UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT
OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
FEBRUARY 11, 2008
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
Form
20-F [X]
|
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.
Yes
[ ]
|
No
[X]
|
If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g-32(b):82-_____________________
Performance highlights 2007
2007
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2006
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Change
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Financial
performance
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Sales total |
DKK
million
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41,831 | 38,743 | 8.0% | ||||
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Diabetes care |
DKK
million
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30,478 | 27,866 | 9.4% | ||||
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Of which modern insulins |
DKK
million
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14,008 | 10,825 | 29.4% | ||||
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Biopharmaceuticals |
DKK
million
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11,353 | 10,877 | 4.4% | ||||
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Gross profit |
DKK
million
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32,038 | 29,158 | 9.9% | ||||
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Gross margin |
%
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76.6 | 75.3 | |||||
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Sales and distribution costs |
%
of sales
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29.6 | 30.0 | |||||
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Research and development costs |
%
of sales
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20.4 | 16.3 | |||||
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Research and development costs excl AERx® *) |
%
of sales
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17.2 | 16.3 | |||||
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Administration expenses |
%
of sales
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6.0 | 6.2 | |||||
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Operating profit |
DKK
million
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8,942 | 9,119 | (1.9%) | ||||
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Operating profit excl AERx® *) |
DKK
million
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10,267 | 9,119 | 12.6% | ||||
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Net profit |
DKK
million
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8,522 | 6,452 | 32.1% | ||||
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Effective tax rate |
%
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22.3 | 29.6 | |||||
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Capital expenditure |
DKK
million
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2,268 | 2,787 | (18.6%) | ||||
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Free cash flow |
DKK
million
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9,012 | 4,707 | 91.5% | ||||
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Long-term financial targets | ||||||||
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Operating profit growth |
%
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(1.9 | ) | 12.7 | ||||
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Operating profit growth excl AERx® *) |
%
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12.6 | 12.7 | |||||
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Operating margin |
%
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21.4 | 23.5 | |||||
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Operating margin excl AERx® *) |
%
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24.5 | 23.5 | |||||
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Return on invested capital (ROIC) |
%
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27.2 | 25.8 | |||||
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Cash to earnings |
%
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105.7 | 73.0 | |||||
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Cash to earnings excl AERx® *) |
%
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94.2 | 73.0 | |||||
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Non-financial performance | ||||||||
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Employees |
FTE
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25,516 | 23,172 | 10% | ||||
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Engaging culture (employee engagement) |
Scale
15
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4.1 | 4.0 | |||||
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Employee turnover |
%
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11.6 | 10.0 | |||||
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Employment impact |
Number
of jobs
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81,600 | 82,700 | (1%) | ||||
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CO2 emissions |
1,000
tons
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236 | 229 | 3% | ||||
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Water consumption |
1,000m3
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3,231 | 2,995 | 8% | ||||
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Recycling of waste |
%
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38 | 35 | |||||
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New patent families (first filing) |
Number
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116 | 149 | (22%) | ||||
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Share performance | ||||||||
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Dividend per share (proposed) **) |
DKK
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4.50 | 3.50 | 28.6% | ||||
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Closing share price (B shares) **) |
DKK
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335 | 236 | 41.9% | ||||
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Market capitalisation (B shares) ***) |
DKK
billion
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172 | 124 | 38.7% | ||||
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*)
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Excluding non-recurring costs related to discontinuation of the development of the AERx® inhaled insulin system. | |
**)
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Novo Nordisk B shares were split on 3 December 2007 and ADRs were split on 17 December 2007. | |
***)
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Novo Nordisk B shares (excluding treasury shares). | |
See
more financial and non-financial highlights on pp 5253.
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Readers guide
Novo Nordisks ambition is to defeat diabetes. This report illustrates how our commitment to this goal shapes our work every day across the globe. Welcome to Novo Nordisks Annual Report 2007 a presentation of the companys performance during the year, our achievements and our challenges. It comprises two main elements: the management report (pp 250) and the consolidated financial and non-financial statements (pp 51115). The management
report describes how we do business and explains how we will continue
to create long-term value for shareholders and for other stakeholders.
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In
our selection of themes, we have chosen to focus on presenting the drivers
that will enable Novo Nordisk to pursue our vision and achieve our strategic
objectives: our approach to doing business, our people and the resources
we put into supporting each of the two business segments diabetes
care and biopharmaceuticals. The consolidated financial and non-financial statements give a detailed account of the years performance with comparative data. The financial statements of the parent company are included on pp 105112. References to studies and reports are provided on the inside back flap. To learn more, or to help us turn our vision into reality, please get in touch. |
A
year Therapeutic proteins
take R&D lead |
NovoSeven®
results on ICH |
Funding the future
in China |
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US hiring blitz
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Clinton calls for
change Gore visits Bagsværd
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Expanded Brazil
facility opens Most employees
outside Denmark |
Japanese design captures the spirit of unite for diabetes . | On 14
November blue circles were formed around the world to mark the first UN-observed World Diabetes Day. |
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Welcome to Novo Nordisk | |
02 | United to change diabetes |
04 | Novo Nordisk at a glance |
06 | Leading the Novo Nordisk way |
Landmark renewable
energy alliance |
Board of Directors
visits China |
Clinical trials
and bioethics websites |
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New HRT product
launched |
New pilot plant
in Denmark US insulin filling
capacity doubles |
Buoyant first-half
sales |
Professor Chen Zu of the Chinese Academy of Sciences and Mads Krogsgaard Thomsen, Novo Nordisk chief science officer. |
Monica
Priore, diagnosed with diabetes when she was five, recently swam across
the Strait of Messina in Italy
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3841 | |
Biopharmaceuticals | |
38 | Meeting needs in haemophilia |
40 | Expanding the range of biopharmaceuticals |
4250 | |
Shareholder information | |
42 | Corporate governance |
44 | Executive remuneration |
46 | Board of Directors |
48 | Executive Management |
49 | Shares and capital structure |
51115 | |
Consolidated financial and non-financial statements 2007 | |
52 | Financial and non-financial statements |
54 | Consolidated financial statements |
89 | Consolidated non-financial statements |
105 | Financial statements of the parent company |
113 | Management statement |
114 | Auditors reports |
116 |
Additional information |
Index |
Contacts |
References |
Novo Nordisk key products |
Focus on childhood
diabetes |
Anniversary milestones Changing Diabetes®
Barometer |
Stock split |
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Sustainability
leader |
Biking for a cure
in Death Valley Levemir®
approved in Japan
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First UN-observed
World Diabetes Day
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Liraglutide trial
results
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Novo
Nordisk Annual Report 2007
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1
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Reaching across the globe, Novo Nordisk employees organised human blue circles, gathering more than a quarter of a million people to mark the first UN-observed World Diabetes Day on 14 November 2007. It was a truly magnificent moment and one we are proud to have been part of. Never before have the landmarks of the world been so spectacularly lit up, and never before have so many people been engaged in advocacy to protect current and future generations against one of the biggest public health threats that mankind has ever faced. The power of the possible To defeat diabetes
that is our aspiration and our business. Results For Novo Nordisk,
the year 2007 was yet another year with remarkable progress. Our financial
results and the growth of our business were achieved despite an increasingly
competitive environment and adverse currency exchange rates. This is underpinned
by a solid track record on measures of economic, environmental and social
impact. This was also rewarded: throughout the year, our shareholders
have seen a significant appreciation of their investment in our company.
Globalisation
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and we must strengthen
our global presence to stay competitive and expand the market for our
products and services. Today, the number of Novo Nordisk employees outside
Denmark exceeds that of our Danish organisation. Innovation
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2 | Novo Nordisk Annual Report 2007 |
Welcome to Novo Nordisk | Welcome letter
And
finally, in January 2008, we decided to discontinue the development of
the AERx® inhaled insulin system and focus our research
and development on a new generation of systems for administering long-acting
insulin and GLP-1 via inhalation. Leadership
|
supplies of renewable
energy. It is our ambition that this too may serve as inspiration for
others. We have been active advocates on the international scene, sharing
our experience and supporting coalitions urging immediate and concerted
action. Challenges At the beginning
of 2008, we can confidently say that Novo Nordisk is well-positioned to
meet the challenges posed by our competitive environment and societal
developments. Diabetes care is one of the segments of the pharmaceutical
industry with the highest expected future growth rates. This makes it
attractive to continue to invest in staying ahead in this market.
Thanks We are set on one goal: improving value for patients. Looking back at our achievements in 2007, we believe that we are on the right track. We thank our customers, shareholders and partners for their loyalty and support throughout the year. We also believe that our customers, shareholders and partners share with us a great thanks to our employees for their efforts, their creativity and their dedication that makes Novo Nordisk a very special company.
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Novo
Nordisk Annual Report 2007
|
3
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Welcome to Novo Nordisk | Novo Nordisk at a glance
At 73%
of sales, diabetes care is the main growth driver for Novo Nordisk's business.
Solid growth and efficient production make it possible to invest in building
long-term market presence.
Biopharmaceuticals, the
companys other main business area, accounts for 27% of overall sales.
In this area, which includes NovoSeven®, human growth hormone
and HRT products, Novo Nordisk is also exploring potential new therapies in
areas where significant medical needs exist.
North
America
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International
Operations
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Europe
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Sales:
33% of total sales.
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Sales:
17% of total sales.
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Sales:
39% of total sales.
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Insulin
volume share: 43% of the total market.
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Insulin
volume share: 57% of the total market.
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Insulin
volume share: 57% of the total market.
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Modern
insulin volume share: 31% of the segment.
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Modern
insulin volume share: 54% of the segment.
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Modern
insulin volume share: 50% of the segment.
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People
with diabetes: 21 million people living in the US and Canada
are estimated to have diabetes.
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People
with diabetes: 183 million people living in countries within
International Operations are estimated
to have diabetes.
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People
with diabetes: 34 million people living in Europe are estimated
to have diabetes.
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Performance:
Growth is primarily driven by the complete portfolio of modern insulins,
NovoLog®, NovoLog® Mix 70/30 and Levemir®. Novo Nordisk is
the leader in the US insulin market.
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Performance:
Growth is driven by modern insulins as well as human insulin. China
is a key growth driver, contributing around 50% of the growth in insulin
sales.
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Performance:
Growth is primarily driven by the complete portfolio of modern insulins,
NovoRapid®,
NovoMix® 30 and Levemir®. Novo
Nordisk continues to consolidate its leadership
position in the European insulin market.
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Capacity-building:
90,000 healthcare professionals have been trained or educated through
Novo Nordisks National Changing Diabetes Program®.
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Capacity-building:
134,000 healthcare professionals have been trained or educated through
Novo Nordisks National Changing Diabetes® programmes.
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Capacity-building:
54,000 healthcare professionals have been trained or educated through
Novo Nordisks National Changing Diabetes® programmes.
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Market share data is based
on IMS MAT November volume data.
IMS World now includes certain IO countries.
4 | Novo Nordisk Annual Report 2007 |
Japan & Oceania Sales: 11% of total sales. Insulin volume share: 73% of the total market. Modern insulin volume share: 62% of the segment. People with diabetes: 8 million people living in Japan are estimated to have diabetes. Performance: Growth is primarily driven by the modern insulins NovoRapid® and NovoRapid Mix® 30.With the launch of Levemir® in Japan in December 2007, Novo Nordisk continues to consolidate its strong leadership position in the Japanese insulin market. Capacity-building: 58,000 healthcare profes- sionals have been trained or educated through Novo Nordisks National Changing Diabetes® programmes. |
|
the
world of Novo Nordisk is a
focused healthcare company headquartered in Denmark. With market presence
in 179 countries, and R&D and production facilities spanning five
continents, the companys global reach is expanding. Ownership structure Novo A/S, an unlisted
Danish public limited liability company wholly-owned by the Novo Nordisk
Foundation, holds 25.5% of Novo Nordisks total share capital and
71% of the total number of votes. The Novo Nordisk Foundation is a self-governing
and profit-making foundation, whose purpose is to provide a stable basis
for the commercial and research activities conducted by the companies
within the Novo Group and to support scientific, humanitarian and social
purposes. History Novo Nordisk has
its origins in two Danish companies founded in the 1920s Nordisk
Insulinlaboratorium and Novo Terapeutisk Laboratorium. These two companies,
which merged in 1989 to become Novo Nordisk, independently pioneered several
key breakthroughs in diabetes care during the last century. Both companies
took a broader approach to diabetes: in 1932 Nordisk Insulinlaboratorium
founded the Steno Memorial Hospital and six years later Novo Terapeutisk
Laboratorium established the Hvidøre Diabetes Sanatorium. This
resolve to treat the person and not just the symptoms of the disease is
a forerunner of Novo Nordisks modern-day commitment to sustainable
development and balanced growth. |
Novo
Nordisk Annual Report 2007
|
5
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Welcome to Novo Nordisk | The Novo Nordisk way
The Novo Nordisk Way of Management forms the values-based governance framework for the company. From vision to policies, it describes how people at Novo Nordisk put values into action and defines the principles for how the company does business.
The Novo Nordisk Way of
Management consists of three elements: the Vision, the Charter and global company
policies.
The
Vision sets out the direction for Novo Nordisk. It expresses what Novo
Nordisk is striving for, how the company works and how it is guided by its values
in its endeavours to find the right balance between commercial interests and
acting as a responsible business.
The
Charter describes the companys values, commitments, fundamentals
and follow-up methods. The values underpin the commitments to the Triple Bottom
Line and sustainable development. The fundamentals are a set of 11 management
principles to ensure focus on business objectives, customers, compliance, collaboration
and sharing of better practices, and quality mindset. And the follow-up methods
provide ongoing systematic and validated documentation of performance in all
material areas of Novo Nordisk.
The
global company policies set global standards and give operational guidelines
in 13 specific areas: bioethics, business ethics, communication, environment,
finance, global health, health and safety, information technology, legal, people,
purchasing, quality and risk management.
The Novo Nordisk
Way of Management
The follow-up methodology has four key components which provide assurance to stakeholders of the quality of the companys processes and performance. | ||
Financial and non-financial audit is a systematic methodology to assess performance as accounted for in the annual reporting. Furthermore, Novo Nordisk voluntarily includes independent assurance of the companys non-financial reporting. | ||
Facilitation is a specific follow-up method that is unique to companies in the Novo Group. It is used to provide systematic and validated documentation of the levels of compliance with the Novo Nordisk Way of Management. The global facilitator team consists of senior people with deep insight into the business and the business environment. | ||
Organisational development is assessed through an annual Organisational audit, commissioned by the Board of Directors and Executive Management. This process, conducted at senior management level, includes an assessment of linking business and organisation as well as succession management. | ||
Quality audit monitors adherence to the quality requirements, including quality management systems. It aims to ensure continuous improvements and optimal use of internal standardisation. Quality audit supplements inspections by regulatory bodies. |
Commitments: the Triple Bottom Line
Novo Nordisk is committed
to sustainable development and balanced growth. The principles of sustainable
development to preserve the planet while improving the quality of life
for its current and future inhabitants resonate well with the philosophy
upon which the company was founded and how it does business today: constantly
striving to improve performance as measured by the Triple Bottom Line principle.
In
Novo Nordisks Articles of Association it is stated as the objectives
that the company strives to conduct its activities in a financially,
environmentally and socially responsible way. This implies that any
decision should always seek to balance three considerations: Is it economically
viable? Is it socially responsible? And is it environmentally sound?
This
is the Triple Bottom Line business principle, which ensures that decision-making
balances financial growth with corporate responsibility, short-term gains
with long-term profitability and shareholder return with other stakeholder
interests.
The
Triple Bottom Line is how Novo Nordisk has chosen to interpret its commitment
to sustainable development. It is built into the corporate governance structures,
management tools, individual performance assessments and reward schemes.
Economically
viable means managing the business in a way that ensures corporate profitability
and growth, and seeks to leave a positive economic footprint in the community.
Environmentally sound decisions address the companys impact on the external
environment as well as the bioethical implications of its activities. Socially
responsible implies caring for people. For Novo Nordisk, this applies to the
people who rely on the companys products and to employees. It also considers
the impact of the business on society.
6 | Novo Nordisk Annual Report 2007 |
Employees from Bulgaria volunteer | Managers participate in the Novo Nordisk educational programme | Employees put energy into the | ||
to build a playground at a childrens | Lighthouse to increase their leadership skills. | promise to change diabetes. | ||
hospital. |
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Setting long-term targets
Sustainability
is a moving target. Understanding the dynamics of society and the business
environment that can enhance or impede corporate growth helps identify risks
and opportunities for the company as a commercial business and as a corporate
citizen. Such insights are gained via trendspotting, scenario analyses and
forecasting in a 10-year perspective as part of the Strategic Planning Process
(see pp 89). This translates into medium- and short-term priorities and targets for the companys financial and non-financial performance. Novo Nordisk has adopted the Balanced Scorecard as the company-wide management tool for measuring progress. As part of the remuneration package, individuals are rewarded for performance that meets or exceeds |
the financial and non-financial targets in the Balanced Scorecard, which comprise corporate, unit-specific and individual targets. Progress is tracked against targets in the annual accounts. Financial performance is guided by a set of four long-term targets focusing on growth, profitability, financial return and cash generation (see p 10). Non-financial performance is guided by measures for the companys impacts on the Triple Bottom Line. These include socio-economic impacts such as job creation, the ability to manage environmental impacts and optimise resource efficiency, and social impacts related to employees, patients and communities (see pp 14 and 9394). |
Guided The ambition to ultimately defeat diabetes is at the core of the companys vision. It is a business proposition and the main driver for Novo Nordisks contribution to sustainable development. Good health is a driver of economic growth and a prerequisite for achieving greater |
social equity. Serving
unmet medical needs also motivates the aspiration to offer products and
services in areas that make a difference. |
they do. Offering
an inspiring place to work attracts and retains talented people and is
a key factor for long-term success in an increasingly competitive business
environment. |
We will be the worlds leading diabetes care company Our aspiration is to defeat diabetes by finding better methods of diabetes prevention, detection and treatment. We will work actively to promote collaboration between all parties in the healthcare system in order to achieve our common goals. |
We will offer products and services in other areas where we can make a difference Our research will lead to the disco very of new, innovative products, also outside diabetes. We will develop and market such products ourselves whenever we can do it as well as, or better than, others. |
We will achieve competitive business results Our focus is our strength. We will stay independent and form alliances whenever they serve our business purpose and the cause we stand for. |
A job here is never just a job We are committed to being there for our customers whenever they need us. We will be innovative and effective in everything we do. We will attract and retain the best people by making our company a challenging place to work. |
Our values are expressed in all our actions Decency is what counts. Every day we strive to find the right balance between compassion and competitiveness, the short and the long term, self and commitment to colleagues and society, work and family life. |
Novo
Nordisk Annual Report 2007
|
7
|
Business results | Strategy and risks
business
strategy,
opportunities
and key risks
In the face of intensified competition the leadership challenge is to stay focused on pursuing long-term objectives for value creation and overcoming barriers to sustainable growth. Novo Nordisk is a
focused healthcare company. This focus underlines the companys claim
to leadership in its markets. Novo Nordisk offers therapies in areas where
significant unmet medical needs remain: diabetes care, haemostasis management,
growth hormone deficiency and hormone replacement therapy. Diabetes care Strategic objective:
maintaining leadership Novo Nordisk offers a full portfolio of modern
insulins and has a strong pipeline with a late-stage product candidate
that the company hopes will meet current and future needs. The company
has sufficient production capacity to scale up deliveries, and a well-tuned
sales force in place globally. Moreover, significant investments in diabetes
research make Novo Nordisk the largest player in this field. Growth drivers and risk factors The market for diabetes care is growing rapidly. It is also becoming increasingly competitive as new products
|
and biosimilar products
become available. Competing under such conditions hinges on the ability
to offer superior products and to effectively convey the value proposition
to customers and healthcare professionals. Delay or failure of key development
projects would impair Novo Nordisks ability to successfully market
current and new products. Causes of delay may include slow recruitment
for clinical trials, safety or efficacy concerns, filing delay or insufficient
production capacity. Our core competences are in therapeutic proteins, and this is where we can make the greatest difference in driving company growth and achieving better outcomes for people whose healthcare needs we serve. Lars
Rebien Sørensen Barriers
to success include customers willingness and ability to pay. Ageing
populations in the developed parts of the world have led to increased
pressure on healthcare costs, and governments seek to cut prices and do
not offer premiums for new, innovative products. This development threatens
to undermine the profitability of bringing improved treatments to market.
