawn
marketing authorisation involving top-level management in the containment
and preparation of corrective actions.
Development
Following the receipt in December 2012 of a
Warning Letter from the US Food and Drug Administration (FDA), a re-inspection
was carried out in August 2013. In January 2014 Novo Nordisk received confirmation
from the agency that the violations had been addressed satisfactorily.
In total, 84 inspections were conducted in 2013, compared with 130 in 2012, contributing to continuous adjustments.
NOVO NORDISK ANNUAL REPORT 2013
| Supplementary information |
CONSOLIDATED ENVIRONMENTAL
STATEMENT
|
101
|
Statement
of environmental
performance
for the year ended 31 December
|
Note |
2013
|
2012
|
2011
|
|||||
|
|
|
|
|
|
|
|
|
|
| Resources | ||||||||
| Energy consumption (1,000 GJ) |
2.1
|
2,572 | 2,433 | 2,187 | ||||
| Water consumption (1,000 m3) |
2.2
|
2,685 | 2,475 | 2,136 | ||||
| Emissions and waste | ||||||||
| CO2 emissions from energy consumption (1,000 tons) |
3.1
|
125 | 122 | 94 | ||||
| CO2 emissions from refrigerants (1,000 tons) |
3.1
|
2 | 3 | 3 | ||||
| CO2 emissions from transport (1,000 tons) |
3.1
|
59 | 55 | 53 | ||||
| Wastewater (1,000 m3) |
3.2
|
2,457 | 2,272 | 2,036 | ||||
| Chemical oxygen demand (COD) in wastewater (tons) |
3.2
|
897 | 723 | 446 | ||||
| Waste (tons) |
3.3
|
91,712 | 82,802 | 41,376 | ||||
| Non-hazardous waste (of total waste) |
3.3
|
85% | 84% | 70% | ||||
| Breaches of regulatory limit values |
3.4
|
14 | 27 | 22 | ||||
|
|
|
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
| 102 | CONSOLIDATED ENVIRONMENTAL STATEMENT |
Supplementary information
|
|
|
||
Sections in the Consolidated environmental statement
Section 1 Basis of preparation
Read this section to get an overview of the
accounting policies and standards used for reporting on environmental performance.
| 1. | Basis of preparation, p 102 |
Section 2 Resources
Read this section to get more information
about performance related to consumption of resources at production sites.
Disclosures encompass data on realised energy and water consumption as well
as efforts to reduce environmental impacts.
| 2.1 | Energy consumption, p 102 |
| 2.2 | Water consumption, p 102 |
Section 3 Emissions and
waste
Read this section to get more information
about performance related to outputs from production sites. Disclosures encompass
data on realised emissions and waste as well as efforts to reduce environmental
impacts.
| 3.1 | CO2 emissions, p 103 |
| 3.2 |
Wastewater and chemical oxygen demand (COD) in wastewater, p 103 |
| 3.3 | Waste, p 103 |
| 3.4 | Breaches of regulatory limit values, p 103 |
Section 1
Basis of preparation
General reporting standards and principles
The Consolidated environmental statement
is prepared in accordance with the same standards as those for the Consolidated
social statement. Read more in section 1 ‘Basis of preparation’
of the Consolidated social statement on p 96.
Principles of consolidation
The Consolidated environmental statement
covers the production sites,
except for CO2 emissions from transport, which covers forwarders used to distribute Novo Nordisk products.
Environmental accounting policies
The accounting policies set out below have
been consistently applied in preparation of the Consolidated environmental
statement for all the years presented.
Please refer to the accounting policies stated in the notes for information on the environmental disclosures.
Section 2
Resources
| 2.1 | Energy consumption |
Accounting
policies
Energy consumption is measured as both direct
supply of energy (internally produced
energy), which is energy Novo Nordisk produces from mainly natural gas and
wood, and indirect supply of external energy (externally produced energy),
which is electricity, steam and district heat. The consumption of fuel and
externally produced energy is based on meter readings and invoices.
| Energy consumption in 1,000 GJ |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Diabetes care | 1,762 | 1,680 | 1,515 | |||
| Biopharmaceuticals | 362 | 316 | 280 | |||
| Not allocated1 | 448 | 437 | 392 | |||
|
|
|
|
|
|
|
|
| Total | 2,572 | 2,433 | 2,187 | |||
|
|
|
|
|
|
|
|
| 1. | Not allocated consists of consumption that cannot be directly linked to the production of either diabetes care or biopharmaceuticals, ie office buildings. |
In 2013 energy consumption increased by 6%, compared with 11% in 2012, due to increased production and start-up of new production facilities.
| 2.2 | Water consumption |
Accounting
policies
Water consumption is measured based on meter
readings and invoices. It includes drinking water, industrial water and steam.
| Water consumption in 1,000 m3 |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Diabetes care | 2,261 | 2,156 | 1,853 | |||
| Biopharmaceuticals | 244 | 201 | 142 | |||
| Not allocated1 | 180 | 118 | 141 | |||
|
|
|
|
|
|
|
|
| Total | 2,685 | 2,475 | 2,136 | |||
|
|
|
|
|
|
|
| 1. | Not allocated consists of consumption that cannot be directly linked to the production of either diabetes care or biopharmaceuticals, ie office buildings. |
In 2013 water consumption increased by 8%, compared with 16% in 2012, due to increased diabetes care production as well as start-up of new production facilities.
NOVO NORDISK ANNUAL REPORT 2013
| Supplementary information |
CONSOLIDATED ENVIRONMENTAL
STATEMENT
|
103
|
Section 3
Emissions and waste
| 3.1 | CO2 emissions |
Accounting
policies
CO2
emissions from energy consumption
The amount of CO2
emissions from energy consumption covers consumption
related to production measured in metric tons. CO2
emissions from energy
consumption is calculated according to the GHG Protocol and based on emission
factors from the previous year.
CO2
emissions from refrigerants
CO2
emissions from refrigerants is calculated by converting to metric tons using
standard factors.
CO2
emissions from transport (product distribution)
CO2
emissions from product distribution is calculated as the estimated emissions
from product distribution in metric tons. It is calculated as the worldwide
distribution of semi-finished and finished products, raw materials and components
by air, sea and road between production sites and from production sites to affiliates,
direct customers and importing distributors.