In contrast, in the developing parts of the world the challenge is to
provide access to medicines and to healthcare. Biopharmaceuticals Strategic objective:
expand the business With a solid range of therapeutic products, the
strategy for biopharmaceuticals is to expand the business by pursuing
new indications and exploring new potential in other areas where Novo
Nordisk can make a difference. |
8 | Novo Nordisk Annual Report 2007 |
Representatives from the External Affairs network in Novo Nordisk. | Building on research and development to change diabetes. | |
|
|
|
Growth drivers
and risk factors Given the nature of indications investigated and
the limited number of patients for whom treatment is relevant, conducting
clinical trials is cumbersome and time-consuming. At the same time, the
risk of failure is great, and even when results are positive there is
no guarantee of commercial viability. Still, Novo Nordisk is committed
to pursuing treatment options if there is a sufficiently well-founded
hypothesis that the compound could benefit patients. As with diabetes
care, delay or failure of key development projects would impair Novo Nordisks
ability to successfully market current and new products. Facing industry challenges The pharmaceutical
industry is subject to extensive regulation, which aims to ensure patient
safety, but also increases costs. The approval process for new products
is generally lengthy, expensive and subject to unanticipated delays. Sustaining
revenue growth therefore also depends on the timely and successful approval,
introduction and marketing of new products, as well as gaining approval
for existing products for new indications. On a path of continued growth In recent years,
Novo Nordisk has grown at a rate that generally outperforms peers in the
pharmaceutical industry. |
Quality
is paramount in pharmaceutical production. Quality failures could jeopardise
patients well-being and would entail major reputational risks as
well as risks of costly compensation payments. With an aim to mitigate
this Novo Nordisk has a global quality system in place, with audits, improvement
plans and management reviews. Managing risks Novo Nordisk defines
risks as events or developments which could reduce our ability to
meet our overall objectives. This includes both financial and non-financial
risks that could affect the company throughout its value chain: from discovery
and development, through manufacturing, sales and support functions.
|
Novo
Nordisk Annual Report 2007
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9
|
Market shares are based on IMS MAT November 2007 volume data. |
Novo Nordisk is on a solid growth track. In 2007, the results testified to a robust sales growth in all major markets for the portfolio of modern insulins supported by productivity improvements. Sales increased by
13% in 2007 in local currencies and by 8% in Danish kroner due to a significant
negative currency development. This result is in line with the expected
growth in reported sales of 69%, communicated in connection with
the release of financial results for the third quarter of 2007. The primary
growth contribution came from the robust market penetration of the companys
modern insulins NovoRapid®, NovoMix® and
Levemir® in all markets. Sales of modern insulins
increased by 35% (29% in Danish kroner). |
lower than in 2006)
was impacted by the non-recurring cost of DKK 1,325 million following
the decision to discontinue the development of AERx®,
the companys pulmonary insulin delivery system, communicated to
the market in January 2008. This is significantly below the expectations
of growth in operating profit of close to 10% as reported,
communicated at the end of the third quarter of 2007. Adjusted for the
non-recurring costs related to the discontinuation of AERx®,
operating profit growth was 13%. |
10 | Novo Nordisk Annual Report 2007 |
Business results | Financial and non-financial performance
closer to the long-term
target of 30%. This was achieved through a solid growth in the underlying
profit combined with a modest growth in invested capital as a result of
reduced unit costs on inventory, and lower investments in tangible assets. Diabetes care Novo Nordisk retained its position as global leader, with 53% of the total insulin market and 43% of the modern insulin market, both measured by volume. The company is determined to sustain its leadership in diabetes care by leveraging the value of its full portfolio of modern insulins and delivery devices while developing new antidiabetic agents and next-generation insulins to better address future needs for effective diabetes care. See pp 2637. Sales performance Modern insulins,
human insulins and insulin-related products North America |
set to work on promoting the companys portfolio of modern insulins across the US. Europe International
Operations Japan & Oceania Oral antidiabetic
products (NovoNorm®/Prandin®) Biopharmaceuticals Novo Nordisk is seeking to expand its leading positions within the biopharmaceuticals therapy areas by pursuing new indications for its existing product range and by exploring new potential proteins in other areas. See pp 3841. Sales performance NovoSeven®
|
Novo
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11
|
Market shares are based on IMS MAT November 2007 volume data. |
cies and by 4% in Danish kroner to DKK 5,865 million compared to 2006. This sales growth, driven by sales in North America, primarily reflected increased sales within the congenital bleeding disorder segments, where Novo Nordisk is the global leader. Treatment of spontaneous bleeds for congenital inhibitor patients remains the largest area of use. Growth hormone
therapy (Norditropin®) Other products Pipeline progress Operating
performance |
management and other
senior employees (around 525 in total) amounting to DKK 130 million.
The comparable expense for 2006 was DKK 113 million (around 425 participants
in total). Net financials
and tax Capital expenditure
and free cash flow |
12 | Novo Nordisk Annual Report 2007 |
Business results | Financial and non-financial performance
ty, as well as the
expansion of the purification and filling capacity for insulin products.
The realised capital expenditure was slightly lower than the previously
communicated expectation of around DKK 2.5 billion. Equity Proposed dividend
Share repurchase programme
Holding of treasury
shares and reduction of share capital |
share capital will amount to DKK 634,000,000 divided into an A share capital of DKK 107,487,200 and a B share capital of DKK 526,512,800. Legal issues
Long-term incentive programmes Novo Nordisks remuneration policy aims to attract, retain and motivate members of the Board of Directors and Executive Management of Novo Nordisk. See pp 4445. Novo Nordisk will present for approval at the Annual General Meeting in 2008 its guidelines for incentive-based remuneration for the Board of Directors and Executive Management of Novo Nordisk. Long-term share-based
incentive programme for senior management Long-term share-based
incentive programme for vice presidents
|
Novo
Nordisk Annual Report 2007
|
13
|
|
gramme, based on
similar performance criteria as the programmes for senior management.
The pool will operate with a maximum contribution per participant equal
to four months fixed base salary. The shares in the pool are also
locked up for a three-year period before they potentially may be transferred
to the participants. Non-financial performance In 2007, Novo Nordisk continued to perform well in terms of managing direct and indirect economic, environmental and social impacts in areas of strategic importance. The Triple Bottom Line approach aims to deliver long-term value to the business and contribute to global society. See p 53 for an overview of non-financial measures. Economics
Environment
|
parison to sales
growth there is a continued positive development from 2003 to 2007. Social |
14 | Novo Nordisk Annual Report 2007 |
Business results | Outlook and forward-looking statement
Novo Nordisk expects slightly more than 10% growth in sales measured in local currencies for 2008.
This is based on expectations
of continued market penetration for Novo Nordisks key strategic products
within diabetes care and biopharmaceuticals, as well as expectations of increased
competition during 2008.
Given
the exchange rates prevailing on 28 January 2008, the reported sales growth
in 2008 is expected to be around 3.5 percentage points lower than the growth
rate measured in local currencies.
For
2008, reported operating profit is expected to increase by at least
25% despite the negative currency environment. The guidance for reported operating
profit for 2008 includes an estimate of non-recurring costs of DKK 300 million
in relation to the discontinuation of AERx® to cover severance
payments and other costs. Adjusting for the impact from currency and the non-recurring
costs in 2007 and 2008 related to the discontinuation of AERx®,
underlying operating profit is expected to grow by at least 20%.
For
2008, Novo Nordisk expects a net financial income of DKK 450 million,
reflecting significant foreign exchange hedging gains, primarily related to
the US dollar.
The
effective tax rate for 2008 is expected to be approximately 24%.
Capital
expenditure is expected to be around DKK 2.5 billion in 2008. Expectations
for depreciations, amortisation and impairment losses are around DKK
2.5 billion, and free cash flow is expected to be around DKK 7.5 billion.
All of the above expectations are provided that currency exchange rates, especially the US dollar and related currencies, remain at the level prevailing on 28 January 2008. All other things being equal, movements in key invoicing currencies will impact Novo Nordisks operating profit as illustrated below:
Invoicing currency
Annual
impact on Novo Nordisks operating profit
|
|
of
a 5% movement in currency
|
|
|
|
USD | DKK 470 million |
JPY | DKK 140 million |
GBP | DKK 85 million |
USD-related* | DKK 100 million |
|
|
* For 2008 onwards the currency sensitivity for USD-related currencies | |
has been focused to solely reflect the impact from CNY and CAD. |
Novo Nordisk has hedged expected net cash flows in relation to US dollars, Japanese yen and British pounds for 17, 15 and 10 months respectively. The financial impact from foreign exchange hedging is included in Net financials.
Novo Nordisks reports
filed with or furnished to the US Securities and Exchange Commission (SEC),
including this document and the companys Form 20-F expected to be filed
with the SEC in February 2008, 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 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 plans, objectives or goals for future operations, including those related to Novo Nordisks products, product research, product introductions and product approvals as well as cooperations in relation thereto, |
statements containing projections of revenues, income (or loss), earnings per share, capital expenditures, dividends, capital structure or other net financials, | ||
statements of future economic performance, future actions and outcome of contingencies such as legal proceedings, and | ||
statements of the assumptions underlying or relating to such statements. |
In this
document, examples of forward-looking statements can be found under the headings
Business strategy, opportunities and key risks, Performance
in 2007, Outlook for 2008 and note 31, Financial Risk,
on p 76.
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
cur-
rency exchange rate fluctuations,
delay or failure of development projects, unplanned loss of patents, interruptions
of supplies and production, product recall, unexpected contract breaches or
terminations, government-mandated or market-driven price decreases for Novo
Nordisks products, introduction of competing products, reliance on information
technology, Novo Nordisks 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
on pp 89.
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.
Novo
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||||
Therapeutic area | Compound/product | Description |
Diabetes care | ||||
|
||||
Insulin | NovoMix® 50/70 | Premixed formulations of the rapid-acting modern insulin, insulin aspart. Provide a combined rapid- and intermediate-acting insulin effect at the ratio 50/50 or 70/30. | ||
|
||||
NN5401 | A next-generation modern insulin. | |||
|
||||
NN1250 | A next-generation modern insulin. | |||
|
||||
GLP-1 |
Liraglutide | A once-daily analogue of human GLP-1 stimulating the release of insulin only when glucose levels become too high, and inducing weight loss. | ||
|
||||
Liraglutide | A once-daily analogue of human GLP-1 stimulating the release of insulin only when glucose levels become too high, and inducing weight loss. | |||
|
||||
Once-weekly GLP-1 | A once-weekly analogue of human GLP-1. | |||
|
||||
Oral | PrandiMet | A single tablet formulation combining the short-acting insulin secretagogue repaglinide with an insulin-sensitising agent, metformin. | ||
|
Biopharmaceuticals
|
||||
Haemophilia | rFVIIa Temperature stable |
A temperature-stable recombinant factor VIIa. | ||
rFVIIa Short-acting analogue |
A single-dose, short-acting rFVIIa analogue, a next-generation successor to NovoSeven®. | |||
|
||||
rFVIIa Long-acting analogue |
A long-acting rFVIIa analogue, a next-generation molecule targeting prophylactic therapy. | |||
|
||||
rFVIIa | A subcutaneous formulation of rFVIIa for the treatment of haemophilia patients | |||
Subcutaneous | with inhibitors. | |||
|
||||
Haemostasis | NovoSeven® Novo Nordisks recombinant blood clotting factor VIIa |
The efficacy and safety of NovoSeven® is tested on severe bleeding in trauma patients. | ||
|
||||
The efficacy and safety of NovoSeven® is tested in spinal surgery patients. | ||||
|
||||
The efficacy and safety of NovoSeven® is tested in cardiac surgery patients. | ||||
|
||||
rFXIII | A recombinant blood clotting factor XIII. | |||
|
||||
Growth disorders | Norditropin® | The efficacy of Novo Nordisks Norditropin® in reducing mortality is tested in adult patients in chronic dialysis treatment. | ||
|
||||
Long-acting | A long-acting human growth hormone. | |||
human growth hormone | ||||
|
||||
Hormone replacement therapy | Vagifem® low dose |
A low-dose product for vaginal application intended for effective relief of symptoms associated with vaginal dryness. | ||
|
||||
Activelle® low dose |
A low-dose continuous-combined product. | |||
|
||||
Oncology | IL-21 | Interleukin 21 is an immuno-stimulatory protein that helps the immune system attack tumour cells. | ||
|
||||
Anti-KIR | A first-in-class therapeutic antibody that stimulates the bodys own immune system to kill cancer cells. | |||
|
16 | Novo Nordisk Annual Report 2007 |
Indication
|
Phase
1
|
Phase 2 | Phase 3 |
Filed
|
|
|
|||||
Type 1 and type 2 diabetes | |||||
|
|||||
Type 1 and type 2 diabetes | |||||
|
|||||
Type 1 and type 2 diabetes | |||||
|
|||||
Type 2 diabetes | |||||
|
|||||
Obesity | |||||
|
|||||
Type 2 diabetes | |||||
|
|||||
Type 2 diabetes | |||||
|
|||||
Haemophilia patients with inhibitors |
|||||
|
|||||
Haemophilia patients with inhibitors |
|||||
|
|||||
Haemophilia patients with inhibitors |
|||||
|
|||||
Haemophilia patients with inhibitors |
|||||
|
|||||
Bleeding in emergencies, trauma | |||||
|
|||||
Bleeding during spinal surgery | |||||
|
|||||
Bleeding during cardiac surgery | |||||
|
|||||
Bleeding during cardiac surgery | |||||
|
|||||
Adult patients in
chronic dialysis (APCD) |
|||||
|
|||||
Growth disorders | |||||
|
|||||
Topical hormone replacement therapy |
|||||
|
|||||
Hormone replacement therapy | |||||
|
|||||
Malignant melanoma | |||||
|
|
|
|
|
|
Renal cell carcinoma | |||||
|
|
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Ovarian cancer | |||||
|
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|
|
|
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Colorectal cancer | |||||
|
|||||
Acute myeloid leukaemia (AML) | |||||
|
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Multiple myeloma | |||||
|
pipeline
overview
Novo Nordisks research and development efforts focus on offering superior therapies that help save peoples lives or improve their quality of life.
The strategy is to address unmet medical needs by leveraging the companys core capabilities within diabetes research, protein engineering, expression, formulation and delivery.
In diabetes care the aim is to maintain the companys position as the world leader. In biopharmaceuticals the aims are to expand the franchise within haemostasis and growth hormone deficiency, and to build a presence in inflammation.
See more at novonordisk-trials.com
The website includes results from clinical trials finalised after October 2002 for Novo Nordisk-marketed products and all Novo Nordisks efficacy clinical trials in phases 24. As of mid-2008, all phase 1 trials will be posted. In 2007, phase 1 trials were registered upon requirement by authorities and/ or journal editors as a prerequisite for publication.
See current pipeline
overview
novonordisk.com/science/pipeline
Phase
1
Studies in a small group
of healthy volunteers, and sometimes patients, usually between 10 and 100,
to test a new drug for best dosage and potential side effects.
Phase
2
Testing a drug at various
dose levels in a larger group of patients to learn about side effects, the
bodys use of the drug and its effect on the condition.
Phase
3
Studies in large groups
of patients worldwide, comparing the new medication with a commonly used drug
or placebo for both safety and efficacy.
Filed
A New Drug Application
is submitted for review by various government regulatory agencies.
Novo
Nordisk Annual Report 2007
|
17
|
Phase
1 Studies in a small group of healthy volunteers, and sometimes patients, usually between 10 and 100, to test a new drug for best dosage and potential side effects. |
ññ
| Phase
2 Testing a drug at various dose levels in a larger group of patients to learn about side effects, the bodys use of the drug and its effect on the condition |
||||
Type
2 diabetes Once-weekly GLP-1 analogue Once-weekly GLP-1 human analogue for people with type 2 diabetes is being tested in a phase 1 study initiated in 2007 by Novo Nordisk. With the aim of assuming a leadership position also in the GLP-1 segment, Novo Nordisk is building a portfolio of GLP-1 products. |
||
Haemophilia
patients with inhibitors rFVIIa long-acting analogue In 2007, Novo Nordisk initiated a phase 1 study of its long-acting recom-binant factor VIIa analogue. The analogue is a potential next-generation successor to NovoSeven® in the treatment of haemophilia patients with inhibitors. With its long duration of action it is intended to enable preven-tion of bleeding for the patient. rFVIIa for subcutaneous administration In 2007, Novo Nordisk initiated a phase1 study of a subcutaneous formu-lation of rFVIIa for the treatment of haemophilia patients with inhibitors. The subcutaneous administration is expected to provide con-venience to patients as the current haemophilia treatment regimen is delivered intravenously. |
||
Growth
disorders Long-acting human growth hormone In 2007, Novo Nordisk initiated a phase 1 study of a long-acting human growth hormone. The product is intended to provide patients with the convenience of fewer injections. |
||
Immunotherapy Anti-KIR Anti-KIR is a first-in-class therapeutic antibody that entered phase 1 studies in AML and multiple myeloma aimed at stimulating the body's natural killer cells to eradicate tumour cells. Novo Nordisk expects to outlicense Anti-KIR |
||
Type
1 and type 2 diabetes NN1250 NN1250 is a neutral, soluble, long-acting insulin analogue with improved properties. It entered phase 2 in January 2008. NN5401 NN5401 is a neutral, soluble, insulin analogue with improved properties. It entered phase 2 in January 2008. |
||
Haemophilia patients
with inhibitors rFVIIa short-acting analogue (NN1731) In 2007, Novo Nordisk moved its fast-acting recombinant factor VIIa ana-logue into phase 2. The analogue is a next-generation successor to NovoSeven® in the treatment of haemophilia patients with inhibitors. From a single dose its fast haemostatic effect is intended to provide faster cessation of bleeding and pain relief for the patient. |
||
Haemostasis NovoSeven® cardiac surgery Preliminary results of this phase 2 study confirm the safety profile known from the cardiac surgery setting and from other studies of NovoSeven® outside of haemophilia with inhibitors. While the primary aim of this trial was safety, the trial also demonstrated the biologic haemostatic effect of NovoSeven®. NovoSeven® spinal surgery Novo Nordisk completed its phase 2 study in spinal surgery trial in 2006 and the project has been on hold in 2007, pending detailed analysis of the results from the cardiac surgery phase 2 trial. NovoSeven® traumatic brain injury Given the results obtained in the intracerebral haemorrhage study, Novo Nordisk decided not to pursue this indication further. |
||
Immunotherapy IL-21 IL-21 has shown early signs of biological activity in trials with renal cell carcinoma and malignant melanoma. Further phase 1/2 investigations are ongoing. Novo Nordisk expects to outlicense IL-21. |
||
18 | Novo Nordisk Annual Report 2007 |
Pipeline | Progress
Phase
3 Studies in large groups of patients worldwide, comparing the new medication with a commonly used drug or placebo for both safety and efficacy. |
ññ
| Regulatory
approval Following successful completion of phase 3 studies, compounds are sub-mitted for review by national or regional government regulatory agencies. Following regulatory approval the products can be marketed. |
||||
Type
2 diabetes Liraglutide Liraglutide is Novo Nordisks once-daily human analogue of the naturally occurring GLP-1 hormone. In 2007, Novo Nordisk completed five major phase 3 trials in the LEAD (Liraglutide Effect and Action in Diabetes) development programme, and regulatory submission is expected by mid-2008 in Europe and the US. The progress and clinical results of the LEAD trials were encouraging. See more on pp 3233. In 2007, Novo Nordisk successfully completed the phase 2 study of liraglutide as an antiobesity treatment for obese, non-diabetic people. |
||
Type
1 and type 2 diabetes AERx® iDMS Novo Nordisk has decided to refocus its activities within inhaled insulin and to discontinue clinical development of AERx® iDMS insulin, which was in phase 3 development. The decision was based on a detailed analy-sis of the future prospects for inhaled insulin and a review of the medical and commercial potential of the AERx® inhaled insulin system. The deci-sion to discontinue the development of AERx® was not due to safety concerns. |
||
Haemostasis NovoSeven® intracerebral haemorrhage In 2007, Novo Nordisk completed the phase 3 study with NovoSeven® in patients suffering from a bleeding in the brain, intracerebral haemorrhage. The trial showed that treatment with NovoSeven® significantly reduced intracerebral bleeding compared to placebo treatment. Improvement in clinical outcomes in terms of functional independence and neurological impairment was observed on day 15 after the bleeding, but mortality and severe disability were not improved at the end of the study period (day 90). With regard to safety, study results were in line with the established safety profile of NovoSeven®. Novo Nordisk decided not to file for regula-tory approval. NovoSeven® trauma In 2007, Novo Nordisk continued its phase 3 study with NovoSeven® in severe bleeding in patients suffering a trauma. The phase 3 trial is expected to be completed in 2010. |
||
Growth
disorders Norditropin® adult patients in chronic dialysis In 2007, Novo Nordisk initiated a global phase 3 study for the treatment of adult patients in chronic dialysis (APCD) with its human growth hor-mone Norditropin®. The 2,500 patients will be treated for two years. |
||
Hormone
replacement therapy (HRT) Vagifem® low dose In 2007, Novo Nordisk successfully completed the US phase 3 study of Vagifem® low dose, a topical product for vaginal application. The product is now filed for regulatory approval in the US. A phase 3 study with Vagifem® low dose is ongoing in the EU. |
||
Type
1 and type 2 diabetes Levemir® Levemir® is Novo Nordisks long-acting modern insulin. In 2007, the prod-uct was approved and launched in Japan. This completed the launch of the companys full portfolio of modern insulins in Europe, the US and Japan. In total, Levemir® has now been launched in 61 countries. Furthermore, the European Commission approved Levemir® for use in combination with oral antidiabetics. NovoRapid® NovoRapid®, Novo Nordisks fast-acting modern insulin, was approved for elderly people by the European Commission. NovoMix® 50/70 Following European approval, the two modern premixed insulins were launched in the first European countries in 2007. These insulins contain a higher proportion of short-acting insulin compared to the modern pre-mixed insulin NovoMix® 30. In Japan, NovoMix® 70 was filed for approval in December 2007. |
||
Type
2 diabetes
NovoNorm® Fixed Combo, PrandiMet In 2007, Novo Nordisk filed a New Drug Application in the US for NovoNorm® Fixed Combo, PrandiMet. The product combines in a sin-gle tablet formulation the short-acting insulin secretagogue repaglinide with an insulin-sensitising agent, metformin. Novo Nordisk further grant-ed Sciele exclusive US marketing rights to the product in 2007. This completed Novo Nordisks research and development activities within the oral antidiabetics segment as all other small-molecule projects were discontinued and existing projects divested in 2007. Novo Nordisk took this step to dedicate its resources to protein-based pharmaceuticals. |
||
Haemophilia
patients with inhibitors NovoSeven® single dose NovoSeven® single dose for haemophilia patients with inhibitors was approved by the European Commission and subsequently launched. The treatment regimen is dosed at 270 microgrammes per kilogramme body-weight and is expected to offer patients protection of veins, fewer injec-tions and less interruption to daily life. rFVIIa temperature stable rFVIIa temperature stable was filed for regulatory approval in Europe, the US and Japan in 2007. A temperature-stable product is expected to deliv-er significant patient benefits, including rapid dosing and ease of access to treatment outside of home or hospital settings. |
||
Growth
disorders Norditropin® Norditropin® was approved for Noonan syndrome and Turner syndrome in the US. The accessory NordiFlex PenMate® was also approved in the US. |
||
Hormone
replacement therapy (HRT) Activelle® low dose In addition to the approval in the US in late 2006, the Activelle® low-dose version was approved by the Swedish regulatory authorities in 2007 and the mutual recognition procedure is now ongoing in Europe. |
||
Novo
Nordisk Annual Report 2007
|
19
|
Concentrated effort to drive progress through the pipeline. | Some 4,200 new employees joined Novo Nordisk in 2007. | ||
|
|
20 | Novo Nordisk Annual Report 2007 |
Clinical trials require meticulous measurement. | CEO Lars Rebien Sørensen visits the Naivasha District Hospital in Kenya. | |
|
|
|
effective tools in broadening the portfolio of haemophilia and haemosta-sis projects. Partnerships can be cost-effective methods of leveraging expertise, and we intend to avail ourselves of more such opportunities, says Lars Rebien Sørensen. More regulatory pressure At the same time as competition between pharmaceutical companies is intensifying, regulatory authorities are exerting more pressure on the industry. Companies are being asked for greater proof that new compounds submitted for approval have a benefit over products already available. This includes requests for more safety data, which is also made publicly available, as well as a demand that companies continuously Compared with many of our peers, we are in a fortunate position. Our top-line performance is strong, productivity in the pipeline is high, we are relatively well protected against patent expiries, and our production capacity and sales forces are geared for continued expansion. Lars Rebien Sørensen president and chief executive officer track the safety and efficacy of products after they are marketed by way of phase 4 studies. Such requirements are being harmonised internationally, increasing the scale and complexity of clinical trials. Novo Nordisk uses its experience and knowledge within its core therapeutic areas to work together with authorities to design studies that address these concerns. Consistently high ethical standards within clinical trials and transparency on clinical trial results are key to the companys approach. Demonstrable value for money required Healthcare costs are rising, with governments and payers straining to meet the needs of the growing disease burden. Healthcare spending has historically outpaced economic growth everywhere in the world, a trend set to continue. The total global expenditure for healthcare is |
4
trillion US dollars, according to the World Health Organization. The cost
burden is prompting governments and payers to look more closely at the
value of pharmaceutical products. While spending on medicines has gone
up as part of the overall healthcare bill, medicines share of healthcare
spending remains very small about 10 cents of every dollar spent
in the US on healthcare, for example.