CO2
emissions from product distribution from affiliates to pharmacies,
hospitals and wholesalers are not included.
| CO2 emissions in 1,000 tons |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| CO2 emissions from energy consumption | 125 | 122 | 94 | |||
| – Diabetes care | 96 | 95 | 70 | |||
| – Biopharmaceuticals | 11 | 9 | 8 | |||
| – Not allocated1 | 18 | 18 | 16 | |||
| CO2 emissions from refrigerants | 2 | 3 | 3 | |||
| CO2 emissions from transport | 59 | 55 | 53 | |||
|
|
|
|
|
|
|
|
| Total | 186 | 180 | 150 | |||
|
|
|
|
|
|
|
| 1. | Not allocated consists of consumption that cannot be directly linked to the production of either diabetes care or biopharmaceuticals, ie office buildings. |
CO2 emissions from energy consumption increased by 2% in 2013 compared with 2012, when emissions increased by 30%. The increase is linked to energy consumption, but is less than the increase in energy consumption. This is due to a decrease in energy consumption at production facilities with CO2-intensive energy supply and an increase in energy consumption at production facilities with less CO2-intensive energy supply.
The emission of refrigerants decreased mainly due to replacement of refrigerants with high global-warming potential.
CO2 emissions from transport (product distribution) increased by 7% due to increased distribution volumes. Distributing as many products as possible by sea is a priority for Novo Nordisk, as it reduces both CO2 emissions and costs.
| 3.2 | Wastewater and chemical
oxygen demand (COD) in wastewater |
Accounting
policies
The volume of wastewater is measured as process
wastewater, sanitary wastewater and drainage water from fortified areas. The
total volume of wastewater is calculated based on input from the production
sites either as a direct measure of the total sum discharged to public sewer
systems or as the site’s total consumption of water minus registered
evaporation from cooling systems (including cooling towers and other plants
from which evaporation occurs) and any large amount of wastewater collected
and treated as waste.
Chemical oxygen demand (COD) in wastewater is a measure of the level of pollutants in the water and is calculated based on in-house test results or standard factors.
Development
The increase in water consumption led to
an increase in the total volume of wastewater of 8%, from 2,272,000 m3
in 2012 to 2,457,000 m3
in 2013. The quantity of discharged COD in the wastewater increased by 24%,
from 723 tons in 2012 to 897 tons in 2013, primarily due to increased activity,
especially in Kalundborg and Bagsvaerd.
| 3.3 | Waste |
Accounting
policies
Waste is measured as the sum of non-hazardous
and hazardous waste disposed of based on weight receipts.
Non-hazardous waste is calculated as a percentage of the total amount of waste disposed of.
| Tons of waste |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Non-hazardous waste | 78,233 | 69,937 | 29,131 | |||
| – Organic production waste for biogas1 | 65,437 | 58,193 | 16,765 | |||
| – Other non-hazardous waste | 12,796 | 11,744 | 12,366 | |||
| Hazardous waste | 13,479 | 12,865 | 12,245 | |||
| – Ethanol | 9,992 | 9,825 | 9,179 | |||
| – Other hazardous waste | 3,487 | 3,040 | 3,066 | |||
| Total waste | 91,712 | 82,802 | 41,376 | |||
|
|
|
|
|
|
|
|
| Non-hazardous waste (of total waste) | 85% | 84% | 70% | |||
|
|
|
|
|
|
|
| Waste treatment |
2013
|
2012
|
2011
|
|||
|
|
|
|
|
|
|
|
| Recycling | 84% | 84% | 71% | |||
| Incineration with energy recovery | 9% | 9% | 16% | |||
| Incineration without energy recovery | 1% | 1% | 1% | |||
| Special treatment2 | 5% | 5% | 10% | |||
| Landfilling | 1% | 1% | 2% | |||
|
|
|
|
|
|
|
|
| Total | 100% | 100% | 100% | |||
|
|
|
|
|
|
|
| 1. | Until 2011, most of the non-hazardous organic production waste was used as animal feed and classified as a by-product. Since October 2011, all this organic production waste has been sent for energy recovery in biogas plants and is therefore reported as waste. |
| 2. | Waste handled by companies specialised in chemical waste disposal. In 2013, 67% was either process wastewater requiring special treatment or waste containing medicine. |
In 2013, total waste increased by 11%. Of this, 81% is non-hazardous organic production waste from Diabetes care. All of this organic production waste is recycled for energy recovery in biogas plants.
| 3.4 | Breaches of regulatory
limit values |
Accounting
policies
Breaches of regulatory limit values covers
all breaches reported to the authorities.
Development
Breaches of regulatory limit values decreased
by 48%, from 27 breaches in 2012 to 14 in 2013. Most breaches are short-term
violations of limit values for pH in wastewater with no impact on the environment.
NOVO NORDISK ANNUAL REPORT 2013
| 104 | FINANCIAL STATEMENTS OF THE PARENT COMPANY |
Financial
statements
of the parent
company 2013
|
|
||
Income statement
for the year ended 31 December
| DKK million |
Note |
2013
|
2012
|
|||
|
|
|
|
|
|
|
|
| Sales |
2
|
49,500
|
49,834
|
|||
| Cost of goods sold |
3
|
11,711
|
12,271
|
|||
|
|
|
|
|
|
|
|
| Gross profit |
37,789
|
37,563
|
||||
| Sales and distribution costs |
3
|
10,483
|
11,626
|
|||
| Research and development costs |
3
|
9,903
|
9,071
|
|||
| Administrative costs |
3
|
1,560
|
1,439
|
|||
| Licence income and other operating income, net |
832
|
796
|
||||
|
|
|
|
|
|
|
|
| Operating profit |
16,675
|
16,223
|
||||
| Profit in subsidiaries, net of tax |
10
|
12,134
|
9,914
|
|||
| Financial income |
4
|
1,573
|
139
|
|||
| Financial expenses |
4
|
394
|
1,792
|
|||
|
|
|
|
|
|
|
|
| Profit before income taxes |
29,988
|
24,484
|
||||
| Income taxes |
5
|
4,798
|
3,037
|
|||
|
|
|
|
|
|
|
|
| Net profit for the year | 25,190 | 21,447 | ||||
|
|
|
|
|
|
|
|
| Proposed appropriation of net profit: | ||||||
| Dividends | 11,866 | 9,715 | ||||
| Net revaluation reserve according to the equity method | 2,255 | 731 | ||||
| Retained earnings | 11,069 | 11,001 | ||||
|
|
|
|
|
|
|
|
| 25,190 | 21,447 | |||||
|
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
|
FINANCIAL STATEMENTS
OF THE PARENT COMPANY
|
105
|
Balance sheet
at 31 December
| DKK million |
Note |
2013
|
2012
|
|||
|
|
|
|
|
|
|
|
| Assets | ||||||
| Intangible assets | 7 | 1,299 | 1,153 | |||
| Property, plant and equipment | 8 | 15,221 | 14,628 | |||
| Financial assets | 10 | 19,848 | 18,046 | |||
|
|
|
|
|
|
|
|
| Total non-current assets | 36,368 | 33,827 | ||||
|
|
|
|
|
|
|
|
| Raw materials | 1,279 | 1,268 | ||||
| Work in progress | 4,894 | 3,824 | ||||
| Finished goods | 1,220 | 1,857 | ||||
|
|
|
|
|
|
|
|
| Inventories | 7,393 | 6,949 | ||||
|
|
|
|
|
|
|
|
| Trade receivables | 1,490 | 1,509 | ||||
| Amounts owed by affiliates | 9,332 | 8,921 | ||||
| Tax receivables | 3,021 | 1,052 | ||||
| Other receivables | 794 | 756 | ||||
|
|
|
|
|
|
|
|
| Receivables | 14,637 | 12,238 | ||||
|
|
|
|
|
|
|
|
| Marketable securities | 3,739 | 4,544 | ||||
| Derivative financial instruments | 1,521 | 931 | ||||
| Cash at bank and on hand | 9,605 | 10,693 | ||||
|
|
|
|
|
|
|
|
| Total current assets | 36,895 | 35,355 | ||||
|
|
|
|
|
|
|
|
| Total assets | 73,263 | 69,182 | ||||
|
|
|
|
|
|
|
|
| Equity and liabilities | ||||||
| Share capital | 550 | 560 | ||||
| Net revaluation reserve according to the equity method | 10,591 | 8,771 | ||||
| Retained earnings | 31,428 | 31,301 | ||||
|
|
|
|
|
|
|
|
| Total equity | 9 | 42,569 | 40,632 | |||
|
|
|
|
|
|
|
|
| Deferred income tax liabilities | 6 | 171 | 52 | |||
| Other provisions | 11 | 776 | 704 | |||
|
|
|
|
|
|
|
|
| Total provisions | 947 | 756 | ||||
|
|
|
|
|
|
|
|
| Non-current liabilities | – | – | ||||
|
|
|
|
|
|
|
|
| Current debt | 1 | 137 | ||||
| Derivative financial instruments | – | 48 | ||||
| Trade payables | 1,901 | 1,764 | ||||
| Amounts owed to affiliates | 23,724 | 22,401 | ||||
| Tax payable | 183 | – | ||||
| Other liabilities | 3,938 | 3,444 | ||||
|
|
|
|
|
|
|
|
| Current liabilities | 29,747 | 27,794 | ||||
|
|
|
|
|
|
|
|
| Total liabilities | 29,747 | 27,794 | ||||
|
|
|
|
|
|
|
|
| Total equity and liabilities | 73,263 | 69,182 | ||||
|
|
|
|
|
|
|
NOVO NORDISK ANNUAL REPORT 2013
| 106 | FINANCIAL STATEMENTS OF THE PARENT COMPANY |
Notes
| 1 |
Accounting
policies |
The financial statements of the parent company have been prepared in accordance with the Danish Financial Statements Act (Class D) and other accounting regulations for companies listed on NASDAQ OMX Copenhagen.
The accounting policies for the financial statements of the parent company are unchanged from the last financial year and are the same as for the Consolid ated financial statements with the following additions. For a description of the accounting policies of the Group, please refer to the Consolidated financial statements, pp 61–62.
Supplementary accounting policies for the parent company
Financial assets
In the financial statements of the parent
company, investments in subsidiaries are recorded under the equity method,
which is at the respective share of the net asset values in subsidiaries.
Net profit of subsidiaries less unrealised intra-Group profits is recorded
in the Income statement of the parent company.
To the extent it exceeds declared dividends from such companies, net revaluation of investments in subsidiaries is transferred to Net revaluation reserve under Equity according to the equity method. Profits in subsidiaries are disclosed as profit after tax.
Fair value adjustments of financial assets categorised as ‘Available for sale’ in the parent company are recognised in the Income statement.
Tax
For Danish tax purposes, the parent company
is assessed jointly with its Danish subsidiaries. The Danish jointly taxed
companies are included in a Danish on-account tax payment scheme for Danish
corporate income tax. All current taxes under the scheme are recorded in the
individual companies. Novo Nordisk A/S and its Danish subsidiaries are included
in the joint taxation of the parent company, Novo A/S.
Statement of cash flows
No separate statement of cash flows has been
prepared for the parent company; please refer to the Statement of cash flows
for the Group on p 58.
| 2 |
Sales
|
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| Sales by business segment | ||||
| Diabetes care |
49,275
|
49,479
|
||
| Biopharmaceuticals |
225
|
355
|
||
|
|
|
|
|
|
| Total sales |
49,500
|
49,834
|
||
|
|
|
|
|
|
| Sales by geographical segment | ||||
| North America |
20,829
|
20,463
|
||
| Europe |
12,978
|
13,201
|
||
| International Operations |
8,370
|
7,986
|
||
| Japan & Korea |
2,377
|
3,992
|
||
| Region China |
4,946
|
4,192
|
||
|
|
|
|
|
|
| Total sales |
49,500
|
49,834
|
||
|
|
|
|
|
Sales are attributed to geographical segment based on location of the customer. For definitions of segments, please refer to note 2.2 to the Consolidated financial statements.
| 3 |
Employee
costs |
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| Wages and salaries |
7,792
|
7,076
|
||
| Share-based payment costs |
174
|
167
|
||
| Pensions |
727
|
663
|
||
| Other social security contributions |
192
|
183
|
||
| Other employee costs |
300
|
264
|
||
|
|
|
|
|
|
| Total employee costs | 9,185 | 8,353 | ||
|
|
|
|
|
|
| Change in employee costs included in inventories | 37 | (7 | ) | |
|
|
|
|
|
For information regarding remuneration to the Board of Directors and Executive Management, please refer to ‘Remuneration’ on pp 49–51 and note 2.3 to the Consolidated financial statements.