Ethical conduct is a business imperative Ethical,
social and governance issues are also gaining greater prominence. Increasingly,
investors and customers expect evidence of ethical behaviour in all aspects
of business, including the conduct of clinical trials and the promotion
and marketing of products. Stakeholders are looking at companies
ability to handle such issues consistently across diverse markets. Well
before this trend became common currency, Novo Nordisk formulated its
Way of Management (see p 6). This blueprint, with its clear description
of core values, implies that the challenges faced by the industry are
best resolved by working in partnership with governments, regulators and
the healthcare community to meet the worlds healthcare needs. The
company-wide implementation of a business ethics policy underpins this
values-based approach. |
|
Novo
Nordisk Annual Report 2007
|
21
|
Leif
Henriksen and Peter Jacobi at Biopharmaceuticals, Gentofte, Denmark. They and their colleagues have optimised energy and water consumption and reduced CO2 emissions from 2004 to 2007 by 9.5%. |
|
22 | Novo Nordisk Annual Report 2007 |
On
30 November 2007, some 70 investors and analysts visit Kalundborg, Denmark site of the worlds largest insulin plant and the facility that will soon produce liraglutide. |
Lars
Clausen, executive vice president, DONG Energy, and Lise Kingo, executive vice president and COS, Novo Nordisk, seal their ambitious wind power deal with a handshake. |
||
able
to shorten analysis time by more than 25% by turning the spotlight on
one of the invisible tasks easily overlooked in the busy daily
routine. The key to the results was performance management and immediate
follow-up. Production efficiency accelerates CO2 reduction At
the same time, production efficiency underpins Novo Nordisks climate
strategy and contributes to lowering the levels of CO2 emissions.
The company has set an ambitious target, as part of its commitment to
the WWF Climate Savers programme, to reduce CO2 emissions in
2014 to a level that is 10% below the 2004 level, despite a significant
production increase. An innovative partnership for wind power In
2007, Novo Nordisk entered into a pioneering agreement with DONG Energy,
Denmarks largest energy company: DONG Energy assists Novo Nordisk
in identifying energy-saving options and in return Novo Nordisk will purchase
corresponding quantities of energy from a new offshore wind farm off the
west coast of Denmark.
|
From 2014, Novo Nordisk is expected to purchase about a third of the total energy produced by the wind farm. The aim is that, by then, electricity supplies for Novo Nordisks facilities in Denmark, which currently account for 85% of the companys total CO2 emissions, will be entirely based on power from this wind farm. The partnership will run till 2020. A quality mindset In
times of increased regulatory pressure for the pharmaceutical industry
to meet high safety and quality standards, emphasis on quality goes hand
in hand with effective and efficient production. More stable processes
serve to ensure product quality. We are doing more with less, quite simply. Low unit costs allow us to invest more in research and development and in sales and marketing. This is what will keep us strong in the long run, and its a very motivating message to our employees. Per
Valstorp At Novo Nordisk, cLEAN® in manufacturing is an expression of the Quality Mindset, one of the fundamental management principles in the Novo Nordisk Way of Management: Everyone must continuously improve the quality of their work. The robust quality system at Novo Nordisk has resulted in a consistently high level of performance regarding the quality of the companys products as well as compliance in the manufacturing of products. Novo Nordisks production is generally in compliance with international standards for current good manufacturing practice (cGMP). In 2007, more than 70 inspections by various health authorities or certifying bodies were passed. |
|
Novo
Nordisk Annual Report 2007
|
23
|
Business environment | Values in action
24 | Novo Nordisk Annual Report 2007 |
Business environment | People
Promoting a healthier lifestyle The NovoHealth programme, aimed at preventing lifestyle diseases among employees, is now a global effort. This programme encourages and supports a healthy lifestyle by offering access to healthy food in the workplace, a |
smoke-free
work environment, exercise and individual health checks every second year. See
more on people and workplace at novonordisk.com/sustainability
|
Novo
Nordisk Annual Report 2007
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25
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US ballerina Zippora Karz dances on despite diabetes. |
Times
Square, New York, on World Diabetes Day, 14 November.
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26 | Novo Nordisk Annual Report 2007 |
Denise
Cleary is a diabetes sales representative in Newfoundland and Labrador on the east coast of Canada. |
270
cyclists, including 25 Novo Nordisk employees, joined the 10th
Ride to Cure Diabetes in Death Valley, California, on 20 October. |
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|
convince
governments and international organisations of the need to give diabetes
priority. Secondly, to drive health outcomes for people with diabetes.
And thirdly, to mobilise political support to break the curve of the global
diabetes pandemic. Leadership in action: sustainable health policy As
part of its collaborative, multi-stakeholder approach to changing dia
betes, Novo Nordisk held the first Global Changing Diabetes®
Leadership Forum in March 2007. The Forums ambition was to
translate the UN Resolution on diabetes, adopted by the United Nations
General Assembly in December 2006, into national action plans for the
prevention, treatment and care of diabetes. |
We have a medical ambition to improve patient outcomes by focusing on transparency and measurability to drive change. The Changing Diabetes® Barometer will guide our efforts towards our ultimate goal of allowing all patients to have an HbA1c below 7%. Jakob
Riis global
tool that would track and measure best performance in the prevention, treatment
and care of diabetes worldwide. What you can measure, you can manage,
Lars Rebien Sørensen elaborated. Barometer: tracking performance In
November 2007, Novo Nordisk launched the global Changing Diabetes®
Barometer2). It identifies diabetes indicators such as
the HbA1c test of blood sugar level, using published data.
The Barometer aims
to provide a scorecard for tracking change and pinpointing areas in need
of improvement so that healthcare providers, governments and patient associations
are better able to measure progress and set priorities for national diabetes
action plans. |
Novo
Nordisk Annual Report 2007
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27
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Diabetes care | Changing diabetes
adequately
and diagnosed earlier, before any complications arise. The report found
that10 of the 21countries did not have a national diabetes strategy in
2007. Seven countries lacked data
on important treatment indicators such as HbA1c, blood pressure
and lipids levels, and only a couple of countries had systems in place
enabling registration of data on key treatment indicators and consistent
follow-up on a national scope. The cost of inaction Inaction
is far costlier to society than investing today in better diabetes diagnosis,
treatment and prevention. That was a key conclusion of The Silent Epidemic3),
an economic study of diabetes in developed and developing countries carried
out by the Economist Intelligence Unit (EIU) and sponsored by Novo Nordisk. |
86,000 |
Novo
Nordisk is undertaking several socio-economic studies to examine the burden
of diabetes and the costs and benefits of improved diabetes care, including
in China and India, which have the largest diabetes populations in the
world. Inclusive access to diabetes care Novo
Nordisk supports the United Nations Millennium Development Goals and recognises
the link between poverty and ill health. The companys framework
programme Changing global access to diabetes care aims to
ensure that the company is acting responsibly and proactively to make
diabetes care inclusive for all across geographies, cultures, social
standing, age, gender and ethnicity. Access to health defined as
availability, accessibility, affordability and quality is a critical
precondition for effective prevention, treatment and care. The programme
targets disadvantaged communities and the most vulnerable population groups
with the lowest access to diabetes care, specifically people living in
the least developed countries, low-income groups in emerging economies,
migrants in developed countries and children. |
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80% |
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Public affairs roadmap for Changing Diabetes®
28 | Novo Nordisk Annual Report 2007 |
By 2025, an estimated 80% of all people with diabetes will live in developing countries. Improving these peoples access to proper care is a moral obligation. Finding commercially viable solutions to curb the diabetes pandemic is a business imperative. Lise Kingo executive vice president and chief of staffs |
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focused,
targeted and collaborative actions. Novo Nordisk cooperates with governments,
healthcare providers, NGOs, universities, healthcare professionals and
diabetes associations worldwide to establish data, build evidence and
pilot new intervention approaches. |
Maternal
health in India: At
a local maternity clinic on the outskirts of Chennai, hundreds of pregnant
women have gathered to be screened for gestational diabetes mellitus (GDM)
at the Dr V Seshiah Diabetes Care and Research Institute. Some women are
here for the first time, encouraged by posters or public announcements
to take a free blood test. Others already have GDM and are here to have
a monthly check-up. All are present as part of a project called Diabetes
in Pregnancy Awareness and Prevention (DIPAP). It targets GDM,
a type of diabetes that affects pregnant women who were not known to have
diabetes previously. The project is supported by the World Diabetes Foundation
(WDF). There is no known specific cause of GDM, but it is believed that
the hormones produced during pregnancy reduce a womans receptivity
to insulin, resulting in high blood sugar. Undiagnosed, it can lead to
miscarriages or stillbirths, malformations, large babies with the risk
of injuries during delivery and a higher risk of mother and child developing
diabetes. See more at worlddiabetesfoundation.org |
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New initiatives include: | |||||
pilot projects in Cameroon, Guinea, Tanzania and Congo aiming to ensure that the preferential prices offered by Novo Nordisk to governments in least developed countries make insulin more affordable and available to more patients, | |||||
the development of tools to bridge disparities in healthcare, targeted at migrant communities, | |||||
pilot projects aimed at securing access at the base of the pyramid, starting in BRIC countries (Brazil, Russia, India and China), | |||||
a programme targeted at improving the lives and well-being of children with diabetes worldwide. | |||||
Children
and youth at risk Type 2 diabetes, once considered the adult-onset form of diabetes, is now on the rise among children and adolescents, due to the same lifestyle factors prompting the rise of the pandemic among adults. World Diabetes Day 2007 centred on the impact of diabetes on children and adolescents. In September 2007, at the congress of the European Association for the Study of Diabetes (EASD), Novo Nordisk and the IDF presented a global overview of the diabetes burden among children and adolescents. This expert review into existing data and global trends within childhood diabetes, now referred to as the Diabetes Youth Charter4), highlighted that many children are in poor control of their diabetes. The experts found that early diagnosis, prevention and improved control could help prevent many deaths. Following this, Novo Nordisk, together with the IDF and the International Society for Pediatric and Adolescent Diabetes (ISPAD), launched the DAWN Youth programme at the ISPAD Congress in September 2007. This programme will facilitate advocacy, research and action to improve the lives of young people with diabetes and their families. DAWN5) (Diabetes Attitudes, Wishes and Needs) is Novo Nordisks global study of the psychosocial barriers to diabetes care. |
Novo
Nordisk Annual Report 2007
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29
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Diabetes care| Strategy
improved
prevention, detection
and treatment
As the world leader in diabetes care, Novo Nordisks ambition is to defeat diabetes by finding better methods of prevention, detection and treatment. The companys strategy is framed around the promise of changing diabetes and finding ways to improve peoples lives. Modern
insulin therapy serves individuals' varying needs and lifestyles while
providing blood sugar control and, in some instances, less weight gain
in a simple and cost-effective way. The control factor The American Diabetes Association (ADA) and the European Association for the Study of Diabetes (EASD) recommend tight blood sugar control and early adoption of insulin thera- |
232 |
py
for people with diabetes who are not meeting their treatment goals. Blood sugar control is key The IMPROVE® Control programme, a Novo Nordisk global observational study involving more than 50,000 people with diabetes, is also generating insight into the need for improved control. Participants started on treatment with NovoMix® 30. Most of them had either been on tablet therapy or received no treatment. Others had been on insulin therapy, but did not |
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9.2% |
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The
modern
insulin
portfolio
There
is no one-size-fits-all approach to diabetes treatment. Modern
insulins are designed to mimic the bodys own physiological insulin regulation
of blood glucose levels more closely than human insulin. Modern insulins offer
better glucose control, less hypoglycaemia and increased convenience, leading
to fewer serious complications and better treatment outcomes.
Levemir®, a soluble long-acting basal insulin analogue for once-daily use. |
NovoRapid® (NovoLog® in the US), a rapid-acting insulin analogue to be used at mealtimes. | |
NovoMix® 30 (NovoLog® Mix 70/30 in the US), a dual-release modern insulin that covers both mealtime and basal requirements. |
Novo Nordisk also has advanced products within insulin delivery systems. These include FlexPen®, the worlds most-used insulin delivery device.
30 | Novo Nordisk Annual Report 2007 |
For
50 years, researchers at the Hagedorn Research Institute have worked to find a cure for diabetes. |
Over
30 children had lots of fun while learning about diabetes during a bring-your-kids-to-work day at Novo Nordisk in Bagsværd, Denmark. |
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achieve the treatment
targets. Safety and efficacy results after six months treatment
will be presented at the annual meeting of the American Diabetes Association
in 2008. Convenience drives compliance People with type 2 diabetes typically start insulin therapy with long -acting or pre-mixed insulin, and experience shows that they want very simple, very convenient devices for administering their insulin. Novo Nordisk offers a broad range of injection devices for added convenience and accurate dosing, but is also committed to pursuing alternative delivery models. This is an area in which Novo Nordisk is determined to gain the lead. Fast-acting inhaled insulin in the form it is known today is unlikely to offer significant clinical or convenience benefits over injections of modern insulin with pen devices. A completely new approach to inhaled insulin is needed. Novo Nordisk has therefore refocused its research and development activities towards inhalation systems for long-acting formulations of insulin and GLP-1. This work will be done in Hayward, California, US, and Hillerød, Denmark, and will target both liquid-based and powder-based technologies. Opportunities in new treatment options The scope of the diabetes pandemic and the many unmet treatment needs of those millions of people with diabetes who do not achieve their treatment targets invite fierce competition to offer improved treatment. |
Proper treatment of diabetes is not just about medicine but about awareness, education and training. Lise
Kingo While
modern insulins are currently proven to be the best option, investments
are funnelled to research into two new areas. One is next-generation modern
insulins, which may offer even better safety and efficacy. The other is
GLP-1, a new class of therapies that offer new options for early- and
intermediate-stage diabetes. Search for a cure While much focus is being directed at the earlier detection and improved treatment of type 2 diabetes, Novo Nordisks commitment to finding a cure for type 1 diabetes remains firm. Through the Hagedorn Research Institute, an independent basic research component within Novo Nordisk that celebrated its 50th anniversary in 2007, Novo Nordisk is the worlds largest private sponsor of research into diabetes. Hagedorn is a major industrial partner in two cutting-edge research efforts: Beta Cell Biology Consortium (BCBC), supported by the National Institutes of Health (NIH); and the Juvenile Diabetes Research Foundation (JDRF) Center for Beta Cell Therapy in Diabetes in Europe, funded by the European Union.
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Novo
Nordisk Annual Report 2007
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31
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Diabetes care | Liraglutide
liraglutide
key to
future growth
Diabetes is a demanding condition. It requires constant attention and measuring of blood sugar levels. And with type 2 diabetes being a progressive disease, too many patients never reach an acceptable level of control of their diabetes. The consequence is debilitating and expensive late complications. Liraglutide, Novo
Nordisks once-daily human analogue of the naturally occurring hormone
Glucagon-Like Peptide-1 (GLP-1), is a compound being developed for the
treatment of type 2 diabetes. GLP-1 works by stimulating the release of
insulin only when glucose levels become too high, and by decreasing appetite.
The effect can be described as enhancing the function of tired
or worn-out insulin-producing cells. Liraglutide is being studied as a
once-daily product that may be administered any time of day. Because of
the mechanism of action, glucose monitoring may not be necessary.
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3,992
|
We
are very pleased with the clinical results. The phase 3 studies have investigated
the use of liraglutide throughout the progressive stages of diabetes:
from early diagnosis where oral agents are used to intensified insulin
therapy. In these studies,
reduction in HbA1c and body weight were measured,
says Mads Krogsgaard
Thomsen, chief science officer. The level
of HbA1c reflects the average blood glucose level over the past two to
three months, and a decrease is therefore considered a measure of treatment
effect. The American Diabetes Association
recommends a treatment goal of HbA1c <7%. How GLP-1 works Liraglutide mimics
GLP-1, which is a hormone released in the intestine. |
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300
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Liraglutide
phase 3 programme
LEAD (Liraglutide
Effect and Action in Diabetes)
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Study
objective
|
Primary
endpoint
|
Number of persons |
Results
announced
|
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LEAD 1 |
HbA1c
|
1,041 |
20
August 2007
|
Effect of liraglutide in combination with sulphonylurea (SU) (glimepiride) | (26 weeks) | ||
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LEAD 2 | HbA1c |
1,091
|
20 August 2007 |
Effect of liraglutide in combination with metformin | (26 weeks) | ||
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LEAD 3 | HbA1c |
746
|
11 December 2007 |
Effect of liraglutide in monotherapy | (52 weeks) | ||
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LEAD 4 | HbA1c |
533
|
14 September 2007 |
Effect of liraglutide in combination with metformin and TZD (rosiglitazone) | (26 weeks) | ||
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LEAD 5 | HbA1c |
581
|
21 June 2007 |
Effect of liraglutide in combination with metformin and SU (glimepiride) | (26 weeks) | ||
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Detailed results from the
full LEADTM
programme are expected to be communicated at scientific
meetings and in peer-reviewed journals.
More details
can be found at novonordisk-trials.com
32 | Novo Nordisk Annual Report 2007 |
The innovation space of GLP-1 fits perfectly with our skill base. GLP-1 and insulin are the two most promising areas in diabetes care be in, and where the most advancement seems possible. Mads
Krogsgaard Thomsen is believed that the
glucose-dependent action, sustained beta cell function and weight loss
work together in a virtuous circle, says Peter Kristensen, who as
project vice president for liraglutide has overseen the trial programme.
Liraglutide studied for obesity treatment In November 2007,
Novo Nordisk announced the clinical results from a double-blind, placebo-controlled
phase 2 study of the use of liraglutide for treatment of obesity in people
who do not have diabetes. It is aimed at clinically obese people with
a Body Mass Index (BMI) above 30. Production capacity in place The making of GLP-1 is quite similar to the production processes required for the production of modern insulins, and Novo Nordisks production capacity is geared to begin supplying the market once regulatory approval has been obtained. With the companys extensive programme to build global sourcing and optimise production efficiency (see pp 2223), facilities in Kalundborg, Denmark, are available for a dedicated production of liraglutide. Looking ahead As part of the longer-term
life-cycle management initiatives supporting the GLP-1 franchise, Novo
Nordisk initiated a phase 1 study of a once-weekly human GLP-1 analogue
in 2007. Based on Novo Nordisks protein acylation technology, this
compound is designed for treatment with expected administration in a convenient
injection device. |
Obesity
Being overweight
and obese significantly increases the risk of developing type 2 diabetes.
According to the World Health Organization, at least 300 million people
in the world are obese8). With numbers such as these, obesity
and its related disorders is set to become one of the 21st
centurys biggest health crises. Already today, more than half the
OECD population has a BMI at more than 25, currently applied as the upper
level of normal weight. |
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Novo
Nordisk Annual Report 2007
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33
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Diabetes care | Markets
modern
insulins
available to
more people
With 53% of the total insulin market and 43% of the modern insulin market, both measured by volume, Novo Nordisk is the global market leader. The modern insulin and device portfolios showed continued strong sales growth in 2007. We offer excellent
products and devices, and we put a strong organisation behind it, focusing
on delivering results to the people with diabetes using our products.