|
2013
|
2012
|
|||
|
|
|
|
|
|
| Average number of full-time employees in Novo Nordisk A/S | 12,849 | 12,003 | ||
|
|
|
|
|
| 4 | Financial income and financial expenses |
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| Interest income relating to subsidiaries |
42
|
31
|
||
| Other financial income |
1,531
|
108
|
||
|
|
|
|
|
|
| Total financial income | 1,573 | 139 | ||
|
|
|
|
|
|
| Interest expenses relating to subsidiaries | 25 | 70 | ||
| Foreign exchange loss (net) | 308 | 148 | ||
| Other financial expenses | 61 | 1,574 | ||
|
|
|
|
|
|
| Total financial expenses | 394 | 1,792 | ||
|
|
|
|
|
| 5 | Income taxes |
Following developments in tax disputes, uncertain tax positions previously presented net, are as of 2013 presented individually as part of tax receivables/tax payables. Novo Nordisk has applied the reclassification in 2013 without restating previous years’ comparative amounts and disclosures, as the change in classification has only immaterial impact. Had comparative amounts been restated for 2012, tax receivables would have decreased by DKK 456 million and tax payables increased by DKK 181 million, both offset in financial assets.
Novo Nordisk A/S and its Danish subsidiaries’ tax contribution to the joint taxation in 2013 amounts to DKK 4,251 million (DKK 3,527 million in 2012). In 2013, Novo Nordisk A/S paid income taxes of DKK 4,753 million related to the current year (DKK 4,235 million in 2012) and DKK 2,550 million in taxes regarding prior years (DKK 3,620 million in 2012).
Furthermore, DKK 60 million has been paid in income taxes by Danish subsidiaries (a payment of DKK 40 million in 2012).
| 6 | Deferred income tax asset/(liabilities) |
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| The deferred tax assets/liabilities are allocated to the various balance sheet items as follows: | ||||
| Property, plant and equipment |
(776
|
)
|
(912
|
)
|
| Indirect production costs |
(876
|
)
|
(810
|
)
|
| Unrealised internal profit |
2,024
|
2,024
|
||
| Other |
(543
|
)
|
(354
|
)
|
|
|
|
|
|
|
| Total income tax assets/(liabilities) | (171 | ) | (52 | ) |
|
|
|
|
|
The Danish corporate tax rate was 25% in 2013. Deferred tax has been calculated based on expected realisation reflecting the reduction in the Danish corporate tax rate. The effect of the change (DKK 109 million) is included in the total deferred income tax.
NOVO NORDISK ANNUAL REPORT 2013
|
FINANCIAL STATEMENTS
OF THE PARENT COMPANY
|
107
|
| 7 | Intangible assets |
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| Cost at the beginning of the year |
1,991
|
1,872
|
||
| Additions during the year |
360
|
119
|
||
| Disposals during the year |
–
|
–
|
||
|
|
|
|
|
|
| Cost at the end of the year |
2,351
|
1,991
|
||
|
|
|
|
|
|
| Amortisation at the beginning of the year |
838
|
713
|
||
| Amortisation during the year |
101
|
97
|
||
| Impairment losses for the year |
113
|
28
|
||
|
|
|
|
|
|
| Amortisation at the end of the year |
1,052
|
838
|
||
|
|
|
|
|
|
| Carrying amount at the end of the year | 1,299 | 1,153 | ||
|
|
|
|
|
Intangible assets primarily relate to patents and licences, internally developed software and costs related to major IT projects.
| 8 | Property, plant and equipment |
| DKK million |
Land
and
buildings |
Plant
and
machinery |
Other
equipment |
Payments
on account and assets in course of construction |
2013
|
2012
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost at the beginning of the year | 10,803 | 14,568 | 1,990 | 3,710 | 31,071 | 29,307 | ||||||
| Additions during the year | 432 | 562 | 102 | 1,288 | 2,384 | 2,177 | ||||||
| Disposals during the year | (98 | ) | (538 | ) | (155 | ) | – | (791 | ) | (413 | ) | |
| Transfer from/(to) other items | 524 | 866 | 37 | (1,427 | ) | – | – | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost at the end of the year | 11,661 | 15,458 | 1,974 | 3,571 | 32,664 | 31,071 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and impairment losses at the beginning of the year | 4,413 | 10,658 | 1,372 | – | 16,443 | 15,050 | ||||||
| Depreciation for the year | 488 | 1,098 | 152 | 1,738 | 1,704 | |||||||
| Impairment losses for the year | 4 | 22 | 5 | 31 | 86 | |||||||
| Depreciation reversed on disposals during the year | (92 | ) | (528 | ) | (149 | ) | (769 | ) | (397 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and impairment losses at the end of the year | 4,813 | 11,250 | 1,380 | – | 17,443 | 16,443 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Carrying amount at the end of the year | 6,848 | 4,208 | 594 | 3,571 | 15,221 | 14,628 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9 | Statement of changes in equity |
| DKK million |
Share
capital |
Net
revaluation reserve |
Retained
earnings |
2013
|
2012
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at the beginning of the year | 560 | 8,771 | 31,301 | 40,632 | 37,448 | |||||
| Appropriated from Net profit for the year | 11,069 | 11,069 | 11,001 | |||||||
| Proposed dividends | 11,866 | 11,866 | 9,715 | |||||||
| Appropriated from Net profit for the year to Net revaluation reserve | 2,255 | 2,255 | 731 | |||||||
| Effect of hedged forecast transactions transferred to the Income statement | (832 | ) | (832 | ) | 1,118 | |||||
| Fair value adjustments of cash flow hedges for the year | 1,205 | 1,205 | 832 | |||||||
| Dividends paid | (9,715 | ) | (9,715 | ) | (7,742 | ) | ||||
| Share-based payments (note 3) | 174 | 174 | 167 | |||||||
| Tax credit related to share option scheme | 57 | 57 | 31 | |||||||
| Purchase of treasury shares | (13,989 | ) | (13,989 | ) | (12,162 | ) | ||||
| Sale of treasury shares | 65 | 65 | 266 | |||||||
| Reduction of the B share capital | (10 | ) | 10 | 0 | 0 | |||||
| Exchange rate adjustments of investments in subsidiaries | (435 | ) | (19 | ) | (454 | ) | (172 | ) | ||
| Other adjustments | 236 | 236 | (601 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at the end of the year | 550 | 10,591 | 31,428 | 42,569 | 40,632 | |||||
|
|
|
|
|
|
|
|
|
|
|
Please refer to note 4.1 to the Consolidated financial statements regarding average number of shares, treasury shares and total number of A and B shares in Novo Nordisk A/S.
NOVO NORDISK ANNUAL REPORT 2013
| 108 | FINANCIAL STATEMENTS OF THE PARENT COMPANY |
| 10 | Financial assets |
| DKK million |
Investments
in subsidiaries |
Amounts
owed by affiliates |
Other
securities and investments |
2013 | 2012 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| Cost at the beginning of the year | 8,805 | 234 | 674 | 9,713 | 9,569 | |||||
| Investments during the year | 74 | 453 | 3 | 530 | 268 | |||||
| Divestments during the year | (477 | ) | (163 | ) | (640 | ) | (124 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
| Cost at the end of the year | 8,879 | 210 | 514 | 9,603 | 9,713 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| Value adjustments at the beginning of the year | 20,198 | (531 | ) | 19,667 | 23,113 | |||||
| Profit/(loss) before tax | 15,533 | 15,533 | 13,883 | |||||||
| Income taxes on profit for the year | (2,564 | ) | (2,564 | ) | (3,340 | ) | ||||
| Reclassification to unrealised internal profit | 4,219 | 4,219 | – | |||||||
| Amortisation and impairment | (26 | ) | (26 | ) | – | |||||
| Reclassification effect of uncertain tax positions | 637 | 637 | – | |||||||
| Dividends received | (10,423 | ) | (10,423 | ) | (13,039 | ) | ||||
| Divestments during the year | 107 | 107 | – | |||||||
| Effect of exchange rate adjustment | (1,124 | ) | (4 | ) | 108 | (1,020 | ) | (482 | ) | |
| Other adjustments | (130 | ) | (130 | ) | (468 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
| Value adjustments at the end of the year | 26,346 | (4 | ) | (342 | ) | 26,000 | 19,667 | |||
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealised internal profit at the beginning of the year | (11,334 | ) | (11,334 | ) | (15,239 | ) | ||||
| Change for the year – charged to Income statement | (835 | ) | (835 | ) | (627 | ) | ||||
| Change for the year – charged to Equity | (37 | ) | (37 | ) | – | |||||
| Reclassification to value adjustment | (4,219 | ) | (4,219 | ) | 4,219 | |||||
| Effect of exchange rate adjustment | 670 | 670 | 313 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealised internal profit at the end of the year | (15,755 | ) | – | – | (15,755 | ) | (11,334 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
| Carrying amount at the end of the year | 19,470 | 206 | 172 | 19,848 | 18,046 | |||||
|
|
|
|
|
|
|
|
|
|
|
Carrying amount of investments in subsidiaries does not include capitalised goodwill at the end of the year. A list of companies in the Novo Nordisk Group is found in note 5.8 to the Consolidated financial statements.
| 11 | Other provisions |
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| Non-current |
465
|
480
|
||
| Current |
311
|
224
|
||
|
|
|
|
|
|
| Total other provisions |
776
|
704
|
||
|
|
|
|
|
Provisions for pending litigations are recognised as Other provisions. Furthermore, as part of normal business Novo Nordisk issues credit notes for expired goods. Consequently, a provision for future returns is made, based on historical product return statistics.
For information on pending litigations, please refer to note 3.6 to the Consolidated financial statements.
| 12 | Related party transactions |
For information on transactions with related parties, please refer to note 5.5 to the Consolidated financial statements.
| 13 | Commitments and contingencies |
| DKK million |
2013
|
2012
|
||
|
|
|
|
|
|
| Commitments | ||||
| Lease commitments | 1,664 | 993 | ||
| Contractual obligations relating to investments in property, plant and equipment | 404 | 107 | ||
| Guarantees given for subsidiaries | 4,390 | 4,523 | ||
| Obligations relating to research and development projects | 5,276 | 2,915 | ||
| Other guarantees and commitments | 1,677 | 2,574 | ||
| Lease commitments expiring within the following periods from the balance sheet date | ||||
| Within one year | 201 | 191 | ||
| Between one and five years | 659 | 534 | ||
| After five years | 804 | 268 | ||
|
|
|
|
|
|
| Total lease commitments | 1,664 | 993 | ||
|
|
|
|
|
|
| The lease costs for 2013 and 2012 were DKK 315 million and DKK 335 million respectively. | ||||
| Security for debt | ||||
| Land, buildings and equipment etc. at carrying amount | 90 | 90 | ||
|
|
|
|
|
Novo Nordisk A/S and its Danish subsidiaries are jointly taxed with the Danish companies in the Novo A/S Group. The joint taxation also covers withholding taxes in the form of dividend tax, royalty tax and interest tax. The Danish companies are jointly and individually liable for the joint taxation. Any subsequent adjustments to income taxes and withholding taxes may lead to a larger liability. The tax for the individual companies is allocated in full on the basis of the expected taxable income.
For information on pending litigation and other contingencies, please refer to notes 3.6 and 5.4 to the Consolidated financial statements.
NOVO NORDISK ANNUAL REPORT 2013
| Management statement |
CONSOLIDATED FINANCIAL
STATEMENTS
|
109
|
| Statement
by the Board of Directors and Executive Management on the Annual Report |
||
|
Today, the Board of Directors and Executive Management approved the Annual Report of Novo Nordisk A/S for the year 2013. The Consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB), and International Financial Reporting Standards as endorsed by the EU. The Financial statements of the parent company, Novo Nordisk A/S, are prepared in accordance with the Danish Financial Statements Act. Further, the Consolidated financial statements, the Financial statements of the parent company and Management’s Review are prepared in accordance with additional Danish disclosure requirements for listed companies. In our opinion, the Consolidated financial statements and the Financial statements of the parent company give a true and fair view of the financial position at 31 December 2013, the results of the Group’s and parent |
company’s operations, and consolidated cash flows for the financial year 2013. Furthermore, in our opinion, Management’s Review includes a true and fair account of the development in the operations and fi nancial circumstances, of the results for the year, and of the financial position of the Group and the parent company as well as a description of the most significant risks and elements of uncertainty facing the Group and the parent company. Novo Nordisk’s Consolidated social and environmental statements have been prepared in accordance with the reporting principles of materiality, inclusivity and responsiveness of AA1000APS(2008). They give a balanced and reasonable presentation of the organisation’s social and environmental performance. We recommend that the Annual Report be adopted at the Annual General Meeting. |
|
Bagsværd, 29 January 2014
|
|
 |
 |
 |
| Executive Management |
Lars Rebien Sørensen
President and CEO |
Jesper Brandgaard
CFO |
Lars Fruergaard Jørgensen
|
 |
 |
 |
|
| Lise Kingo | Jakob Riis | Kåre Schultz | |
 |
|||
| Mads Krogsgaard Thomsen | |||
 |
 |
 |
|
| Board of Directors | Göran Ando Chairman |
Jeppe Christiansen Vice chairman |
Bruno Angelici |
 |
 |
 |
|
| Henrik Gürtler | Liz Hewitt Audit Committee member |
Ulrik Hjulmand-Lassen | |
 |
 |
 |
|
| Thomas Paul Koestler | Anne Marie Kverneland | Søren Thuesen Pedersen | |
 |
 |
||
| Hannu Ryöppönen Chairman of the Audit Committee |
Stig Strøbæk Audit Committee member |
NOVO NORDISK ANNUAL REPORT 2013
| 110 | INDEPENDENT AUDITOR’S REPORT |
Independent Auditor’s Reports
To the Shareholders of Novo Nordisk A/S
Report on Consolidated financial statements and Financial statements of the Parent Company
We have audited the Consolidated financial statements and the Financial statements of Novo Nordisk A/S for the financial year 2013, pp 55–93 and pp 104–108, which comprise Income Statement, Balance Sheet, Statement of Changes in Equity and Notes including accounting policies for the Group as well as for the Parent Company and Statement of Comprehensive Income and Cash Flow Statement for the Group.
The Consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and International Financial Reporting Standards as endorsed by the EU. The Financial statements of the Parent Company are prepared in accordance with the Danish Financial Statements Act. Moreover, both the Consolidated financial statements and the Financial statements of the Parent Company are prepared in accordance with additional Danish disclosure requirements for listed companies.
Management’s Responsibility
for the Consolidated financial statements and the Financial statements of the
Parent Company
The Management is responsible for the preparation
of the Consolidated financial statements and the Financial statements of the
Parent Company that give a true and fair view in accordance with the above legislation
and accounting standards, and for such internal control as Management determines
is necessary to enable preparation of Consolidated financial statements and
Financial statements of the Parent Company that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion
on the Consolidated financial statements and the Financial statements of the
Parent Company based on our audit. We conducted our audit in accordance with
International standards on Auditing and additional requirements under Danish
Audit regulation. This requires that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the
Consolidated financial statements and the Financial statements of the Parent
Company are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Consolidated financial statements and the Financial statements of the Parent Company. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the Consolidated financial statements and the Financial statements of the Parent Company, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of Consolidated financial statements and Financial statements of the Parent Company that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Management, as well as evaluating the overall presentation of the Consolidated financial statements and the Financial statements of the Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Our audit has not resulted in any qualification.
Opinion
In our opinion, the Consolidated financial
statements give a true and fair view of the financial position at 31 December
2013 of the Group and of the results of the Group’s operations and consolidated
cash fl ows for the financial year 2013 in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board,
and International Financial Reporting Standards as endorsed by the EU and additional
Danish disclosure requirements for listed companies. Moreover, in our opinion
the Financial statements of the Parent Company give a true and fair view of
the financial position at 31 December 2013 and of the results of the Parent
Company’s operations for the financial year 2013 in accordance with the
Danish Financial Statements Act and additional Danish disclosure requirements
for listed companies.
Statement on Management’s
Review
We have read Management’s Review, pp
1–54 and p 94 in accordance with the Danish Financial Statements Act.
On this basis, it is our opinion that the information provided in the Management’s Review is consistent with the Consolidated financial statements and the Financial statements of the Parent Company.
Bagsværd, 29 January 2014
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
 |
 |
| Lars Holtug | Lars Baungaard |
| Danish State Authorised | Danish State Authorised |
| Public Accountant | Public Accountant |
NOVO NORDISK ANNUAL REPORT 2013
|
INDEPENDENT ASSURANCE
REPORT
|
111
|
Independent Assurance
Report on the social
and environmental reporting for 2013
To the Stakeholders of Novo Nordisk A/S
We have reviewed the Consolidated social and environmental information in the Annual Report of Novo Nordisk A/S for the financial year 2013, which comprises Management’s Review and the Consolidated social and environmental statement on pp 1–54, 94 and 95–103.
The assurance engagement has furthermore covered the nature and extent of Novo Nordisk A/S incorporation of the AA1000 AccountAbility Principles Standard (AA1000APS(2008)) principles (inclusivity, materiality and responsiveness) with respect to stakeholder dialogue.
Criteria for the preparation of
reporting on data
The Consolidated social and environmental information
is prepared in accordance with the social accounting policies and environmental
accounting policies described on pp 96–100 and pp 102–103.
Management’s responsibility
The Management is responsible for preparing
the Consolidated social and environmental information, including for establishing
data collection and registration, internal control systems with a view to ensuring
reliable information, specifying acceptable reporting criteria and choosing
data to be collected for intended users of the report. Also, adherence to AA1000APS(2008)
i.e. the three principles of inclusivity, materiality and responsiveness is
the responsibility of Management.
Assurance provider’s responsibility
Our responsibility is, on the basis of our
work, to express a conclusion on the reliability of the Consolidated social
and environmental information in the Annual Report. Furthermore, our responsibility
is, by applying the AA1000 Assurance Standard (AA1000AS(2008)), to express a
conclusion on as well as to make recommendations for the nature and extent of
Novo Nordisk A/S adherence to the AA1000APS(2008) principles.
Our team has competences in respect of assurance engagements related to Consolidated social and environmental information. In addition, our team has competences in assessing social and environmental information and sustainability management, and thus qualifies to conduct this independent assurance engagement. During 2013 we have not performed any tasks or services for Novo Nordisk A/S or other clients that would conflict with our independence. Furthermore, we have not been responsible for the preparation of any part of the report; and therefore qualify as independent as defined by in AA1000AS(2008).
Scope, standards and criteria used
We have planned and performed our work in
accordance with the International Standard on Assurance Engagements (ISAE)
3000, ‘Assurance Engagements other than Audits or Reviews of Historical
Financial Information’, to obtain limited assurance that the Consolidated
social and environmental information in the Annual Report is free of material
misstatements and that the information has been presented in accordance with
the social accounting policies and environmental accounting policies here
for. The assurance obtained is limited, as our work compared to that of an
engagement with reasonable assurance has been limited to, principally, inquiries,
interviews and analytical procedures related to registration and communication
systems, data and underlying documentation.