That is our simple recipe for success, says Kåre Schultz,
executive vice president and chief of operations. This doesnt
mean it is a smooth road ahead. But we have good reason to be confident
about our future. Levemir® gains momentum Market performance
in 2007 reflected the success of Novo Nordisks portfolio of modern
insulins. Both NovoRapid® and NovoMix® 30
(NovoLog® and NovoLog® Mix 70/30 in the
US respectively) consolidated their market positions. In addition, a number
of pivotal developments in 2007 helped strengthen the position of Levemir®,
the companys long-acting basal insulin not least its entry
into crucial new markets. |
53%
700
20% of the worlds elderly population has diabetes. 61 countries offer Levemir®, Novo Nordisks once-daily, soluble, long-acting basal insulin analogue. |
At the meeting of the American Diabetes Association in 2007, Novo Nordisk presented detailed results from the Levemir® PREDICTIVETM clinical trial in the US. This six-month study included 5,604 persons with type 2 diabetes and showed that they were able to reduce their blood sugar level by adjusting their own dosage of Levemir®, compared to dosing adjusted by their primary care physician. This underscores the simplicity of starting insulin therapy with Levemir®. Once-daily use of Levemir® In 2007, Novo Nordisk
received marketing authorisation from the European Commission for the
use of Levemir® once-daily in combination treatment with
tablet-based antidiabetics (OADs) for people with type 2 diabetes. The Weight of the World The finding from
the PREDICTIVETM study that Levemir® also resulted
in less weight gain is attracting attention from healthcare professionals.
Historically, insulin treatments have had negative weight implications
for patients; an unfortunate side effect which can exacerbate the problems
associated with the condition it is intended to improve. United States expanded sales force Novo Nordisk is the
only company in the United States the worlds largest pharmaceutical
market to offer a complete portfolio of modern insulins. The company
expanded its US diabetes sales force in 2007 with an additional 700 people,
bringing the total to around 1,900. |
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Diabetes highlights 2007 | |||||||
Levemir® launched in Japan. | |||||||
European Commission approves use of Levemir® once-daily in combination treatment with tablet-based antidiabetics for people with type 2 diabetes. | |||||||
European Commission approves NovoRapid® for treatment of diabetes in the elderly and in people with renal or hepatic impairment. | |||||||
NovoLog® takes leadership position in the US. | |||||||
Once-daily Levemir® gains momentum in the US through PREDICTIVETM 303 results and widened outreach to primary care. | |||||||
FlexPen® is the most used insulin device in the world. | |||||||
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34 | Novo Nordisk Annual Report 2007 |
The
long-acting basal modern insulin Levemir® entered new markets in 2007. |
Beatriz
de Lourdes Gonçalves from Belo Horizonte, Brazil, has type 1 diabetes. |
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Nordisk Inc. In 2007, NovoLog® (NovoRapid®) became the leading brand in the rapid-acting category. In addition, Novo Nordisk products have at minimum 80% coverage in the managed care formularies, which are restricted lists of reimbursable medicines. All of these elements put us in a strong position in the US diabetes care market, says Camille Lee.
Europe modern insulin growth
In
Europe, Novo Nordisk continued to increase the market share of its modern
insulins. This was boosted not only by the Levemir® once-daily
approval with OADs, but also the approval in Europe in 2007 of NovoRapid®
for the treatment of diabetes in the elderly and in people with renal
or hepatic impairment.
Since
diabetes is a progressive disease, many older people with diabetes require
more intensive insulin therapy over time. According to the International Diabetes
Federation (IDF), approximately 20% of the worlds elderly population
has diabetes, and the figure is increasing steadily.
We
have become the European market leader in modern insulins. Our next ambition
is to bring the benefit of modern insulins to all people with diabetes in
Europe, says Kåre Schultz.
Emerging markets on the move
Novo Nordisks International Operations (IO) consists of 142 countries that between them generate more than 50% of global GDP growth. These emerging markets are home to more than 85% of the worlds population and 80% of all people with diabetes in the world some 183 million in all. Sales of diabetes care products in the region in 2007 grew by 20% measured in local currencies and by 14% in Danish kroner. China is currently Novo Nordisks fifth-largest market (see pp
3637)
and is expected to be its second- or third-largest within the next five years.
Other key markets are Brazil, Russia, India and Turkey.
International
Operations is contributing significantly to creating new growth for Novo Nordisk.
Average earnings in the IO countries are still low, but a growing middle class
in countries like China, India and Brazil is stimulating demand for modern
insulins, says Jesper Høiland,
Leadership
in modern insulins is key to realising
both our vision and our financial targets.
Kåre
Schultz
executive
vice president and chief operating officer
senior vice president, International Operations. If you look at the pharmaceutical industry as a whole, analysts anticipate significant growth rates of 1015% in the emerging markets. Due to our early and sustained presence and our market leadership, Novo Nordisk is in a strong position to capture a large share of that growth.
Japan & Oceania leading the market
With the launch of Levemir® in 2007, Novo Nordisk is the only company in Japan offering a full portfolio of modern insulins. Novo Nordisk has long been the market leader in Japan and had 73% of the insulin market (by volume) in 2007. Japan, with a population of 130 million people, is the worlds second-largest pharmaceutical market. Diabetes is a large and growing public health issue. It is estimated that diabetes currently affects more than 16 million people in Japan: 8 million have diabetes or glucose levels indicating diabetes, and 8.8 million have prediabetes.
Novo
Nordisk Annual Report 2007
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35
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Diabetes care | Emerging markets
tackling
diabetes
on all fronts
in China
Chinas rapid economic transformation poses major challenges to society, and one of these is diabetes. A growing middle class is adopting Western lifestyles with too little exercise and diets high in saturated fat proven risk factors for diabetes and other chronic diseases. Over weight and obesity are on the rise, even among children and youth. Globalisation, an ageing population and urbanisation are contributing factors to the health crisis. Nearly
40 million Chinese are estimated to have diabetes, the second-highest
number of people with diabetes in any single country after India. As a
sign that the problem will get worse before it gets better, 64 million
Chinese have impaired glucose tolerance, or prediabetes. At this rate,
the International Diabetes Federation (IDF) predicts that the number of
adults with diabetes in China will reach 46 million by 2025, or 12% of
the worldwide figure. Early, long-term presence In
1994, Novo Nordisk began to invest in building a strong presence in China.
Today, Novo Nordisk is the market leader in the insulin market and is
also among the fastest-growing pharmaceutical companies in China. |
80% of deaths in China are attributable to chronic diseases, according to the Chinese Centre for Disease Control and Prevention. |
effort
to put diabetes on the agenda and to present Novo Nordisk as having better
products and the most extensive knowledge of diabetes. The commitment
to change diabetes, with a focus on education, training and public awareness,
has made Novo Nordisk a trusted partner in China. Staying focused Novo
Nordisk China employs 1,250 people, has a production facility in Tianjin
and a thriving R&D centre the first R&D centre established
in China by an international pharmaceutical company. The Tianjin plant
has been expanding its production capacity by around 40% a year. |
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2
million Chinese migrate every month from rural areas to coastal cities |
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Investing Novo Nordisks R&D centre in China is located in Zhongguancun Life Science Park just outside Beijing. The centre has been developing and expanding since 2002. As an integrated part of Novo Nordisks Biopharmaceuticals Research Unit, the 45 employees work closely with R&D colleagues in Denmark. With a strong technology platform within the areas of |
molecular
biology, protein chemistry and cell biology, the R&D centre plays
a key role in Novo Nordisks overall R&D strategy. China
today is moving towards a very innovative culture with lots of opportunity
and resources within life sciences, says Baoping Wang, head of the
centre. He expects that the centre will soon be able to identify a first
new drug discovery project of its own. |
ment
in 2007 establishing a joint research foundation in China. |
36 | Novo Nordisk Annual Report 2007 |
Nearly
40 million people in China are estimated to have diabetes. |
The
China Health Star Search is a contest for people with diabetes. In quizzes
and presentations they compete on knowledge about how to reach treatment targets. |
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With our promise of changing diabetes, we believe that we are making a difference. Thats why many people join us and why many people stay. Ron
Christie tain
its market leadership by building the market for the companys modern
insulins, maintaining a strong sales organisation and relentlessly making
the case for earlier detection and improved treatment of diabetes. Education is the key The first step to improving diagnosis and treatment is education. It is estimated that only 25% of people with diabetes in China are diagnosed and treated; only about 40,000 doctors in the country of 1.3 billion people are trained in diabetes care. In 2002, Novo Nordisk established the National Diabetes Management programme with the Chinese Ministry of Health. This led, among other things, to the creation of the first-ever national guidelines for the diagnosis and treatment of diabetes and the education of doctors in 300 cities. Through Novo Nordisk education programmes more than 150,000 healthcare professionals in China have received training in diabetes care since 2002. |
The Novo Nordisk China Health Star Search raised public awareness by involving more than 40,000 people with diabetes in a contest to share their positive stories about living with diabetes. It has run in 43 cities and through media coverage reached out to millions of people. Other initiatives include a Changing Diabetes® bus that will cover 100 cities over a three-year period and a patient network of some 600,000 members. Ongoing medical reform Access to national healthcare insurance has been a barrier to improved care in China. Today, only 12% of Chinese have comprehensive medical healthcare insurance. This is set to change in coming years, with the Chinese government pledging to establish a medical service system covering all urban and rural Chinese by 2010. In 2007, the Chinese government extended national health insurance coverage to 32 million migrant workers. As health insurance spreads and more Chinese people get access to advanced pharmaceutical products, the market for dia betes care is set to grow at an even faster pace. Investment in people Competition
for market share as well as employees and knowledge is fierce. To help
retain talent, Novo Nordisk prioritises the creation of attractive career
opportunities, but even more importantly, shared values and a corporate
culture underpin the Novo Nordisk Way of Management. |
Novo
Nordisk Annual Report 2007
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37
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Enea Atroce is a nine-year-old from Switzerland who has haemophilia. | |
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|
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acquired haemophilia and other rare bleeding disorders such as Glanzmanns thrombasthenia (approved in 82 countries) and and FVII deficiency. Sustaining the lead in haemophilia NovoSeven® is positioned as the first-line treatment for bleedings in haemophilia patients with inhibitors because of its efficacy, safety profile and onset of action. Further improvements in terms of formulation and dosing have been made, making NovoSeven® even more convenient, while at the same time maintaining efficacy and safety profiles. With the main NovoSeven® patents due to expire in November 2010 (in the US) and February 2011 (in the EU), Novo Nordisk is placing high priority on sustaining its haemophilia inhibitor portfolio with new, superior, patent-protected molecules. With the portfolio advancements during 2007, Novo Nordisk is progressing well. In 2007, NovoSeven® sales exceeded one billion US dollars, thereby reaching blockbuster status. NovoSeven® is still expected to show growth, albeit at a lower pace, notes Jesper Brandgaard, chief financial officer, Novo Nordisk. Just one infusion In
2007, NovoSeven® was launched in Europe for single-dose
use (270 µg/kg), making administration of NovoSeven® more
convenient for mild to moderate bleedings. |
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With next-generation successors to NovoSeven® in the pipeline and several new molecules Novo Nordisk demonstrates its commitment to offering improved treatment options for people with haemophilia. A
decade ago, recombinant factor VIIa (rFVIIa), the active ingredient in
NovoSeven®, dramatically changed the lives of two boys
with haemophilia A who had inhibitors (antibodies) to coagulation factor
VIII and could not control their bleedings. Today, NovoSeven®
is the leading treatment for people with congenital haemophilia
with inhibitors, about 3,500 people worldwide. Novo Nordisk is a leader
in developing therapies to stop or reduce bleeding episodes in haemophilia
patients with inhibitors. Haemophilia is a disabling, inherited bleeding
disorder that has a tremendous medical, social, psychological and financial
impact upon patients, their families and society. There remain many unmet
needs in this group of people. |
1st
haemostasis research laboratory in the US dedicated to life-threatening bleeding is Novo Nordisks research facility in New Brunswick, New Jersey, US. |
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1
billion US dollars. When sales of NovoSeven® hit this figure in June 2007, it became a block-buster. |
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38 | Novo Nordisk Annual Report 2007 |
riences a bleed, since the product will become portable without the need for refrigeration. Next-generation compounds To
be able to offer better treatment and protect patent rights, Novo Nordisk
is developing a class of future-generation rFVIIa compounds with improved
properties. In 2007, Novo Nordisk initiated a phase 2 study of the short-acting
rFVIIa analogue (NN1731). The study is expected to include around 75 haemophilia
patients with inhibitors and will evaluate both safety and efficacy. |
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NovoSeven® in critical bleedings Novo
Nordisk is currently exploring the potential of NovoSeven® for
managing critical bleedings in selected areas where rFVIIa can potentially
make a clinical difference to patient outcomes. While several projects
in the pipeline show promise, research in this area suffered a setback
in 2007 when Novo Nordisk decided not to pursue regulatory approval for
NovoSeven® in the treatment of people suffering from bleeding
in the brain, also known as intracerebral haemorrhage, or ICH. Preliminary
results of a phase 3 trial confirmed the safety profile and showed that
NovoSeven® reduces bleeding in the brain, but does not
improve long-term clinical outcomes. Novo
Nordisk is committed to building leadership Anne
Prener programme.
Data from the phase 3 clinical trial, as well as the extensive analyses
of the study results that have been conducted, have been submitted for
publication in peer-reviewed journals. With regard to safety, study results
were in line with the established safety profile of NovoSeven®.
The results came as a disappointment, particularly given the encouraging
results from the phase 2 trial. We hoped that NovoSeven®
could become a treatment for the people who suffer from ICH, and
for whom no effective medical treatment exists, says Lars Rebien
Sørensen, president and chief executive officer, Novo Nordisk. |
||||
Outreach Lack
of access to haemophilia care is particularly daunting in the developing
part of the world, where this disease is not a priority. It is estimated
that the disorder affects some 600,000 people globally, of whom an estimated
two thirds live in developing countries. Haemophilia only affects males,
and about half of the patients may require treatment for bleeding episodes
several times a month. But today, only a small minority in the developed
world some 30,000 receive proper treatment. See more at nnhf.org |
Novo
Nordisk Annual Report 2007
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39
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Biopharmaceuticals | Other therapy areas
expanding
the range of
biopharmaceuticals
Novo Nordisks strategy to expand its biopharmaceuticals business is two-pronged. While seeking additional uses for existing products, the company also explores potential new therapies for neglected medical conditions. In 2007, this strategy delivered several successes. These included the approval of new indications for the companys human growth hormone product Norditropin®, new product launches within hormone replacement therapy, and a new pilot production facility to spur faster advancement in areas of unmet needs within inflammation. The growth hormone business continued in 2007 to steadily penetrate the market, including hard-won success in the competitive US market. With a global market share of approximately 23% in terms of value, Novo Nordisk ranks second worldwide in growth hormones. In 2007, the company made significant progress towards taking top place. New indications for Norditropin® There
is a number of very small patient groups with few, if any, medical options.
For these people, the development of new treatments is vital. Such was
the case with NovoSeven®, which was developed for a population
of 3,500 individuals with congenital haemophilia (see p 38). To encourage
the development of treatment for rare disorders that may not otherwise
be commercially viable, the US Food and Drug Administration (FDA) designates
drugs that treat fewer than 200,000 US patients with an orphan drug
status. Having orphan drug status in the US means that no other company
can promote this new indication for a seven-year period. This offers a
win-win proposition for patients, companies and society. Helping girls with Turner syndrome In September 2007, Norditropin® also received approval from the FDA for the treatment of children with short stature associated with Turner syndrome. This FDA approval gives physi- |
80% of children with Noonan syndrome have significantly short stature. |
cians
in the US the option of dosing up to higher levels than previously. Turner
syndrome is a rare chromosomal condition caused by complete or partial
absence of the second sex chromosome (X chromosome) in females. This occurs
in approximately one in 2,500 live female births. Short stature is the
most common feature associated with Turner syndrome and affects the majority
of patients. New hope for dialysis patients Norditropin®
may also have potential for the treatment of complications associated
with adult patients in chronic dialysis (APCD). In 2007, Novo Nordisk
initiated a phase 3 trial encompassing about 2,500 patients worldwide. Lower-dose HRT products Sales
of Novo Nordisk hormone replacement therapy (HRT) products showed solid
growth in 2007. This is in contrast to the situation following the publication
of results from the Womens Health Initiative in 2002, when sales
of HRT products in general, including Novo Nordisk products, declined. |
||||
20%
is the annual mortality rate for US adults in chronic dialysis. |
||||||
23%
of the global market for growth hormones (in value) makes Novo Nordisk number two in this market. |
||||||
2008
is the year when Novo Nordisks first projects to treat autoimmune diseases enter clinical trials |
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40 | Novo Nordisk Annual Report 2007 |
An investment of 350 million Danish kroner Novo Nordisks new pilot plant in Hillerød, Denmark. |
Only
girls have Turner syndrome.
|
|
|
|
|
existing portfolio of HRT products with lower-dose versions of Activelle® (Activella® in the US, where it was launched in 2007) and Vagifem®. New pilot plant Novo
Nordisk is using its existing knowledge of proteins and autoim-mune diseases
to build a presence within inflammation. Progress in new areas Novo
Nordisk is pursuing treatment of autoimmune inflammatory diseases such
as rheumatoid arthritis, psoriasis, inflammatory bowel disease and systemic
lupus erythematosus (SLE) because of large unmet medical needs for which
the companys solid foundation of existing competences in proteins
and delivery devices could offer therapeutic solutions. In type 1 diabetes,
the bodys immune system destroys the insulin-producing cells in
the pancreas, and similar processes are the cause of other autoimmune
diseases. The first projects to treat autoimmune diseases are ready to
enter clinical trials during 2008. |
maceuticals
area has been updated. Based on an evaluation of the general competence
level required, the level of investments needed and the likelihood of
success, Novo Nordisk has decided to increase and focus activities on
inflammatory diseases. As a consequence, research and development activities
within oncology will be terminated and resources applied to the growing
inflammation portfolio. Existing oncology proj- We
are intent on addressing significant unmet Lars
Rebien Sørensen ects,
including the IL-21 programme and the anti-KIR project, are expected to
be outlicensed. The ongoing development activities for these two projects
will continue while discussions with potential new partners are taking
place. The first two compounds targeting inflammatory diseases are expected
to enter clinical development in 2008. See novonordisk.com/science. Click: Partnering |
Novo
Nordisk Annual Report 2007
|
41
|
Corporate governance refers to the way a company is managed and the major principles and frameworks that regulate interaction between the companys managerial bodies, its owners and other stakeholders.
Novo Nordisk's values are consistent with principles of good governance. The Novo Nordisk Way of Management forms the values-based governance framework for the company and is an integrated part of the companys corporate governance (see pp 67).
Governance structure
The company has a two-tier board structure consisting of the Board of Directors and Executive Management. The two bodies are separate, and no person serves as a member of both.
Shareholder
rights
Novo
Nordisks share capital is divided between A shares and B shares. All
A shares are held by Novo A/S, a Danish public limited liability company wholly-owned
by the Novo Nordisk Foundation, which is a private, profit-making, self-governing
institution. The B shares are traded on the stock exchanges in Copenhagen
and London, and in the form of ADRs on the New York Stock Exchange. Each A
share carries 10 votes, whereas each B share carries one vote (see p 50).
Special
rights attached to A shares include preemptive subscription rights in case
of an increase of the A share capital, and preemptive purchase rights in case
of a sale of A shares and priority dividend if dividend is below 0.5%, while
B shares take priority for dividend between 0.5% and 5% and B shares take
priority for winding-up proceedings.
Novo
Nordisk is of the opinion that the current share and ownership structure is
appropriate and preferable for the long-term development
of
the company. A study11) commissioned by the European Commission
concluded in 2007 that control-enhancing mechanisms such as the A and B share
structure are allowed in all European countries investigated and that they
do not have a negative impact on shareholder value creation. Novo Nordisk
believes that the transparency inherent in its share structure is to the benefit
of shareholders, who know in advance the relative voting power of each share
class. The current differentiation of voting rights cannot be revoked as this
would violate the articles of association of the Foundation, which have been
approved by the Danish authorities.
Novo
Nordisk is not aware of the existence of any agreements between shareholders
on the exercise of votes or control.
Shareholders
have the ultimate authority over the company, and exercise their right to
make decisions regarding Novo Nordisk at general meetings, either in person
or by proxy. Resolutions can be passed by a simple majority, while resolutions
to amend the articles are subject to adoption by at least two thirds of votes
cast and capital represented unless stricter requirements are imposed by Danish
company law. The annual general meeting approves the annual report and any
amendments to the articles. The general meeting elects 410 directors
plus the auditor. All shareholders may, no later than 1 February, request
that proposals for resolution be included on the agenda. All shareholders
may also ask questions at the general meetings. Simultaneous interpretation
between English and Danish is available, and the meeting is webcast live.
The
Board of Directors
On
behalf of the shareholders, the Board determines the overall strategy and
actively contributes to developing the company as a focused global pharmaceutical
company. It supervises Executive Management in its decisions and operations.
The Board may issue new shares or buy back shares in accordance with authorisations
granted by the general meeting and recorded in the minutes.
The
guiding principle in composing the Board is that it should comprise individuals
whose particular knowledge and experience enables the Board as a whole to
attend to the interests of shareholders, employees and other stakeholders.
New
board members undergo an induction programme equivalent
Corporate governance benchmark 2007
In 2007,
Novo Nordisk commissioned ISS Corporate Services Inc. (ISS) to appraise the
companys corporate governance practices against those of its national,
European and US peers as well as international best practice standards.
The
ISS study confirmed Novo Nordisks strong performance in its corporate
governance disclosure practice. It also provided compelling evidence of Novo
Nordisks firm commitment to good corporate governance and to the maximisation
of shareholder value.