Moreover, we have planned and performed our work based on the AA1000AS(2008), using the criteria in the AA1000APS(2008), to perform a Type 2 engagement and to obtain a moderate level of assurance regarding the nature and extent of Novo Nordisk A/S adherence to the principles of inclusivity, materiality and responsiveness.
Methodology, approach, limitation
and scope of work
Based on an assessment of materiality and risk,
our work included: (i) Inquiries regarding procedures and methods to ensure
that social and environmental information include data from the Group’s
affiliates, and that these data have been incorporated in compliance with the
social accounting policies and environmental accounting policies. Furthermore,
based on our assessment of materiality and risk, we have selected and conducted
interviews with data and reporting responsible personnel, and based on requests
and selected documentation, we have assessed the existing systems for data collection
and registration, and procedures to ensure reliable information;
(ii) Inquiries and interviews with members of the Board of Directors, Executive Management, Corporate Stakeholder Engagement, Operations, Corporate Sustainability, as well as Management in the US affiliate, regarding Novo Nordisk A/S commitment and adherence to the principles of inclusivity, materiality and responsiveness, the existence of systems and procedures to support adherence to the principles and embeddedness of the principles at corporate level.
Conclusion
Based on our review, nothing has come to our
attention which causes us not to believe that the Consolidated social and environmental
information presented in the Annual Report of Novo Nordisk A/S for 2013 (on
pp 1–54, 94 and pp 95–103) is free of material misstatements and has
been stated in accordance with the social accounting policies and environmental
accounting policies here for.
Furthermore, nothing has come to our attention causing us to believe that Novo Nordisk A/S does not adhere to the AA1000APS(2008) principles.
Observations and recommendations
According to AA1000AS(2008), we are required
to include observations and recommendations for improvements in relation to
adherence to the AA1000APS(2008) principles:
Regarding inclusivity
Novo Nordisk A/S continues to demonstrate a
strong commitment to accountability with systems and processes in place to support
stakeholder engagement around sustainability issues at corporate level. Building
capabilities on stakeholder engagement and sustainability across the business
has been a focus in 2013. This has involved roll-out of guidelines, workshops
in China and Brazil and offerings, systems and contracts made with affiliates
to systematically support and clarify roles and responsibilities.
We have no significant recommendations regarding inclusivity.
Regarding materiality
Novo Nordisk A/S continues to discuss, evaluate
and determine the materiality of sustainability issues on an ongoing basis through
a number of relevant governance bodies with senior management representation
from across the business. The refined materiality filter and criteria applied
in the context of the Annual Report has resulted in the exclusion of certain
data types.
We have no significant recommendations regarding materiality.
Regarding responsiveness
Being responsive to stakeholder needs and concerns
is key to Novo Nordisk A/S and evident from the use of different channels to
engage in dialogue and convey messages. We notice that this year’s Annual
Report serve as an example of how stakeholders are engaged on dilemmas Novo
Nordisk A/S are facing.
We have no significant recommendations regarding responsiveness.
Novo Nordisk A/S demonstrates leadership in the area of establishing, evaluating and communicating accountability. We recommend that Novo Nordisk A/S strengthen this leadership position by reviewing the opportunities to further integrate the Triple Bottom Line in management and decision making processes.
Bagsværd, 29 January 2014
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
|
|
| Lars Holtug | Lars Baungaard |
| Danish State Authorised | Danish State Authorised |
| Public Accountant | Public Accountant |
NOVO NORDISK ANNUAL REPORT 2013
| 112 | ADDITIONAL INFORMATION |
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Financial calendar 2014
|
Dividend
|
Announcement of
financial results
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20 March 2014 |
21
March 2014 |
25
March 2014 |
26
March 2014 |
2
April 2014 |
1
May 2014 |
7
August 2014 |
30
October 2014 |
30
January 2015 |
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|
Annual
General Meeting |
Ex-
dividend |
Record
date |
Payment,
B shares |
Payment,
ADRs |
First
three months |
Half
year |
First nine
months |
Full
year |
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News and updates
Follow Novo Nordisk on social media |
Additional reporting In addition to the Annual Report, Novo Nordisk provides disclosure in separate reports to satisfy specific legal requirements and stakeholder interests. Additional reports can be downloaded at novonordisk.com/annualreport. Form 20-F Corporate Governance Report
United Nations Global Compact
Diversity Report
|
|||
| References:
The one rule we have to break: 1.
International Diabetes Federation. IDF
Diabetes Atlas, 6th edn. Brussels, Belgium.
International Diabetes Federation, 2013. idf.org/ diabetesatlas. 2. Hart JT. Rule of Halves:
implications of increasing diagnosis and reducing dropout for future workload
and prescribing costs in primary care. Br
J Gen Pract. 1992; 42(356):116–119,
and Smith WCS, Lee AJ, Crombie IK, Tunstall-Pedoe H. Control of blood pressure
in Scotland: the rule of halves. BMJ 1990; 300:981–983.
3.
Stratton IM, Adler AI, Neil HA et al., for the United Kingdom Prospective
Diabetes Study Group. Association of glycaemia with macrovascular and microvascular
complications of type 2 diabetes (UKPDS 35): prospective observational study.
BMJ
2000; 321(7258):405–412. 4.
Shah CP & Chen C. Review of Therapeutic Advances in Diabetic Retinopathy.