ISS
also revealed areas where Novo Nordisk could consider adjustments. Some adjustments
have already been implemented and others will be considered in coming years.
Novo
Nordisk remains committed to the general principles of good corporate govern
ance and aims to enhance its culture so as to foster these principles at every
level of the organisation.
One
recommendation that will be put to the Annual General Meeting 2008 concerns
an adjustment of the threshold for calling an extraordinary general meeting.
So as to bring this procedure into line with best practice, it is proposed
that the threshold be reduced from the current 10% of total share capital
to 5%.
This
would, naturally, simplify the process of calling an extraordinary general
meeting and would give shareholders greater voice.
Another
recommendation in the ISS report, which will also be put to the 2008 Annual
General Meeting, concerns the Boards standing mandate to increase the
share capital. Best practice in this regard is that a boards ability
to issue B shares without preemptive subscription rights for current B shareholders
is limited to a maximum of 20% of the share capital. Novo Nordisks Board
currently has the right to issue B shares without preemptive subscription
rights to a value corresponding to 34.1% of the share capital. The proposal
is to reduce this to approximately 20%.
42 | Novo Nordisk Annual Report 2007 |
Shareholder information | Corporate governance
to
two full days during their first year on the board and subsequently participate
in educational activities as required.
The
Board has 11 members, of whom seven are elected by shareholders at general
meetings. Shareholder-elected board members serve a one-year term and can
be re-elected at the general meeting. Board members must retire at the first
general meeting after reaching the age of 70. A proposal for nomination of
shareholder-elected board members is presented by the Chairmanship to the
Board taking into account required competences and the result of the self-assessment
process. In nominating
candidates, the Chairmanship seeks to achieve a balance
Transparency, both in terms of corporate governance practices and the risk management process, should be viewed as a precondition for retaining shareholder confidence.
Jesper
Brandgaard
executive
vice president and chief financial officer
between
renewal and continuity. Executive search has helped identify board members
who meet such criteria.
Four
of the shareholder-elected board members are independent as defined by the
Danish Corporate Governance Recommendations, while three shareholder-elected
board members are related to the majority shareholder through board or executive
positions, and two of these have also previously been executives in Novo Nordisk
(see pp 4647).
Under
Danish law, Novo Nordisk employees in Denmark are entitled to be represented
by half of the total number of board members elected at the general meeting.
Thus, in 2006, employees elected four board members from among themselves
for a four-year term. Board members elected by the employees have the same
rights, duties and responsibilities as shareholder-elected board members.
The
Board has appointed a research & development facilitator to assist the
Board and Executive Management in preparing the Boards discussions in
the R&D area. The key tasks are reviewing R&D strategies
and evaluating the competitiveness of the R&D organisation, processes and projects.
Self-assessment
The
Board conducts an annual self-assessment procedure to improve the performance
of the Board and its cooperation with Executive Management. This process is
directed by the Chairman and may be facilitated by an external consultant.
Written questionnaires form the basis for the process, which evaluates whether
each board member and executive participates actively in board discussions
and contributes with independent judgement. It is further assessed whether
the board member is inspirational and whether the environment encourages open
discussion at board meetings. The Audit Committee also conducts an annual
self-assessment based on written questionnaires. The performance of each executive
is continuously assessed by the Board, and once a year the Chairman also conducts
a formal interview with each executive.
Board
meetings
The
Board ordinarily meets seven times a year, including a strategic session over
two to three days. In 2007, the Board met eight times and all board members
attended all board meetings and the Annual General Meeting, with the exception
of one member who was absent on one occasion. By means of a fixed annual calendar,
the Board ensures that it addresses its main tasks in a timely manner. With
the exception of agenda items reserved for the Boards internal discussion
at each meeting, executives attend and may speak, without voting rights, at
board meetings to ensure that the Board is adequately informed of the companys
operations. Executives regular feedback from meetings with investors
allows board members an insight into major shareholders views of Novo
Nordisk.
Chairmanship
A
chairman and a vice-chairman elected by the Board from among its members form
the Chairmanship of the Board. They held eight meetings in 2007. The Chairmanship
carries out administrative tasks, such as planning board meetings to ensure
a balance between overall strat-
The
Novo Nordisk model for corporate governance |
Corporate
governance codes and practices |
||
Novo Nordisk is in compliance with the Danish Corporate Governance Recommendations and is as a foreign-listed issuer in general compliance with the corporate governance standards of the stock exchanges in London and New York, where the Novo Nordisk B shares and ADRs respectively, are listed: | |||
OMX
Nordic Exchange Copenhagen |
|||
New
York Stock Exchange |
|||
London
Stock Exchange |
|||
The
applicable codes and a detailed review of Novo Nordisks compliance
are available at novonordisk.com/about_us. |
|||
The Novo Nordisk corporate governance model sets the direction and is the framework within which the company is managed (see also pp 67). |
Novo
Nordisk Annual Report 2007
|
43
|
Shareholder information | Corporate governance and executive remuneration
egy-setting and financial and managerial supervision of the company. It also reviews the fixed asset investment portfolio. Other tasks include recommending the remuneration of directors and executives and suggesting candidates for election by the general meeting. In practice, the Chairmanship has the role and responsibility of a nomination committee and a remuneration committee.
Audit
Committee
The
Audit Committee has three members elected by the Board from among its members.
All members qualify as independent as defined by the US Securities and Exchange
Commission (SEC). One member is designated as chairman and two members are
designated as Audit Committee financial experts. One member is not regarded
as independent under the Danish Corporate Governance Recommendations. In 2007,
the Audit Committee held four meetings and all members participated in all
meetings.
The
Audit Committee assists the Board with oversight of a) the external auditor,
b) the internal auditors, c) the procedure for handling complaints regarding
accounting, internal controls, auditing or financial reporting matters (whistleblower
function), d) the accounting policies and e) internal controls systems.
The Audit Committee also undertakes
a post-completion review of fixed asset investments previously approved by the Board
Executive
Management
Executive
Management is responsible for the day-to-day management of the company. It
consists of the president and chief executive officer, and four other executives
(see p 48).
Executive
Managements responsibilities include organisation of the company as
well as allocation of resources, determination and imple-mentation of strategies
and policies, direction-setting and ensuring timely reporting and provision
of information to the Board and the stakeholders of Novo Nordisk. Executive
Management meets regularly and at least once a month. The Board appoints Executive
Management and determines its remuneration. The Chairmanship reviews the per-formance
of the executives. As part of the Organisational Audit process the Chairmanship
identifies successors to executives and presents the names of such candidates
to the Board for approval.
Assurance
External audit and assurance The annual report and the internal
Novo Nordisks remuneration policy for its Board of Directors and Executive Management covers both fixed and incentive-based payment. It aims to attract, retain and motivate board members and executives.
Remuneration levels are designed to be competitive and to align the interests of the board members and executives with those of the shareholders. In light of recent changes in Danish legislation, Novo Nordisk will present its guidelines for incentive-based remuneration for approval at the Annual General Meeting 2008.
Board members
Remuneration
of the Board of Directors is aligned with other major Danish companies, and
the Board regularly reviews board fees based on recommendations from the Chairmanship.
See board members fees for the year 2007 on p 81.
The
remuneration of the board members is approved by the annual general meeting
in connection with the approval of the annual report. Changes in the board
fees will be announced at a general meeting in advance of being presented
for approval.
Each
board member receives a fixed fee per year. Ordinary board members receive
a fixed amount (the base fee) while the Chairmanship receives a multiplier
thereof: the chairman receives 2.5 times the base fee and the vice-chairman
1.5 times.
Service
on the Audit Committee entitles members to additional payment: the Audit Committee
chairman receives 1.25 times the base fee and Audit Committee members receive
0.5 times.
Individual
board members may take on specific ad hoc tasks outside the normal duties assigned
by the Board. In such cases the Board determines a fixed fee for the work.
Expenses, such as travel and accommodation in relation to board meetings as well as relevant training, are reimbursed. Board members are not offered stock options, warrants or other incentive schemes.
Executives
Executive
remuneration is proposed by the Chairmanship and subsequently approved by
the Board. See executive pay for 2007 on p 81.
Levels
are evaluated annually against a Danish benchmark of large companies with
international activities. This information is supplemented by information
on remuneration levels for similar positions in the international pharmaceutical
industry. To ensure comparability, executive positions are evaluated in accordance
with an international position evaluation system which, among other parameters,
includes and reflects the development of the company size measured in terms
of company revenue and number of employees.
The
remuneration package consists of a fixed base salary, a short-term cash bonus,
a long-term share-based incentive, pensions and non-monetary benefits. For
executives being expatriated at the request of the company, the remuneration
package is based on current Danish remuneration levels, including pension
entitlements, while a specific expatriation package is added for the period
of expatriation.
The
short-term incentive programme may result in a maximum payout per year equal
to four months fixed base salary plus pension contribution. The long-term
incentive programme may result in a maximum grant per year equal to eight
months fixed base salary plus pension contribution. Consequently, the
aggregate maximum amount that may be granted as incentives for a given year
is equal to 12 months base salary plus pension contribution.
Fixed
base salary
The
fixed base salary for each executive accounts for between 40% and 60% of the
total value of the remuneration package.
Short-term
incentive programme
The
short-term incentive programme consists of a cash bonus that is linked to
the achievement of a number of predefined functional and in-
44 | Novo Nordisk Annual Report 2007 |
controls
over financial reporting processes are audited by an external auditor elected
by the annual general meeting. The auditor acts in the interest of the shareholders,
as well as the public (see auditors report p 114). The auditor reports
any significant findings regarding accounting matters and any significant
internal control deficiencies via the Audit Committee to the Board and in
the auditors long-form report.
Furthermore,
Novo Nordisk voluntarily includes an auditor assurance report for non-financial
reporting in its annual report (see p115).
Internal
audit
The
internal audit function provides independent and objective assurance primarily
within internal control and governance. To ensure that the function works
independently of management, its charter, audit plan and budget are approved
by the Audit Committee. The head of internal audit is appointed by and reports
to the Audit Committee.
Risk
management
Executive
Management is responsible for the risk management process, including risk
identification, assessment of likelihood and potential impact, and initiation
of mitigating actions.
Assessing and articulating risks, whether financial or reputational, can improve decision-making. Novo Nordisk has developed an integrated and systematic risk reporting approach. To simplify the process it is aligned with existing reporting and recurs on a quarterly basis. It is designed to ensure that key business risks are identified, assessed and reported to Novo Nordisks Executive Management and Board of Directors (see p 9).
Internal
control
Novo
Nordisk is in compliance with the SarbanesOxley Act section 404, which
requires detailed documentation of the design and operation of financial reporting
processes. Novo Nordisk must ensure that there are no material weaknesses
in the internal controls that could lead to a material misstatement in its
financial reporting. The companys conclusion and the auditors
evaluation of these processes are included in its Form 20-F filing to the
US Securities and Exchange Commission.
See a description of other assurance mechanisms on pp 67.
dividual business targets for each executive. The targets for the chief executive officer are fixed by the chairman of the Board while the targets for the executive vice presidents are fixed by the chief executive officer. The chairman of the Board evaluates the degree of target achievement for each executive, and cash bonuses for a financial year if any are paid at the beginning of the subsequent financial year.
Long-term
incentive programme
Each
year in January the Board decides whether or not to establish a long-term
incentive programme for that calendar year.
The
long-term incentive programme is based on an annual calculation of shareholder
value creation as compared to the budgeted performance for the year.
In
line with Novo Nordisks long-term financial targets, the calculation
of shareholder value creation is based on reported operating profit after
tax reduced by a WACC-based (weighted average cost of capital) return requirement
on average invested capital.
A
proportion of the calculated shareholder value creation is allocated to a
joint pool for the participants, which in addition to Executive Management
includes the other members of the Senior Management Board.
For
executives the joint pool operates with a yearly maximum allocation per participant
equal to eight months fixed base salary plus pension contribution.
The
joint pool may, subject to the Boards assessment, be reduced in the
event of a lower than planned performance in significant research and development
projects and key sustainability projects. Targets for non-financial performance
related to sustainability and research and development projects may include
achievement of certain milestones within set dates.
Once the joint pool has been approved by the
Board, the total cash amount is converted into Novo Nordisk B shares at market
price. The market price is calculated as the average trading price for Novo
Nordisk B shares on the OMX Nordic Exchange Copenhagen in the open trading
window following the release of financial results for the year prior to the
bonus year.
The
shares in the joint pool are allocated to the participants on a
pro
rata basis: the chief executive officer participates with three units, executive
vice presidents participate with two units each and other members of the Senior
Management Board participate with one unit each. The shares in the joint pool
for a given year are locked up for three years before they are transferred
to the participants. Upon resignation during the lock-up period by a participant,
the shares will remain in the joint pool to the benefit of the other participants.
In
the lock-up period, the Board may remove shares from the joint pool in the
event of lower than planned value creation in subsequent years if, for example,
the economic profit falls below a predefined threshold compared to the budget
for a particular year.
In
the lock-up period the value of the joint pool will change dependent upon
the development in the share price, and consequently the interests of the
participants, including the members of Executive Management, are aligned with
those of the shareholders.
Pension
The
pension contribution is between 25% and 30% of the fixed base salary including
bonus.
Non-monetary
benefits
Non-monetary
benefits such as company car, phone etc are negotiated with each executive
individually.
Severance
payment
In
addition to their notice period executives are entitled, in the event of termination,
whether by Novo Nordisk or by the individual due to a merger, acquisition
or takeover of Novo Nordisk, to a severance payment of 36 months fixed
base salary plus pension contribution. In the event of termination 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,
but in no event less than 12 and no more than 36 months fixed base salary
plus pension contribution.
Novo
Nordisk Annual Report 2007
|
45
|
Sten
Scheibye
Chairman
of the Board of Directors
Sten
Scheibye is chairman of the Board of Directors of Novo Nordisk A/S. Since
1995, he has been president and CEO of Coloplast A/S, Denmark.
Besides
being a member of the boards of various Coloplast companies, Mr Scheibye is
a member of the Board of Danske Bank A/S, Denmark. Furthermore, he holds a
seat on the Central Board and the Executive Committee of the Confederation
of Danish Industries.
Mr
Scheibye has an MSc in Chemistry and Physics from 1978 and a PhD in Organic
Chemistry from 1981, both from the University of Aarhus, Denmark, and a BComm
from the Copenhagen Business School, Denmark, from 1983. Mr Scheibye is also
an adjunct professor of applied chemistry at the University of Aarhus.
Mr
Scheibye was elected to the Board of Novo Nordisk A/S in 2003 and has been
re-elected several times, most recently in 2007. His term as a board member
expires in March 2008.
Mr
Scheibye is regarded as an independent* board member.
Mr Scheibye is a Danish national, born on 3
October 1951.
Göran
A Ando
Vice-chairman
of the Board of Directors
Göran
A Ando, MD, is vice-chairman of the Board of Directors of Novo Nordisk A/S.
Dr Ando was CEO of Celltech Group plc, UK, until 2004. He joined Celltech
from Pharmacia, now Pfizer, US, where he was executive vice president and
president of R&D with additional responsibilities for manufacturing, IT,
business development and M&A from 1995 to 2003.
From
1989 to 1995, Dr Ando was medical director, moving to deputy R&D director
and then R&D director of Glaxo Group, UK. He was also a member of the
Glaxo Group Executive Committee.
Dr
Ando is a specialist in general medicine and a founding fellow of the American
College of Rheumatology in the US. Dr Ando serves as chairman of the boards
of Novexel SA, France, and Inion Oy, Finland, as vice-chairman of the Board
of S*Bio Pte Ltd, Singapore, and as a board member of Novo A/S, Denmark, Bio*One
Capital Pte Ltd, Singapore, A-Bio Pharma Pte Ltd, Singapore, NicOx SA, France,
Enzon Pharmaceuticals, Inc, US, and EUSA Pharma, UK.
Dr
Ando qualified as a medical doctor at Linköping Medical University, Sweden,
in 1973 and as a specialist in general medicine at the same institution in
1978.
Dr
Ando was elected to the Board of Novo Nordisk A/S in 2005 and re-elected in
2006 and 2007. His term as a board member expires in March 2008. Dr Ando is
designated Research and Development Facilitator by the Board of Novo Nordisk
A/S.
Dr
Ando is not regarded as an independent* board member due to his membership
of the Board of Novo A/S.
Dr
Ando is a Swedish national, born on 6 March 1949.
Kurt
Briner
Kurt
Briner works as an independent consultant to the pharmaceutical and biotech
industries and is a board member of OM Pharma, Switzerland, Progenics Pharmaceuticals
Inc, US, and GALENICA SA, Switzerland. From 1988 to 1998, he was president
and CEO of Sanofi Pharma, France. He has been chairman of the European Federation
of Pharmaceutical Industries and Associations (EFPIA).
Mr
Briner holds a Diploma of the Commercial Schools of Basel and Lausanne, Switzerland.
Mr
Briner was elected to the Board of Novo Nordisk A/S in 2000 and has been re-elected
several times, most recently in 2007. His term as a board member expires in
March 2008.
Mr
Briner is regarded as an independent* board member.
Mr Briner is a Swiss national, born on 18 July
1944.
Henrik
Gürtler
Henrik
Gürtler has been president and CEO of Novo A/S, Denmark, since 2000.
He was employed by Novo Industri A/S, Denmark, as an R&D chemist in the
Enzymes Division in 1977.
After
a number of years in various specialist and managerial positions within this
area, Mr Gürtler was appointed corporate vice president of Human Resource
Development in Novo Nordisk A/S in 1991, and in 1993 he was appointed corporate
vice president of Health Care Production. In 1996, he became a member of Corporate
Management of Novo Nordisk A/S with special responsibility for Corporate Staffs.
Mr
Gürtler is chairman of the boards of Novozymes A/S and Copenhagen Airports
A/S, both Denmark. He is vice-chairman of the Board of COWI A/S, Denmark,
and a member of the Board of Brødrene Hartmanns Fond, Denmark.
Mr
Gürtler has an MSc in Chemical Engineering from the Technical University
of Denmark from 1976.
Mr
Gürtler was elected to the Board of Novo Nordisk A/S in 2005 and reelected
in 2006 and 2007. His term as a board member expires in March 2008.
Mr
Gürtler is not regarded as an independent* board member due to his former
position as an executive in Novo Nordisk A/S and his present position as president
and CEO of Novo A/S.
Mr
Gürtler is a Danish national, born on 11 August 1953.
46 | Novo Nordisk Annual Report 2007 |
Shareholder information | Board of Directors
Johnny
Henriksen
Johnny
Henriksen has been an employee-elected member of the Board of Directors of
Novo Nordisk A/S since 2002 and was re-elected in 2006. His term as a board
member expires in March 2010.
He
joined Novo Nordisk in January 1986 and currently works as an environmental
adviser in Product Supply.
Mr
Henriksen has an MSc in Biology from the University of Copenhagen, Denmark,
from 1977.
Mr
Henriksen is a Danish national, born on 19 April 1950.
Niels
Jacobsen
Niels
Jacobsen has been president and CEO of William Demant Holding A/S and Oticon
A/S, both Denmark, since 1998.
Mr
Jacobsen is a board member of A.P. Møller - Mærsk A/S, Denmark,
and is also a board member of a number of companies wholly or partly owned
by the William Demant Group, including Sennheiser Communications A/S, Himsa
A/S (chairman), Himsa II A/S, Hearing Instrument Manufacturers Patent Partnership
A/S (chairman), William Demant Invest A/S (chairman), all in Denmark, and
Össur hf. (chairman), Iceland. Mr Jacobsen also holds a seat on the Central
Board of the Confederation of Danish Industries.
Mr
Jacobsen has an MSc in Business Administration from the University of Aarhus,
Denmark, from 1983.
Mr
Jacobsen was elected to the Board of Novo Nordisk A/S in 2000 and has been
re-elected several times, most recently in 2007. His term as a board member
expires in March 2008.
Mr
Jacobsen is a member of the Audit Committee at Novo Nordisk A/S and is designated
as Audit Committee financial expert.
Mr
Jacobsen qualifies as an independent Audit Committee member as defined by
the US Securities and Exchange Commission (SEC) and is regarded as an independent*
board member under the Danish Corporate Governance recommendations.
Mr
Jacobsen is a Danish national, born on 31 August 1957.
Anne
Marie Kverneland
Anne
Marie Kverneland has been an employee-elected member of the Board of Directors
of Novo Nordisk A/S since 2000. She was re-elected by the employees in 2002
and in 2006. Her term as a board member expires in March 2010.
Ms
Kverneland joined Novo Nordisk in July 1981. She works as a laboratory technician
in R&D.
Ms
Kverneland has a degree in medical laboratory technology from the Copenhagen
University Hospital, Denmark, from 1980.
Ms
Kverneland is a Danish national, born on 24 July 1956.
Kurt
Anker Nielsen
Kurt
Anker Nielsen is a former CFO and deputy CEO of Novo Nordisk A/S and a former
CEO of Novo A/S. He serves as vice-chairman of the Board of Novozymes A/S
and as a member of the Board of Directors of the Novo Nordisk Foundation,
LifeCycle Pharma A/S, Denmark, and ZymoGenetics, Inc, US. He is chairman of
the Board of Reliance A/S, Denmark, and a member of the boards of StatoilHydro
ASA, Norway, and Vestas Wind Systems A/S, Denmark. In LifeCycle Pharma A/S,
ZymoGenetics, Inc, StatoilHydro ASA and Vestas Wind Systems A/S he is also
the elected Audit Committee chairman. Mr Nielsen serves as chairman of the
Board of Directors of Collstrups Mindelegat, Denmark.
Mr
Nielsen has an MSc in Commerce and Business Administration from the Copenhagen
Business School, Denmark, from 1972.
Mr
Nielsen was elected to the Board of Novo Nordisk A/S in 2000 and has been
re-elected several times, most recently in 2007. His term as a board member
expires in March 2008.
Mr
Nielsen is chairman of the Audit Committee at Novo Nordisk A/S and is also
designated as Audit Committee financial expert.
Mr
Nielsen qualifies as an independent Audit Committee member as defined by the
US Securities and Exchange Commission (SEC). He is not regarded as an independent*
board member under the Danish Corporate Governance Recommendations due to
his former position as an executive in Novo Nordisk A/S and his membership
of the Board of the Novo Nordisk Foundation.
Mr
Nielsen is a Danish national, born on 8 August 1945.
Søren
Thuesen Pedersen
Søren
Thuesen Pedersen has been an employee-elected member of the Board of Directors
of Novo Nordisk A/S since 2006 and a member of the Board of Directors of the
Novo Nordisk Foundation since 2002. His term as a board member of Novo Nordisk
A/S expires in March 2010.
Mr
Pedersen is currently working as a specialist in Global Quality Development.
He joined Novo Nordisk in January 1994.
Mr
Pedersen has a BSc in Chemical Engineering from the Danish Academy of Engineers
from 1988.
Mr
Pedersen is a Danish national, born on 18 December 1964.
Stig
Strøbæk
Stig
Strøbæk has been an employee-elected member of the Board of Directors
of Novo Nordisk A/S and of the Board of Directors of the Novo Nordisk Foundation
since 1998. Mr Strøbæk was re-elected by the employees in 2002
and in 2006. His term as a board member expires in March 2010.
He
is currently working in Product Supply as an electrician.
Mr
Strøbæk has a diploma as an electrician. He also has a diploma
in further training for board members from the Danish Employees Capital
Pension Fund (LD) from 2003.
Mr
Strøbæk is a Danish national, born on 24 January 1964.
Jørgen
Wedel
Jørgen
Wedel was executive vice president of the Gillette Company, US, until 2001.
He was responsible for Commercial Operations, International, and was a member
of Gillettes Corporate Management Group. Since 2004, he has been a board
member of ELOPAK AS, Norway.
Mr
Wedel has an MSc in Commerce and Business Administration from the Copenhagen
Business School, Denmark, from 1972, and an MBA from the University of Wisconsin,
US, from 1974.
Mr
Wedel was elected to the Board of Novo Nordisk A/S in 2000 and has been re-elected
several times, most recently in 2007. His term as a board member expires in
March 2008. Mr Wedel is a member of the Audit Committee at Novo Nordisk A/S.
Mr
Wedel qualifies as an independent Audit Committee member as defined by the
US Securities and Exchange Commission (SEC) and is regarded as an independent*
board member under the Danish Corporate Governance recommendations.
Mr
Wedel is a Danish national, born on 10 August 1948.
* | In accordance with Section V4 of Recommendations for corporate governance designated by the OMX Nordic Exchange Copenhagen. |
Novo
Nordisk Annual Report 2007
|
47
|
Shareholder information | Executive Management
Lars
Rebien Sørensen
President
and chief executive officer (CEO)
Lars
Rebien Sørensen joined Novo Nordisks Enzymes Marketing in 1982.
Over the years, he was stationed in several countries, including the Middle
East and the US. Mr Sørensen was appointed member of Corporate Management
in May 1994 and given special responsibility within Corporate Management for
Health Care in December 1994. He was appointed president and CEO in November
2000.
Mr
Sørensen is a member of the Board of ZymoGenetics, Inc, US, and DONG
Energy A/S, Denmark, as well as a member of the Bertelsmann AG Supervisory
Board, Germany. Mr Sørensen received the French award Chevalier de
lOrdre National de la Légion dHonneur in 2005.
Mr
Sørensen has an MSc in Forestry from the University of Copenhagen,
Denmark, from 1981, and a BSc in International Economics from the Copenhagen
Business School, Denmark, in 1983. Since October 2007, Mr Sørensen
has been adjunct professor at the Life Sciences Faculty of the University
of Copenhagen.
Mr
Sørensen is a Danish national, born on 10 October 1954.
Jesper
Brandgaard
Executive
vice president and chief financial officer (CFO)
Jesper
Brandgaard joined Novo Nordisk in 1999 as corporate vice president of Corporate
Finance and was appointed CFO in November 2000. He serves as chairman of the
boards of NNE Pharmaplan A/S and NNIT A/S, both Denmark, and is also vice-chairman
of the Board of SimCorp A/S, Denmark.
Mr
Brandgaard has an MSc in Economics and Auditing from 1990 as well as an MBA
from 1995, both from the Copenhagen Business School, Denmark.
Mr
Brandgaard is a Danish national, born on 12 October 1963.
Lise
Kingo
Executive
vice president and chief of staffs (COS)
Lise
Kingo joined Novo Nordisks Enzyme Promotion in 1988 and over the years
worked to build up the companys Triple Bottom Line approach. In 1999,
she was appointed corporate vice president, Stakeholder Relations. She was
appointed executive vice president, Corporate Relations, in March 2002.
Ms
Kingo is a member of the Board of GN Store Nord A/S, Denmark, and associate
professor at the Medical Faculty, Vrije Universiteit, Amsterdam, the Netherlands.
Ms
Kingo has a BA in Religions and a BA in Ancient Greek Art from the University
of Aarhus, Denmark, from 1986, a BComm in Marketing Economics from the Copenhagen
Business School, Denmark, from 1991, and an MSc in Responsibility and Business
Practice from the University of Bath, UK, from 2000.
Ms
Kingo is a Danish national, born on 3 August 1961.
Kåre
Schultz
Executive
vice president and chief operating officer (COO)
Kåre
Schultz joined Novo Nordisk in 1989 as an economist in Health Care, Economy
& Planning. In November 2000, he was appointed chief of staffs. In March
2002, he took over the responsibility of COO. Mr Schultz is a member of the
Board of LEGO A/S, Denmark.
Mr
Schultz has an MSc in Economics from the University of Copenhagen, Denmark,
from 1987.
Mr
Schultz is a Danish national, born on 21 May 1961.
Mads
Krogsgaard Thomsen
Executive
vice president and chief science officer (CSO)
Mads
Krogsgaard Thomsen joined Novo Nordisk in 1991. He was appointed CSO in November
2000. He sits on the editorial boards of international journals and is a member
of the Board of Governors of the Technical University of Denmark. He is also
a non-executive director of the Board of Cellartis AB, Sweden.
Dr
Thomsen has a DVM from the University of Copenhagen, Denmark, from 1986, where
he also obtained a PhD in 1989 and a DSc in 1991, and became adjunct professor
of pharmacology in 2000. He is a former president of the National Academy
of Technical Sciences (ATV), Denmark.
Dr
Thomsen is a Danish national, born on 27 December 1960.
Other
members of the
Senior Management Board
Jesper
Bøving CMC Supply
Kim
Bundegaard Facilitation and Group Internal Audits
Mariann Strid Christensen
Global Quality *)
Flemming Dahl DAPI Biopharmaceuticals
Claus
Eilersen Japan & Oceania
Peter Bonne Eriksen Regulatory Affairs
Lars Green Corporate Finance
Jesper
Høiland International Operations
Per Jansen NNS *)
Lars
Fruergaard Jørgensen IT & Corporate Development
Terje Kalland
Biopharmaceuticals Research Unit
Lars Guldbæk Karlsen Global
Development **)
Jesper Kløve Devices & Sourcing
Per Kogut
NNIT
Peter
Kurtzhals Diabetes Research Unit
Lars
Christian Lassen Corporate People & Organisation
Ole
Ramsby Legal Affairs
Jakob
Riis International Marketing **)
Martin Soeters North America
**)
Kim Tosti Diabetes Finished Products
Per Valstorp Product
Supply
Hans Ole Voigt NNE Pharmaplan
**)
Until 31 December 2007.
**)
Takes new position as of 1 January 2008.
48 | Novo Nordisk Annual Report 2007 |
Shareholder information | Shares
Novo Nordisk aims at communicating openly with stakeholders about the companys financial and business development as well as strategies and targets. Through active dialogue, the company seeks to ensure fair and efficient pricing of its shares.
To keep
investors updated on financial and operating performance as well as the progress
of clinical programmes, Executive Management and Investor Relations travel
extensively to meet institutional investors and attend investor conferences
after each quarterly financial announcement.
This
ensures that all investors with a major holding of Novo Nordisk shares can
attend meetings on a regular basis and that a high number of smaller investors
or potential investors also have access. Roadshows are concentrated on, but
not limited to, major European and North American financial centres.
A
wide range of other investor activities are held during the year. Investors
and financial analysts are welcome to visit Novo Nordisk at the headquarters
in Bagsværd, Denmark, as well as at regional headquarters. In 2007,
meetings with investor groups were held at regional headquarters in Princeton,
US, in Bangalore, India, and in Moscow, Russia.
Furthermore,
investors and analysts are invited every year to presentations of the most
recent scientific results in connection with the two major medical diabetes
conferences, ADA and EASD. In November 2007, a one-day tour of Novo Nordisks
largest production site was arranged. This visit to the Kalundborg site gave
investors and analysts insight into the production processes of biologics
and an understanding of ongoing efforts to optimise production processes.
Share price performance
In 2007, in line with share price appreciation and in order to enhance liquidity, Novo Nordisks Board of Directors approved a stock split of the companys B shares. This 2:1 split took effect on 3 December for B shares traded on the OMX Nordic Exchange Copenhagen, and on the
London
Stock Exchange. Novo Nordisks ADRs listed on the New York Stock Exchange
were split on 17 December.
Between
the closing price of 2006 and 30 November 2007 (the last day of trading before
the stock split), the price of the Novo Nordisk B share increased by 38% to
DKK 647 from DKK 470.5. In December, following the stock split, the share
price rose by 4%, thus the total increase for 2007 was 42%. This was significantly
better than the 2007 performance of the OMX Copenhagen 20 Index, up 5%, and
the MSCI Europe Health Care Index, down 11%, both measured in DKK. Measured
in USD, the price of the Novo Nordisk B share increased by 58%, which compared
favourably with a USD return of 5% for the MSCI US Health Care Index.
Novo
Nordisks positive share price development is perceived as a reflection
of the companys position in a growth market, strong operating performance
and ongoing progress in research and development. In 2007, operating performance
was bolstered by solid sales growth (reported sales 8%; sales measured in
local currencies 13%) driven by the strategically significant modern insulin
products. Substantial productivity increases, achieved through the production
efficiency improvement programme cLean®, also contributed. These factors
led to an improvement in the gross margin of around 130 basis points in 2007.
Within
research and development, the results of the phase 3 programme intended for
regulatory filing outside Japan for the human GLP-1 analogue liraglutide are
believed to have made a positive impact on the share price. Factors on the
negative side were the NovoSeven® ICH phase 3 results, which did not support
a filing for this indication, and unfavourable currency developments for some
of Novo Nordisks key invoicing currencies, including the US dollar.
Capital structure
The Board
of Directors believes that the current capital and share structures of Novo
Nordisk serve the interests of the shareholders and the company. In the event
of excess capital after the funding of organic growth opportunities and potential
acquisitions, Novo Nordisks guiding policy is to return capital to investors
through dividend payments and share repurchase programmes.
As
decided at the Annual General Meeting 2007, a reduction of the companys
B share capital, corresponding to approximately 4% of the total share capital,
was effected in June 2007 by cancellation of treasury shares.
*) As disclosed by The Capital Group Companies on 10 December 2007.
Price
development and monthly turnover of Novo Nordisks B shares
on the OMX Nordic Exchange Copenhagen 2007
* Historical prices in the graph are adjusted for the share split in December 2007.
Novo
Nordisk Annual Report 2007
|
49
|
Shareholder information | Shares
This
enables Novo Nordisk to continue to buy back shares without exceeding the
limit for total holding of treasury shares of 10% of the total capital. In
2007, Novo Nordisk repurchased shares worth DKK 4.8 billion, compared to DKK
3 billion in 2006. This is part of the ongoing share repurchase programme
of DKK 16.5 billion for the period 20062009.
As
part of the agenda for the Annual General Meeting 2008, the Board of Directors
will propose a reduction of the companys B share capital, corresponding
to approximately 2% of the total share capital, by cancelling treasury shares.
Share capital and ownership
Novo
Nordisks total share capital of DKK 646,960,000 is divided into A share
capital of nominally DKK 107,487,200, and B share capital of nominally DKK
539,472,800 of which DKK 25,815,130 is held as trea -sury shares (figures
as of 31 December 2007). Novo Nordisks A shares (each DKK 1) are non-listed
shares and held by Novo A/S, a Danish public limited liability company which
is 100% owned by the Novo Nordisk Foundation. According to the Articles of
Association of the Foundation, the A shares cannot be divested by Novo A/S
or the Foundation.
In
addition, as of 31 December 2007 Novo A/S held DKK 57,487,600 of B share capital.
Each holding of DKK 1 of the A share capital carries 10 votes. Each holding
of DKK 1 of the B share capital carries one vote. With 25.5% of the total
share capital, Novo A/S controls 71% of the total number of votes, excluding
treasury shares. The total market value of Novo Nordisks B shares excluding
treasury shares was DKK 172 billion at the end of 2007.
Novo
Nordisks B shares are quoted on the OMX Nordic Exchange Copenhagen and
the London Stock Exchange, and on the New York Stock Exchange in the form
of ADRs. The B shares are traded in units of DKK 1. The ratio of Novo Nordisks
B shares to ADRs is 1:1. The B shares are issued to the bearer but may, on
request, be registered in the holders name in Novo Nordisks register
of shareholders.
As
Novo Nordisk B shares are in bearer form, no official record of all shareholders
exists. Based on the available sources of information on the companys
shareholders, it is estimated that Novo Nordisks shares at the end of
2007 were distributed as shown in the charts on p 49. At the end of 2007 the
free float was 71%.
Form 20-F
The Form 20-F Report for 2007 is expected to be filed with the United
States Securities and Exchange Commission in February 2008. The report can be downloaded from novonordisk.com/investors.
Payment of dividends
Shareholders
enquiries concerning dividend payments, transfer of share certificates, consolidation
of shareholder accounts and tracking of lost shares should be addressed to
Novo Nordisks transfer agents (see inside back cover).
For
2007, the proposed dividend payments for Novo Nordisk shares are illustrated
in the table below. Novo Nordisk does not pay a dividend on its holding of
treasury shares. The dividend for 2006 paid in March 2007 was DKK 7 per share
of DKK 2, equivalent to DKK 3.50 a share, adjusted for the 2:1 share split
of December 2007.
Proposed dividend payment for 2007
A
shares of DKK 1
|
B
shares of DKK 1
|
ADRs
|
|
||
DKK
4.50
|
DKK
4.50
|
DKK
4.50
|
|
||
Internet
Novo Nordisks homepage for investors is novonordisk.com/investors. It includes historical and updated information about Novo Nordisks activities: press releases from 1995 onwards, financial and non-financial results, a calendar of investor-relevant events, investor presentations, background information and recent annual reports.
Financial calendar 2008
Annual
General Meeting
|
12
March 2008
|
|
|
||
Dividend |
B
shares
|
ADRs
|
Ex-dividend | 13 March | 13 March |
Record date | 17 March | 17 March |
Payment | 18 March | 25 March |
|
||
Announcement of financial results 2008 | ||
First three months |
30
April
|
|
Half year |
7
August
|
|
Nine months |
30
October
|
|
Full year |
29
January 2009
|
|
|
||
Price development of Novo Nordisks B shares relative to the MSCI Europe Health Care Index measured in DKK
Price development of Novo Nordisks B shares relative to the MSCI US Health Care Index measured in USD
50 | Novo Nordisk Annual Report 2007 |
Consolidated financial and non-financial statements 2007 | Table of contents
consolidated
financial and non-financial
statements 2007
52 |
Financial
and non-financial highlights
|
||||
|
|
|
|||
54 |
Consolidated
income statement
|
||||
|
|
|
|||
55 |
Consolidated
balance sheet
|
||||
|
|
|
|||
56 |
Consolidated
cash flow statement and financial resources
|
||||
|
|
|
|||
57 |
Consolidated
statement of changes in equity
|
||||
|
|
|
|||
58 |
Notes:
Accounting policies and other notes to the financial statement
|
||||
|
|
|
|||
89 |
Overview
of non-financial reporting
|
||||
|
|
|
|
||
90 |
Non-financial
indicators and targets
|
||||
|
|
|
|
||
91 |
Notes:
Accounting policies and other notes to the non-financial data
|
||||
|
|
|
|
||
100 |
Companies
in the Novo Nordisk Group
|
||||
|
|
|
|
||
102 |
Summary
of financial data 20032007
|
||||
|
|
|
|
||
104 |
Quarterly
figures 2006 and 2007 (unaudited)
|
||||
|
|
|
|
||
105 |
Financial
statements of the parent company, Novo Nordisk A/S
|
||||
|
|
|
|||
113 |
Management
statement
|
||||
|
|
|
|||
114 |
Auditors
reports
|
||||
|
|
|
|||
Novo
Nordisk Annual Report 2007
|
51
|
Consolidated financial and non-financial statements | Financial highlights
Sales | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
2004
|
2005
|
2006
|
2007
|
20062007
|
2006
|
2007
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DKK
million
|
DKK
million
|
DKK
million
|
DKK
million
|
DKK
million
|
Change
|
EUR
million
|
EUR
million
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diabetes care: | ||||||||||||||||
Modern insulins (insulin analogues) | 2,553 | 4,507 | 7,298 | 10,825 | 14,008 | 29.4 | % | 1,451 | 1,880 | |||||||
Human insulins | 13,140 | 13,033 | 13,543 | 13,451 | 12,572 | (6.5 | %) | 1,804 | 1,687 | |||||||
Insulin-related sales | 1,352 | 1,350 | 1,463 | 1,606 | 1,749 | 8.9 | % | 215 | 235 | |||||||
Oral antidiabetic products (OAD) | 1,430 | 1,643 | 1,708 | 1,984 | 2,149 | 8.3 | % | 266 | 288 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diabetes care total | 18,475 | 20,533 | 24,012 | 27,866 | 30,478 | 9.4 | % | 3,736 | 4,090 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biopharmaceuticals: | ||||||||||||||||
Haemostasis management (NovoSeven®) | 3,843 | 4,359 | 5,064 | 5,635 | 5,865 | 4.1 | % | 755 | 788 | |||||||
Growth hormone therapy | 2,133 | 2,317 | 2,781 | 3,309 | 3,511 | 6.1 | % | 444 | 471 | |||||||
Hormone replacement therapy | 1,322 | 1,488 | 1,565 | 1,607 | 1,668 | 3.8 | % | 215 | 224 | |||||||
Other products | 385 | 334 | 338 | 326 | 309 | (5.2 | %) | 44 | 41 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biopharmaceuticals total | 7,683 | 8,498 | 9,748 | 10,877 | 11,353 | 4.4 | % | 1,458 | 1,524 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales by segments | 26,158 | 29,031 | 33,760 | 38,743 | 41,831 | 8.0 | % | 5,194 | 5,614 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe*) | 12,053 | 12,887 | 14,020 | 15,300 | 16,350 | 6.9% | 2,051 | 2,194 | ||||||||
North America | 6,219 | 7,478 | 9,532 | 12,280 | 13,746 | 11.9% | 1,646 | 1,845 | ||||||||
International Operations*) | 3,871 | 4,368 | 5,497 | 6,494 | 7,295 | 12.3% | 871 | 979 | ||||||||
Japan & Oceania | 4,015 | 4,298 | 4,711 | 4,669 | 4,440 | (4.9% | ) | 626 | 596 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales by geographical areas | 26,158 | 29,031 | 33,760 | 38,743 | 41,831 | 8.0% | 5,194 | 5,614 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price and volume/mix | 15% | 15% | 15% | 16% | 13% | |||||||||||
Currency | (10% | ) | (4% | ) | 1% | (1% | ) | (5% | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total growth | 5% | 11% | 16% | 15% | 8% | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key figures | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DKK