Ther Adv Endocrinol Metab. 2011 February;
2(1): 39–53. One size doesn’t
fit all: 1. Klein O, Lynge J, Endahl
J, Damholt B, Nosek L, Heise T. Albumin-bound basal insulin analogues (insulin
detemir and NN344): comparable time-action profiles but less variability
than insulin glargine in type 2 diabetes. Diabetes,
Obesity and Metabolism 9:290–299,
2007. 2. Evans et al. Lessons from early experience with insulin degludec
in routine clinical practice. IDF 2013 Abstract
P-1050. Is obesity a disease?:
1. Ogden at al. NCHS Data Brief No. 82 2012. Available at cdc.gov/nchs/data/databriefs/db82. pdf. 2. Must et al. JAMA. 1999 Oct 27; 282(16):1523–9. 3. Gami et al. Endocrinol Metab Clin North Am 2003; 32:869–894 (from 3970 protocol) 4. Young T, Skatrud J, Peppard PE. Risk factors for obstructive sleep apnea in adults JAMA 2004; 29120 13–6. 5. Eheman et al. Cancer. 2012 May 1; 118(9):2338–66. doi: 10.1002/cncr.27514. Epub 2012 Mar 28. 6. Prospective Studies Collaboration. Lancet. 2009; 373:1083–96. 7. Peeters et al. Ann Intern Med. 2003; 138:24–32. 8. World Health Organization. Obesity and overweight. Fact sheet No 311. September 2012. Available at: who.int/mediacentre/factsheets/fs311/en. 9. Tuomilehto et al. N Engl J Med. 2001; 344:1343–50. 10. Knowler et al. N Engl J Med. 2002;346:393–403. 11. Li et al. Lancet. 2008; 371:1783–9. 12. Dattilo & Kris-Etherton. Am J Clin Nutr. 1992; 56:320–8. 13. Dengo et al. Hypertension. 2010; 55:855–61. 14. Felson et al. Ann Intern Med. 1992; 116:535–9. 15. Foster et al. Arch Intern Med. 2009; 169:1619–26. 16. WHO. Factsheet 311. 2011. who.int 17. Williams G and Frühbeck G (eds). Obesity: Science to Practice. John Wiley & Sons, Ltd., 2009. Available at: onlinelibrary.wiley.com/book/10.1002/9780470712221 (last accessed: 7 October 2013). 18. Wren AM and Bloom SR. Gut hormones and appetite control. Gastroenterology 2007; 132:2116–2130. A question of trust: 1. Patient View Quarterly. The Corporate reputation of Pharma – the Patient Perspective Published 14 January 2013. |
Design and production: ADtomic Communications. Accounts and notes: Team2Graphics. Printing: Bording PRO as, February 2014. Photography: ADtomic Communications, BrakeThrough Media, Martin Brinks, Kevin Eilbeck, Ted Fahn, Getty Images, Willi Hansen, Nimish Jain, Martin Juul, David Plakke, Søren Rønholt, Shutterstock, Kasper Veje, Jesper Westley, John Ma Zhuoran and product portfolio. |
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linkedin.com/company/novo-nordisk
NOVO NORDISK ANNUAL REPORT 2013
|
ADDITIONAL
INFORMATION
|
113
|
A selection of Novo Nordisk
injection
devices. From the front: NovoPen®
5,
Tresiba®
FlexTouch®,
Victoza®
and Norditropin®
FlexPro®.
| Diabetes care | |||
| New-generation insulins | |||
| • | Tresiba®, insulin degludec | ||
| • | Ryzodeg®, insulin degludec/insulin aspart | ||
| Glucagon-Like Peptide-1 | |||
| • | Victoza®, liraglutide | ||
| Modern insulins | |||
| • | Levemir®, insulin detemir | ||
| • | NovoRapid®, insulin aspart | ||
| • | NovoMix® 30, biphasic insulin aspart | ||
| • | NovoMix® 50, biphasic insulin aspart | ||
| • | NovoMix® 70, biphasic insulin aspart | ||
| Human insulins | |||
| • | Insulatard®, isophane (NPH) insulin | ||
| • | Actrapid®, regular human insulin | ||
| • | Mixtard® 30, biphasic human insulin | ||
| • | Mixtard® 40, biphasic human insulin | ||
| • | Mixtard® 50, biphasic human insulin | ||
| Diabetes devices | |||
| • |
FlexTouch®, prefilled insulin delivery system |
||
| • |
FlexPen®, prefilled insulin delivery system |
||
| • | NovoPen Echo®, durable insulin delivery system with memory function | ||
| • | NovoPen® 5, durable insulin delivery system with memory function | ||
| • | NovoPen® 4, durable insulin delivery system | ||
| • | InnoLet®, prefilled insulin delivery system | ||
| • | NovoFine® Plus, needle | ||
| • | NovoFine® AutoCover®, needle | ||
| • | NovoFine®, needle | ||
| • | NovoTwist®, needle | ||
| • | GlucaGen®, glucagon | ||
| • | GlucaGen® Hypokit, glucagon | ||
| Oral antidiabetic agents | |||
| • |
NovoNorm®, repaglinide |
||
| • | PrandiMet®, repaglinide/metformin | ||
| Biopharmaceuticals | ||
| Haemostasis | ||
| • | NovoSeven®, recombinant factor VIIa, also available with prefilled syringe in an increasing number of countries | |
| • | NovoThirteen®, recombinant factor XIII | |
| • | NovoEight®, recombinant factor VIII | |
| Human growth hormone | ||
| • | Norditropin®, somatropin (rDNA origin) | |
| • | Norditropin® FlexPro®, prefilled multidose delivery system | |
| • | PenMate®, automatic needle inserter (available for Norditropin® FlexPro®, NordiFlex® and SimpleXx®) | |
| • | Norditropin® NordiFlex®, prefilled multidose delivery system | |
| • | NordiPen®, durable multidose delivery system | |
| • | NordiPenMate®, automatic needle insertion | |
| • | NordiLet®, prefilled multidose delivery system | |
| Hormone replacement therapy | ||
| • | Vagifem®, estradiol hemihydrate | |
| • | Activelle®, estradiol/norethisterone acetate | |
| • | Estrofem®, estradiol | |
| • | Novofem®, estradiol/norethisterone acetate | |
Market data on pp 5, 17, 18, 32, 33, 34, 35 and 41 are from IMS Health, IMS MIDAS Customized Insights (November 2013). Market definition for retail: Algeria, Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, Colombia, Czech Republic, Denmark, Egypt, Estonia, Finland, Germany, Greece, Hungary, India, Ireland, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Saudi Arabia, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, UK and US. Market definition for hospitals: Australia, Bulgaria, Canada, China, Czech Republic, Denmark, Finland, Germany, Hungary, Italy, Japan, Latvia, Lithuania, New Zealand, Norway, Poland, Romania, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, UK and US. Retail data for France are sourced from GERS (November 2013).
IMS Health data coverage for the Federal Facilities channel in the US has changed significantly in the second half of 2013. This may effect the calculation of market share measured in volume but has no material effect on market share measured in value.
NOVO NORDISK ANNUAL REPORT 2013
|
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Cover photo: A resident of Philadelphia, Jesse Crumpler has something in common with 3.7 billion other people: he lives in a big city that is becoming bigger by the day. And like 246 million people living in urban areas, he has diabetes. Sadly, urban living and diabetes go hand in hand. And not much is known about how to change the situation. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized.
| Date: FEBRUARY 5, 2014 |
NOVO NORDISK A/S Lars Rebien Sørensen, Chief Executive Officer |