million
|
DKK
million
|
DKK
million
|
DKK
million
|
DKK
million
|
Change
|
EUR
million
|
EUR
million
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit | 6,422 | 6,980 | 8,088 | 9,119 | 8,942 | (1.9% | ) | 1,223 | 1,200 | |||||||
Operating profit excl. AERx® **) | | | | | 10,267 | 12.6% | | 1,378 | ||||||||
Net financials | 954 | 477 | 146 | 45 | 2,029 | 4408.9% | 6 | 272 | ||||||||
Profit before income taxes | 7,376 | 7,457 | 8,234 | 9,164 | 10,971 | 19.7% | 1,229 | 1,472 | ||||||||
Net profit | 4,833 | 5,013 | 5,864 | 6,452 | 8,522 | 32.1% | 865 | 1,144 | ||||||||
Equity | 24,776 | 26,504 | 27,634 | 30,122 | 32,182 | 6.8% | 4,040 | 4,316 | ||||||||
Total assets | 34,564 | 37,433 | 41,960 | 44,692 | 47,731 | 6.8% | 5,994 | 6,401 | ||||||||
Capital expenditure (net) | 2,273 | 2,999 | 3,665 | 2,787 | 2,268 | (18.6% | ) | 374 | 304 | |||||||
Free cash flow | 3,846 | 4,278 | 4,833 | 4,707 | 9,012 | 91.5% | 631 | 1,210 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share/ADR of DKK1 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DKK
|
DKK
|
DKK
|
DKK
|
DKK
|
Change
|
EUR
|
EUR
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share | 7.09 | 7.45 | 8.95 | 10.05 | 13.49 | 34% | 1.35 | 1.81 | ||||||||
Earnings per share, diluted | 7.08 | 7.42 | 8.92 | 10.00 | 13.39 | 34% | 1.34 | 1.80 | ||||||||
Proposed dividend | 2.20 | 2.40 | 3.00 | 3.50 | 4.50 | 29% | 0.47 | 0.60 | ||||||||
Quoted price at year-end for B shares | 121 | 150 | 178 | 236 | 335 | 42% | 31.65 | 44.96 | ||||||||
|
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Ratios | ||||||||||||
|
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|
|
|
|
|
|
|
|
|
%
|
%
|
%
|
%
|
%
|
Long-term financial target in% | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth in operating profit | 8.4 | 8.7 | 15.9 | 12.7 | (1.9 | ) | 15 | |||||
Growth in operating profit excl. AERx® **) | | | | | 12.6 | |||||||
Growth in operating profit, three-year average | 11.0 | 8.9 | 11.0 | 12.4 | 8.9 | |||||||
Operating profit margin | 24.6 | 24.0 | 24.0 | 23.5 | 21.4 | 25 | ||||||
Operating profit margin excl. AERx® **) | | | | | 24.5 | |||||||
Return on invested capital (ROIC) | 20.4 | 21.5 | 24.7 | 25.8 | 27.2 | 30 | ||||||
Cash to earnings | 79.6 | 85.3 | 82.4 | 73.0 | 105.7 | |||||||
Cash to earnings excl. AERx® **) | | | | | 94.2 | |||||||
Cash to earnings, three-year average | 32.3 | 59.0 | 82.4 | 80.2 | 87.0 | 70 | ||||||
Net profit margin | 18.5 | 17.3 | 17.4 | 16.7 | 20.4 | |||||||
Equity ratio | 71.7 | 70.8 | 65.9 | 67.4 | 67.4 | |||||||
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|
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|
|
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|
*) | Comparative sales figures from 2003 and 2006 have been adjusted in order to reflect a changed organisational structure from 1 January 2007 which transfers eight countries, incl. Bulgaria and Romania, from International Operations to Europe. |
**) | Excluding
costs related to discontinuation of AERx®. Key figures are translated into EUR as supplementary information the translation of income statement items is based on the average exchange rate in 2007 (EUR 1 = DKK 7.45078) 52and the translation of balance sheet items is based on the exchange rate at the end of 2007 (EUR 1 = DKK 7.4566). |
52 | Novo Nordisk Annual Report 2007 |
Economics | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
2004
|
2005
|
2006
|
2007
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R&D | Ratio of R&D expenditure to tangible investments *) | 1.8:1 | 1.5:1 | 1.4:1 | 2.3:1 | 3.2:1 | |||||||
R&D as share of sales | % | 15.5 | 15.0 | 15.1 | 16.3 | 17.2 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments | Capital expenditure (net) | DKK million | 2,273 | 2,999 | 3,665 | 2,787 | 2,268 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remuneration | Remuneration as share of cash received | % | 34 | 34 | 34 | 33 | 32 | ||||||
|
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|
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|
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|
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|
|
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|
Employment | Employment impact worldwide (direct and indirect) | Number of jobs | 67,900 | 73,100 | 78,000 | 82,700 | 81,600 | ||||||
|
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|
|
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|
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|
|
|
|
|
|
Corporate tax | Total corporate tax as share of sales | % | 9.7 | 8.4 | 7.0 | 7.0 | **) | 5.9 | |||||
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|
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|
|
|
|
Exports | Novo Nordisk exports as share of Danish exports (estimated) | % | 4.4 | 3.9 | 4.7 | 4.0 | 3.4 | ||||||
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|
Environment | |||||||||||||
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|
|
|
|
|
|
Resources |
Water
consumption
|
1,000m3
|
2,621
|
2,756
|
3,014
|
2,995
|
3,231
|
||||||
Energy consumption |
1,000GJ
|
2,299 | 2,397 | 2,679 | 2,712 | 2,784 | |||||||
Raw materials and packaging materials |
1,000
tons
|
110 | 111 | 135 | 142 | 152 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wastewater | COD |
Tons
|
1,187 | 1,448 | 1,303 | 1,000 | 813 | ||||||
Nitrogen |
Tons
|
122 | 121 | 126 | 107 | 107 | |||||||
Phosphorus |
Tons
|
21 | 21 | 22 | 19 | 14 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waste | Total waste |
Tons
|
21,356 | 21,855 | 23,776 | 24,165 | 17,576 | ||||||
Recycling percentage |
%
|
41 | 40 | 33 | 35 | 38 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emissions to air | CO2***) |
1,000
tons
|
205 | 210 | 228 | 229 | 236 | ||||||
Organic solvents |
Tons
|
137 | 115 | 124 | 102 | 81 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EIR Water | Diabetes care |
m3/MU
|
| | | 7.8 | 7.3 | ||||||
Biopharmaceuticals |
m3/g
API
|
| | | 4.8 | 4.1 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EIR Energy | Diabetes care |
GJ/MU
|
| | | 5.5 | 5.1 | ||||||
Biopharmaceuticals |
GJ/g
API
|
| | | 9.2 | 7.9 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compliance | Breaches of regulatory limit values |
Number
|
105 | 74 | 174 | 123 | 22 | ||||||
Accidental releases |
Number
|
20 | 29 | 104 | 135 | 105 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Social | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Living our values | Importance of social and environmental issues for the future of the company****) | 4.0 | 4.2 | 4.2 | 4.3 | 4.4 | |||||||
Managers behaviour consistent with Novo Nordisks values****) | 3.8 | 4.0 | 4.0 | 4.1 | 4.2 | ||||||||
Fulfilment of action points from facilitations of the NNWoM |
%
|
99 | 96 | 100 | 99 | 99 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
People | Employees (total) |
Number
|
19,241 | 20,725 | 22,460 | 23,613 | 26,008 | ||||||
Rate of absence |
%
|
3.1 | 3.2 | 3.2 | 3.0 | 2.7 | |||||||
Rate of employee turnover |
%
|
7.1 | 7.3 | 8.0 | 10.0 | 11.6 | |||||||
Engaging culture (employee engagement)****) | | | | 4.0 | 4.1 | ||||||||
Opportunity to use and develop competences/skills****) | 3.7 | 3.8 | 3.8 | 3.9 | 4.0 | ||||||||
People from diverse backgrounds have equal opportunities****) | 3.7 | 3.8 | 3.9 | 3.9 | 4.0 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & safety | Frequency of occupational injuries per million working hours | 5.4 | 5.6 | 7.3 | 6.2 | 5.9 | |||||||
Fatalities |
Number
|
0 | 1 | 0 | 0 | 0 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Training costs | Annual training costs per employee |
DKK
|
7,518 | 8,992 | 9,899 | 11,293 | 13,130 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Access to health | LDCs where Novo Nordisk operates |
Number
|
30 | 35 | 35 | 35 | 38 | ||||||
LDCs where Novo Nordisk sells insulin at or below the policy price |
Number
|
16 | 33 | 32 | 34 | 36 | |||||||
Healthcare professionals trained or educated |
Number
|
| | | 297,000 | 336,000 | |||||||
People with diabetes trained or treated |
Number
|
| | | 1,060,000 | 1,260,000 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patent families | Active patent families to date |
Number
|
701 | 778 | 812 | 913 | 1,003 | ||||||
New patent families (first filing) |
Number
|
140 | 145 | 130 | 149 | 116 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Animals | Animals purchased |
Number
|
42,869 | 47,311 | 57,905 | 56,533 | 54,675 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
*) | Excluding costs related to discontinuation of AERx®. |
**) | Previously reported as 9.1. Reporting error now corrected. |
***) | Data have been restated due to changed emission factors in Denmark. |
****) | On a scale of 15, with 5 being the highest. |
Novo
Nordisk Annual Report 2007
|
53
|
Consolidated financial statements | Consolidated income statement
DKK
million
|
Note
|
2007
|
2006
|
2005
|
||||
|
|
|
|
|
|
|
|
|
Sales |
4,
5, 25
|
41,831
|
38,743
|
33,760
|
||||
Cost of goods sold |
6,
7
|
9,793
|
9,585
|
9,177
|
||||
|
|
|
|
|
|
|
|
|
Gross profit |
32,038
|
29,158
|
24,583
|
|||||
Sales and distribution costs |
6,
7
|
12,371
|
11,608
|
9,691
|
||||
Research and development costs |
6,
7
|
8,538
|
6,316
|
5,085
|
||||
Hereof costs related to AERx® discontinuation |
3
|
(1,325
|
) |
|
|
|||
Administrative expenses |
6,
7, 8
|
2,508
|
2,387
|
2,122
|
||||
Licence fees and other operating income (net) |
9
|
321
|
272
|
403
|
||||
|
|
|
|
|
|
|
|
|
Operating profit |
8,942
|
9,119
|
8,088
|
|||||
Share of profit/(loss) in associated companies |
16
|
1,233
|
(260
|
) |
319
|
|||
Financial income |
10
|
1,303
|
931
|
498
|
||||
Financial expenses |
11
|
507
|
626
|
671
|
||||
|
|
|
|
|
|
|
|
|
Profit before income taxes |
10,971
|
9,164
|
8,234
|
|||||
Income taxes |
12
|
2,449
|
2,712
|
2,370
|
||||
|
|
|
|
|
|
|
|
|
Net profit |
8,522
|
6,452
|
5,864
|
|||||
|
|
|
|
|
|
|
|
|
Basic earnings per share (DKK) |
13
|
13.49
|
10.05
|
8.95
|
||||
Diluted earnings per share (DKK) |
13
|
13.39
|
10.00
|
8.91
|
||||
|
|
|
|
|
|
|
|
54 | Novo Nordisk Annual Report 2007 |
Consolidated
balance sheet
|
DKK
million
|
Note
|
31
Dec 2007
|
31
Dec 2006
|
|||
|
|
|
|
|
|
|
Assets | ||||||
|
|
|
|
|
|
|
Intangible assets |
14
|
671
|
639
|
|||
Property, plant and equipment |
15
|
19,605
|
20,350
|
|||
Investments in associated companies |
16
|
500
|
788
|
|||
Deferred income tax assets |
23
|
2,522
|
1,911
|
|||
Other financial assets |
17
|
131
|
169
|
|||
|
|
|
|
|
|
|
Total long-term assets |
23,429
|
23,857
|
||||
|
|
|
|
|
|
|
Inventories |
18
|
9,020
|
8,400
|
|||
Trade receivables |
19
|
6,092
|
5,163
|
|||
Tax receivables |
319
|
385
|
||||
Other receivables |
20
|
1,493
|
1,784
|
|||
Marketable securities and financial derivatives |
17
|
2,555
|
1,833
|
|||
Cash at bank and in hand |
30
|
4,823
|
3,270
|
|||
|
|
|
|
|
|
|
Total current assets |
24,302
|
20,835
|
||||
|
|
|
|
|
|
|
Total assets |
47,731
|
44,692
|
||||
|
|
|
|
|
|
Equity and liabilities | ||||||
|
|
|
|
|
|
|
Share capital |
21
|
647
|
674
|
|||
Treasury shares |
(26
|
)
|
(39
|
)
|
||
Retained earnings |
30,661
|
28,810
|
||||
Other reserves |
900
|
677
|
||||
|
|
|
|
|
|
|
Total equity |
32,182
|
30,122
|
||||
|
|
|
|
|
|
|
Long-term debt |
22
|
961
|
1,174
|
|||
Deferred income tax liabilities |
23
|
2,346
|
1,998
|
|||
Retirement benefit obligations |
24
|
362
|
330
|
|||
Other provisions |
25
|
1,239
|
911
|
|||
|
|
|
|
|
|
|
Total long-term liabilities |
4,908
|
4,413
|
||||
|
|
|
|
|
|
|
Short-term debt and financial derivatives |
26
|
405
|
338
|
|||
Trade payables |
1,947
|
1,712
|
||||
Tax payables |
929
|
788
|
||||
Other liabilities |
27
|
4,959
|
4,863
|
|||
Other provisions |
25
|
2,401
|
2,456
|
|||
|
|
|
|
|
|
|
Total current liabilities |
10,641
|
10,157
|
||||
|
|
|
|
|
|
|
Total liabilities |
15,549
|
14,570
|
||||
|
|
|
|
|
|
|
Total equity and liabilities |
47,731
|
44,692
|
||||
|
|
|
|
|
|
Novo
Nordisk Annual Report 2007
|
55
|
Consolidated financial statements | Consolidated cash flow statement and financial resources
DKK
million
|
Note
|
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
|
Net profit |
8,522
|
6,452
|
5,864
|
||||
Adjustment for non-cash items: | |||||||
Income taxes |
2,449
|
2,712
|
2,370
|
||||
Depreciation, amortisation and impairment losses |
3,007
|
2,142
|
1,930
|
||||
Interest income and interest expenses |
(16
|
) |
(73
|
) |
44
|
||
Other adjustments for non-cash items |
28
|
(309
|
) |
959
|
1,109
|
||
Income taxes paid |
(2,607
|
) |
(3,514
|
) |
(2,138
|
) | |
Interest received and interest paid (net) |
(29
|
) |
95
|
(73
|
) | ||
|
|
|
|
|
|
|
|
Cash flow before change in working capital |
11,017
|
8,773
|
9,106
|
||||
Change in working capital: | |||||||
(Increase)/decrease in trade receivables and other receivables |
(702
|
) |
(804
|
) |
(1,139
|
) | |
(Increase)/decrease in inventories |
(617
|
) |
(686
|
) |
(618
|
) | |
Increase/(decrease) in trade payables and other liabilities |
289
|
455
|
1,363
|
||||
|
|
|
|
|
|
|
|
Cash flow from operating activities |
9,987
|
7,738
|
8,712
|
||||
Investments: | |||||||
Acquisition of subsidiaries and business units |
29
|
(59
|
) |
|
(350
|
) | |
Sale of intangible assets and long-term financial assets |
|
175
|
400
|
||||
Purchase of intangible assets and long-term financial assets |
(118
|
) |
(419
|
) |
(264
|
) | |
Sale of property, plant and equipment |
40
|
111
|
234
|
||||
Purchase of property, plant and equipment |
(2,308
|
) |
(2,898
|
) |
(3,899
|
) | |
Net change in marketable securities (maturity exceeding three months) |
(541
|
) |
514
|
(1,032
|
) | ||
Dividend received |
16
|
1,470
|
|
|
|||
|
|
|
|
|
|
|
|
Net cash used in investing activities |
(1,516
|
) |
(2,517
|
) |
(4,911
|
) | |
Financing: | |||||||
Repayment of long-term debt |
(18
|
) |
(23
|
) |
(29
|
) | |
Purchase of treasury shares |
(4,835
|
) |
(3,000
|
) |
(3,018
|
) | |
Sale of treasury shares |
241
|
210
|
206
|
||||
Dividends paid |
(2,221
|
) |
(1,945
|
) |
(1,594
|
) | |
|
|
|
|
|
|
|
|
Cash flow from financing activities |
(6,833
|
) |
(4,758
|
) |
(4,435
|
) | |
|
|
|
|
|
|
|
|
Net cash flow |
1,638
|
463
|
(634
|
) | |||
|
|
|
|
|
|
|
|
Unrealised gain/(loss) on exchange rates and marketable securities | |||||||
included in cash and cash equivalents |
(6
|
) |
39
|
154
|
|||
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
1,632
|
502
|
(480
|
) | |||
Cash and cash equivalents at the beginning of the year |
2,985
|
2,483
|
2,963
|
||||
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the year |
30
|
4,617
|
2,985
|
2,483
|
|||
|
|
|
|
|
|
|
|
Supplemental information: | |||||||
Cash and cash equivalents at the end of the year |
30
|
4,617
|
2,985
|
2,483
|
|||
Bonds with original term to maturity exceeding three months |
17
|
1,486
|
1,001
|
1,502
|
|||
Undrawn committed credit facilities |
26
|
7,457
|
7,456
|
7,461
|
|||
|
|
|
|
|
|
|
|
Financial resources at the end of the year |
13,560
|
11,442
|
11,446
|
||||
|
|
|
|
|
|
|
|
Cash flow from operating activities |
9,987
|
7,738
|
8,712
|
||||
+ Net cash used in investing activities |
(1,516
|
) |
(2,517
|
) |
(4,911
|
) | |
Net change in marketable securities (maturity exceeding three months) |
(541
|
) |
514
|
(1,032
|
) | ||
|
|
|
|
|
|
|
|
Free cash flow |
9,012
|
4,707
|
4,833
|
||||
|
|
|
|
|
|
|
56 | Novo Nordisk Annual Report 2007 |
Consolidated
statement of changes in equity
|
Share
|
Treasury
|
Retained
|
Other reserves |
Total
|
||||||||||
capital
|
shares
|
earnings
|
|
|||||||||||
DKK million |
Exchange
rate adjustments |
Deferred
gain/loss on cash flow hedges |
Other
adjust- ments |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 | ||||||||||||||
Balance at the beginning of the year | 674 | (39 | ) | 28,810 | 156 | 420 | 101 | 30,122 | ||||||
Exchange rate adjustment of investments in subsidiaries | 53 | 53 | ||||||||||||
Deferred (gain)/loss on cash flow hedges at the beginning of the year recognised as financial income/expenses for the year | (420 | ) | (420 | ) | ||||||||||
Deferred gain/(loss) on cash flow hedges at the end of the year | 691 | 691 | ||||||||||||
Fair value adjustments on financial assets available for sale | 12 | 12 | ||||||||||||
Novo Nordisk share of equity recognised by associated companies | (41 | ) | (41 | ) | ||||||||||
Tax on equity adjustments | (93 | ) | (93 | ) | ||||||||||
Other adjustments | 21 | 21 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income recognised directly in equity for the year | | | | 53 | 271 | (101 | ) | 223 | ||||||
Net profit for the year | 8,522 | 8,522 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income for the year | | | 8,522 | 53 | 271 | (101 | ) | 8,745 | ||||||
Share-based payment | 130 | 130 | ||||||||||||
Purchase of treasury shares | (16 | ) | (4,819 | ) | (4,835 | ) | ||||||||
Sale of treasury shares | 2 | 239 | 241 | |||||||||||
Reduction of the B share capital | (27 | ) | 27 | | ||||||||||
Dividends | (2,221 | ) | (2,221 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year | 647 | (26 | ) | 30,661 | 209 | 691 | 0 | 32,182 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the year proposed dividends (not yet declared) of DKK 2,795 million (DKK 4.50 per share) are included in Retained earnings. No dividend is declared on treasury shares.
Share
|
Treasury
|
Retained
|
Other reserves |
Total
|
||||||||||
capital
|
shares
|
earnings
|
|
|||||||||||
DKK million |
Exchange
rate adjustments |
Deferred
gain/loss on cash flow hedges |
Other
adjust- ments |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 | ||||||||||||||
Balance at the beginning of the year | 709 | (61 | ) | 26,962 | 142 | (345 | ) | 227 | 27,634 | |||||
Exchange rate adjustment of investments in subsidiaries | 14 | 14 | ||||||||||||
Deferred (gain)/loss on cash flow hedges at the beginning of the year recognised as financial income/expenses for the year | 345 | 345 | ||||||||||||
Deferred gain/(loss) on cash flow hedges at the end of the year | 420 | 420 | ||||||||||||
Fair value adjustments on financial assets available for sale | (27 | ) | (27 | ) | ||||||||||
Novo Nordisk share of equity recognised by associated companies | 36 | 36 | ||||||||||||
Tax on equity adjustments | (129 | ) | (129 | ) | ||||||||||
Other adjustments | 5 | (6 | ) | (1 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income recognised directly in equity for the year | | | 5 | 14 | 765 | (126 | ) | 658 | ||||||
Net profit for the year | 6,452 | 6,452 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income for the year | | | 6,457 | 14 | 765 | (126 | ) | 7,110 | ||||||
Share-based payment | 113 | 113 | ||||||||||||
Purchase of treasury shares | (15 | ) | (2,985 | ) | (3,000 | ) | ||||||||
Sale of treasury shares | 2 | 208 | 210 | |||||||||||
Reduction of the B share capital | (35 | ) | 35 | | ||||||||||
Dividends | (1,945 | ) | (1,945 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year | 674 | (39 | ) | 28,810 | 156 | 420 | 101 | 30,122 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the year proposed dividends (declared in 2007) of DKK 2,221 million (DKK 3.50 per share) are included in Retained earnings. No dividend is declared on treasury shares.
Novo
Nordisk Annual Report 2007
|
57
|
Consolidated financial statements | Notes Accounting policies
1 |
Summary
of significant accounting policies
|
|
The
Consolidated financial statements are prepared in accordance with International
Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB) and with the International Financial Reporting Standards
as adopted by the EU. The Consolidated financial statements are prepared in
accordance with the historical cost convention, as modified by the revaluation
of available-for-sale financial assets, financial assets and financial liabilities
(including derivative financial instruments) at fair value.
The Financial statements of the Parent company,
Novo Nordisk A/S, are prepared in accordance with The Danish Financial Statements
Act. These are presented on pages 105 to 112 and the accounting policies
are set out on page 108.
Further,
the Annual Report is prepared in accordance with additional Danish disclosure
requirements for annual reports for listed companies.
Effects
of new accounting pronouncements
In 2007,
there have been no adoptions of new or revised standards and interpretations
relevant to Novo Nordisk effective for the accounting period beginning on
1 January 2007.
The
following standards and interpretations relevant to Novo Nordisk have been issued
as per 31 December 2007 and are mandatory for the Groups accounting periods
beginning on or after 1 January 2008. None of these have been adopted by Novo
Nordisk:
IFRS 8 Operating segments (effective from 1 January 2009). The amendment to the standard is endorsed by the EU. The impact is expected to be limited as the reportable segments diabetes care and biopharmaceuticals will be unchanged as they are consistent with the internal reporting provided to management. | |
IAS 23 (Amendment) Borrowing costs (effective from 1 January 2009). The amendment to the standard is still subject to endorsment by the EU. The option of immediately expensing borrowing costs of a qualifying asset will be removed. Given the present capital structure of the Group the impact is expected to be limited. | |
Interpretation guideline to IAS 19, IFRIC 14 The limit on a defined benefit asset, minimum funding requirement and their interaction (effective from 1 January 2008). IFRIC 14 provides guidance on assessing the limit in IAS 19 Employee benefits on the amount of the surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. The guideline is not expected to have any material impact on the Groups accounts. |
Principles
of consolidation
The
Consolidated financial statements include the financial statements of Novo Nordisk
A/S (the Parent company) and all the companies in which Novo Nordisk A/S directly
or indirectly owns more than 50% of the voting rights or in some other way has
a controlling influence (subsidiaries). Novo Nordisk A/S and these companies
are referred to as the Group.
Companies
that are not subsidiaries, but in which the Group holds 20% to 50% of the voting
rights or in some other way has a significant influence on the operational and
financial management, are treated as associated companies.
The
Consolidated financial statements are based on the Financial statements of the
Parent company and of the subsidiaries and are prepared by combining items of
a uniform nature and eliminating intercompany transactions, shareholdings, balances
and unrealised intercompany profits and losses. The Consolidated financial
statements are based on financial statements prepared by applying the Groups
accounting policies.
The
purchase method of accounting is used to account for the acquisition of businesses
by the Group. The cost of an acquisition is measured as the fair value of the
assets given and liabilities incurred or assumed at the date of exchange, plus
costs directly attributable to the acquisition. Identifiable assets acquired,
liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date, irrespective
of the extent of any minority interest. The excess of the cost of acquisition
over the fair value of the Groups share of the identifiable net assets
acquired is recorded as goodwill.
Acquired
and divested companies are included in the Income statement during the period
of Novo Nordisks ownership. Comparative figures are not adjusted for disposed
or acquired companies.
CRITICAL
ACCOUNTING POLICIES
Novo
Nordisks management considers the following to be the most critical accounting
policies for the Group.
Sales
and revenue recognition
Sales
represent the fair value of the sale of goods excluding value added tax and
after deduction of provisions for returned products, rebates, trade discounts
and allowances.
Provisions
and accruals for rebates to customers are provided for in the period the related
sales are recorded. Historical data are readily available and reliable and are
used for estimating the amount of the reduction in sales.
Revenue
is recognised when it is realised or realisable and earned. Revenues are considered
to have been earned when Novo Nordisk has substantially accomplished what it
must do to be entitled to the revenues.
Revenue
from the sale of goods is recognised when all the following specific conditions
have been satisfied:
Novo Nordisk has transferred to the buyer the significant risk and rewards of ownership of the goods | |
Novo Nordisk retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold | |
The amount of revenue can be measured reliably | |
It is probable that the economic benefits associated with the transaction will flow to Novo Nordisk; and | |
The costs incurred or to be incurred in respect of the transaction can be measured reliably. |
These
conditions are usually met by the time the products are delivered to the customers.
Licence
fees are recognised on an accrual basis in accordance with the terms and substance
of the relevant agreement.
As
a principal rule, sale of intellectual property is recorded as income at the
time of the sale. Where the Group assumes an obligation in connection with a
sale of intellectual property, the income is recognised in accordance with the
term of the obligation. On the sale of intellectual property where the final
sale is conditional on future events, the amount is recorded as income at the
occurrence of such future events.
Revenue
is measured at the fair value of the consideration received or receivable.
Research
and development
Due
to the long development period and significant uncertainties relating to the
development of new products, including risks regarding clinical trials and regulatory
approval, it is concluded that the Groups internal development costs in
general do not meet the capitalisation criteria in IAS 38 Intangible Assets.
Consequently the technical feasibility criteria of IAS 38 are not considered
fulfilled before regulatory approval is obtained. Therefore, all internal research
and development costs are expensed in the Income statement as incurred.
For
acquired in-process research and development projects the effect of probability
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 criteria for capitalisation. Please refer to the section Intangible
assets regarding the accounting treatment of intangible assets.
Property,
plant and equipment used for research and development purposes are capitalised
and depreciated over their estimated useful lives.
Derivative
financial instruments
The
Group uses forward exchange contracts, currency options, interest rate swaps
and currency swaps to hedge forecasted transactions, assets and liabilities,
and net investments in foreign subsidiaries in foreign currencies.
Novo
Nordisk applies hedge accounting under the specific rules of IAS 39 Financial
instruments to forward exchange contracts and currency swaps. Upon initiation
of the contract, the Group designates each derivative financial contract that
qualifies for hedge accounting as a hedge of a specific hedged transaction:
either i) a recognised asset or liability (fair value hedge), ii) a forecasted
financial trans action or firm commitment (cash flow hedge), or iii) a hedge
of a net investment in a foreign entity.
All
contracts are initially recognised at fair value and subsequently remeasured
at their fair values at the balance sheet date. The value adjustments on forward
exchange contracts designated as hedges of forecasted transactions are re cognised
directly in equity, given hedge effectiveness. The cumulative value adjustment
of these contracts is removed from equity and included in the Income statement
under Financial income or Financial expenses when the hedged transaction is
recognised in the Income statement.
58 | Novo Nordisk Annual Report 2007 |
Notes Accounting policies
1 |
Summary
of significant accounting policies (continued)
|
|
Novo
Nordisk applies the hedge accounting requirements to interest rate swaps hedging
forecasted transactions. Consequently, the fair value effect of interest rate
adjustments on these contracts is recognised in equity.
Currency
options are initially recognised at cost and subsequently remeasured at their
fair values at the balance sheet date.While providing effective economic hedges
under the Groups risk management policy, the current use of currency options
does not meet the detailed requirements of IAS 39 for allowing hedge accounting.
Currency options are therefore recognised directly in the Income statement under
Financial income or Financial expenses.
Forward
exchange contracts and currency swaps hedging recognised assets or liabilities
in foreign currencies are measured at fair value at the balance sheet date.
Value adjustments are recognised in the Income statement under Financial income
or Financial expenses, along with any value adjustments of the hedged asset
or liability that is attributable to the hedged risk.
Currency
swaps used to hedge net investments in subsidiaries are measured at fair value
based on the difference between the swap exchange rate and the exchange rate
at the balance sheet date. The value adjustment is recognised in equity.
All
fair values are based on marked-to-market prices or standard pricing models.
The
accumulated net fair value of derivative financial instruments is presented
as Marketable securities and financial derivatives, if positive,
or Short-term debt and financial derivatives, if negative.
Provisions
Provisions,
including tax and legal cases, are recognised where a legal or constructive
obligation has been incurred as a result of past events and it is probable
that it will lead to an outflow of resources that can be reliably estimated.
In this connection Novo Nordisk makes the estimate based upon an evaluation
of the individual most likely outcome of the cases. In the case where a reliable
estimate cannot be made, these are disclosed as contingent liabilities.
OTHER ACCOUNTING POLICIES
Translation
of foreign currencies
Functional
and presentation currency
Items
included in the financial statements of each of the Groups 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 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 ruling at the dates of the transactions. Foreign exchange gains
and losses resulting from the settlement of such transactions and from the translation
at year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the Income statement, except when deferred
in equity as qualifying cash flow hedges and qualifying net investment hedges.
Translation
differences on non-monetary items, such as financial assets classified as available-for-sale,
are included in the fair value reserve in equity.
Translation
of Group companies
Financial
statements of foreign subsidiaries are translated into Danish kroner at exchange
rates ruling at the balance sheet date for assets and liabilities and at average
exchange rates for Income statement items.
All
exchange rate adjustments are recognised in the Income statement with the exception
of exchange gains and losses arising from:
The translation of foreign subsidiaries net assets at the beginning of the year translated at the exchange rates at the balance sheet date. | |
The translation of foreign subsidiaries income statements using average exchange rates, whereas balance sheets are translated using the exchange rates ruling at the balance sheet date. | |
The translation of long-term intercompany receivables that are considered to be an addition to net investments in subsidiaries. | |
The translation of investments in associated companies. |
The above exchange gains and losses are recognised in Other reserves under equity.
Licence
fees and other operating income (net)
Licence
fees and other operating income (net) comprise licence fees and income (net)
of a secondary nature in relation to the main activities of the Group. The item
also includes non-recurring income items (net) in respect of sale of intellectual
property.
Intangible
assets
Goodwill
Goodwill
represents any cost in excess of identifiable net assets, measured at fair value,
in the acquired company. Goodwill recorded under Intangible assets is related
to subsidiaries.
Goodwill
is measured at historical cost less accumulated impairment losses. Gains and
losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill
is allocated to cash-generating units for the purpose of impairment testing.
Other
intangible assets
Patents and licences, that include acquired patents and licences to in-process
research and development projects, are carried at historical cost less accumulated
amortisation and any impairment loss.
Internal
development software and the costs related in connection with major IT projects
for internal use are capitalised under Other intangible assets.
Amortisation
is provided under the straight-line method over the estimated useful life of
the asset (up to 10 years). For the patents and in-process research and development
projects the amortisation commence in the year in which the rights first generate
sales.
Property,
plant and equipment
Property,
plant and equipment are measured at historical cost less accumulated depreciation
and any impairment loss. The cost of self-constructed assets includes costs
directly attributable to the construction of the assets. Interest on loans financing
construction of major investments is recognised as an expense in the period
in which it is incurred. Subsequent cost is included in the assets carrying
amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group
and the cost of the item can be measured reliably.
Land
is not depreciated. Depreciation is provided under the straight-line method
over the estimated useful lives of the assets as follows:
Buildings: 1250 years. | |
Plant and machinery: 516 years. | |
Other equipment: 316 years. |
The
assets residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date.
An
assets carrying amount is written down to its recoverable amount if the
assets carrying amount is higher than its estimated recoverable amount.
Leases
Leases
of assets whereby the Group assumes substantially all the risks and rewards
of ownership are capitalised as finance leases under Property, plant and equipment
and depreciated over the estimated useful lives of the assets, according to
the periods listed above. The corresponding finance lease liabilities are included
in liabilities.
Operating
lease costs are charged to the Income statement on a straight-line basis over
the period of the lease.
Investments
in associated companies
Investments
in associated companies are accounted for under the equity method of accounting
(ie at the respective share of the associated companies net asset value
applying Group accounting policies).
Goodwill
relating to associated companies is recorded under Investments in associated
companies.
Impairment
of assets
The Group assesses the carrying amount of intangible assets, long-lived assets
and goodwill annually, or more frequently if events or changes in circumstances
indicate that such carrying amounts may not be recoverable. Factors considered
material by the Group and that could trigger an impairment test include the
following:
Novo
Nordisk Annual Report 2007
|
59
|
Consolidated financial statements | Notes Accounting policies
1 |
Summary
of significant accounting policies (continued)
|
|
Significant underperformance relative to historical or projected future results. | |
Significant changes in the manner of the Groups use of the acquired assets or the strategy for our overall business. | |
Significant negative industry or economic trends. |
When
it is determined that the carrying amount of intangible assets, long-lived assets
or goodwill may not be recoverable based upon the existence of one or more of
the above indicators of impairment, any impairment is measured based on discounted
projected cash flows.
This
impairment test is based upon managements projections and anticipated
future cash flows. The most significant variables in determining cash flows
are discount rates, terminal values, the number of years on which to base the
cash flow projections, as well as the assumptions and estimates used to determine
the cash inflows and outflows. Management determines the discount rates to be
used based on the risk inherent in the related activitys current business
model and industry comparisons. Terminal values are based on the expected life
of products, forecasted lifecycle and forecasted cash flows over that period
and the useful lives of the underlying assets.
While
the assumptions are believed to be appropriate, the amounts estimated could
differ materially from what actually occurs in the future. These discounted
cash flows are prepared at cash-generating-unit level. The cash-generating-units
are the smallest group of identifiable assets that generates cash inflows from
continuing use which are largely independent of the cash inflows from other
assets or groups of assets.
Financial
assets
The
Group classifies its investments in the following categories: Financial assets
at fair value through profit or loss (financial derivatives), Loans and receivables
and Available-for-sale financial assets. The classification depends on the purpose
for which the investments were acquired. Management determines the classification
of its investments on initial recognition and re-evaluates this designation
at every reporting date.
Financial
assets at fair value through profit or loss
Financial
assets at fair value through profit or loss include financial derivatives used
for hedging purposes. Assets in this category are classified as current assets.
Loans
and receivables
Loans
and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Loans and receivables are
included in Trade receivables and Other receivables in the Balance sheet.
Trade
receivables and Other receivables are stated at amortised cost less allowances
for doubtful trade receivables. The allowances are based on an individual assessment
of each receivable.
Available-for-sale
financial assets
Available-for-sale
financial assets are non-derivatives that are either designated in this category
or not classified in any of the other categories.They are included in Other
financial assets unless management intends to dispose of the investment
within 12 months of the balance sheet date. Marketable securities under current
assets are classified as available-for-sale financial assets.
Recognition
and measurement
Purchases
and sales of investments are recognised on the settlement date. Investments
are initially recognised at fair value plus transaction costs for all financial
assets not classified as fair value through profit or loss. Investments are
derecognised when the rights to receive cash flows from the investments have
expired or have been transferred and the Group has transferred substantially
all risks and rewards of ownership.
Available-for-sale
financial assets and financial assets at fair value through profit or loss are
subsequently carried at fair value. Loans and receivables are carried at amortised
cost using the effective interest method.
Unrealised
gains and losses arising from changes in the fair value of financial assets
classified as available-for-sale are recognised in equity. When financial assets
classified as available-for-sale are sold or impaired, the accumulated fair
value adjustments are included in the Income statement as gains and losses from
available-for-sale financial assets.
The
fair values of quoted investments are based on current bid prices. Financial
assets for which no active market exists are carried at cost if no reliable
valuation model can be applied.
The
Group assesses at each balance sheet date whether there is objective evidence
that a financial asset or a group of financial assets have been impaired. If
any such evidence exists for available-for-sale financial assets, the cumulative
loss is removed from equity and recognised in the Income statement. Impairment
losses recognised in the Income statement on equity instruments are not reversed
through the Income statement.
Inventories
Raw
materials and consumables are measured at cost assigned by using the first-in,
first-out method.
Work
in progress and finished goods are stated at cost assigned by using the first-in,
first-out method. Cost comprises direct production costs such as raw materials,
consumables, energy and labour, and production overheads such as employee costs,
depreciation, maintenance etc. The production overheads are measured based on
a standard cost method which is reviewed regularly in order to ensure relevant
measures of utilisation, production lead time etc.
If
the expected sales price less completion costs and 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.
Tax
Income
taxes in the Income statement include tax payable for the year with addition
of the change in deferred tax for the year.
Deferred
income taxes arise from temporary differences between the accounting and tax
balance sheets of the individual consolidated companies and from realisable
tax-loss carry-forwards, using the liability method. The tax value of tax-loss
carry-forwards will be included in deferred tax assets to the extent that the
tax losses and other tax assets are expected to be utilised in the 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 the elimination of the temporary
differences.
Employee
benefits
Wages,
salaries, social security contributions, paid annual leave and sick leave, bonuses
and non-monetary benefits are accrued in the year in which the associated
services are rendered by employees of the Group. Where the Group provides long-term
employee benefits, the costs are accrued to match the rendering of the services
by the employees concerned.
Pensions
The
Group operates a number of defined benefit and defined contribution plans throughout
the world. 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 dates of valuation and is based on actuarial assumptions primarily regarding
discount rates used in determining the present value of benefits, projected
rates of remuneration growth and long-term expected rates of return for plan
assets. Discount rates are based on the market yields of high-rated corporate
bonds in the country concerned.
Differences
between assumptions and actual events and effects of changes in actuarial assumptions
are allocated over the estimated average remaining working lives of employees,
where these differences exceed a defined corridor.
Past
service costs are allocated over the average period until the benefits become
vested. Pension assets and liabilities in different defined benefit schemes
are not offset unless the Group has a legally enforceable right to use the surplus
in one plan to settle obligations in the other plan. Pension assets are only
recognised to the extent that the Group is able to derive future economic benefits
in the way of refunds from the plan or reductions of future contributions.
The
Groups contributions to the defined contribution plans are charged to
the Income statement in the year to which they relate.
Share-based
compensation
The
Group 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.
60 | Novo Nordisk Annual Report 2007 |
Notes Accounting policies
1 |
Summary
of significant accounting policies (continued)
|
|
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 grant date. Non-market vesting conditions are included in assumptions about the number of options or shares that are expected to become exercisable. At each balance sheet date, the Group revises its estimates of the number of options or shares that are expected to become exercisable. Novo Nordisk recognises the impact of the revision of the original estimates, if any, in the Income statement and a corresponding adjustment to equity over the remaining vesting period. Adjustments relating to prior years are included in the Income statement in the year of adjustment.
Liabilities
Generally,
liabilities are stated at amortised cost unless specifically mentioned otherwise.
Treasury
shares
Treasury
shares are deducted from the share capital at their nominal value of DKK 1 per
share. Differences between this amount and the amount paid for acquiring, or
received for disposing of, treasury shares are deducted from retained earnings.
Dividends
Dividends
are recognised as a liability in the period in which they are declared at the
Annual General Meeting.
Consolidated
statement of cash flows and financial resources
The
Consolidated statement of cash flows and financial resources is presented in
accordance with the indirect method commencing with net profit. The statement
shows cash flows for the year, the net change in cash and cash equivalents for
the year, and cash and cash equivalents at the beginning and the end of the
year.
Cash
and cash equivalents consist of cash and marketable securities, with original
maturity of less than three months, less short-term bank loans. Financial resources
consist of cash and cash equivalents, bonds with original term to maturity exceeding
three months, and undrawn committed credit facilities expiring after more than
one year.
2 |
Changes
in the scope of consolidation
|
|
In 2007,
the Novo Nordisk subsidiary NNE A/S (Novo Nordisk Engineering) completed the
acquisition of the engineering activities in Pharmaplan GmbH from the German
medical group Fresenius. The cost of the business combination was DKK 59 million.
The purchase price was paid in cash. The net assets were included in the consolidation
as from 1 April 2007.
In 2006,
no changes in the scope of consolidation occurred.
In January
2005, Novo Nordisk completed the acquisition of a business unit from Aradigm
Corporation related to the AERx® insulin Diabetes Management
System (iDMS). The cost of the combination was DKK 358 million consisting of
DKK 350 million in purchase price and DKK 8 million in assumed liabilities.
The purchase price was paid in cash. The net assets were included in the consolidation
as from 26 January 2005.
3 |
Critical
accounting estimates and judgements
|
|
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s). Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgements about the reported carrying amounts of assets and liabilities and the reported amounts of revenues and expenses that may not be readily apparent from other sources. Actual results could differ from those estimates. Novo Nordisk believes the following are the significant accounting estimates and judgements used in the preparation of its Consolidated financial statements.
Non-recurring
costs related to AERx® discontinuation
Novo
Nordisk conducted a detailed analysis of the future prospects for inhaled insulin
and a review of the medical and commercial potential of the AERx® iDMS
inhaled insulin system (AERx®).
This
analysis has resulted in a non-recurring impairment cost regarding intangible
assets and manufacturing activities related to the AERx® system
and cost of discontinuing all clinical development expected to amount to around
DKK 1,325 million which have negatively impacted operating profit in 2007.
The
impairment of tangible and intangible assets and provision for onerous contracts
are based on managements best estimate after reviewing the engaged contracts
and the project-related assets. Commitments regarding clinical trials consist
of legal and constructive obligations which have been assessed by Management,
based on best estimate.
In
2007, Novo Nordisk recorded the following charges related to the impairment
of the AERx® project.
Impairment of intangible assets |
DKK
|
117
million
|
Impairment of tangible assets |
DKK
|
753
million
|
Commitments regarding clinical trials |
DKK
|
326
million
|
Leasing and investment commitments |
DKK
|
129
million
|
|
||
DKK
|
1,325
million
|
|
|
These
charges are included in Research and development costs. In addition a cost of
DKK 52 million, related to the AERx® discontinuation, is included
as financial expense.
In
January 2008 Novo Nordisk has decided to refocus its inhaled insulin activities
and discontinue all further development of AERx®. The decision
to discontinue the development of AERx® was not due to safety
concerns.
Sales
rebate accruals and provisions
Sales
rebate accruals and provisions are established in the same period as the related
sales. The sales rebate accruals and provisions are recorded as a reduction
in sales and are included in Other provisions and Other liabilities.
The
accruals and provisions are based upon historical rebate payments. They are
calculated based upon a percentage of sales for each product as defined by the
contracts with the various customer groups.
Factors
that complicate the rebate calculations are:
Identification of the products which have been sold subject to a rebate | |
The customer or government price terms which apply | |
The estimated time lag between sale and payment of a rebate. |
The largest sales rebate and discount amount are rebates from sales covered by Medicaid and Medicare, the US health care insurance systems. Provisions for 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 involves interpretation of relevant regulations, which are subject to challenge or change in interpretative guidance by government authorities. Although accruals are made for Medicaid and Medicare rebates at the time sales are recorded, the Medicare and Medicaid rebates related to the specific sale will typically be invoiced to Novo Nordisk up to six months later. Due to the time lag, in any particular period the rebate adjustments to sales may incorporate revisions of accruals for prior periods.
Novo
Nordisk Annual Report 2007
|
61
|
Consolidated financial statements | Notes Accounting policies
3 |
Critical
accounting estimates and judgements (continued)
|
|
Customer
rebates are offered to a number of managed health care plans. These rebate programmes
provide that the customer receives a rebate after attaining certain performance
parameters relating to product purchases, formulary status and pre-established
market share milestones relative to competitors. Since rebates are contractually
agreed upon, rebates are estimated based on the specific terms in each agreement,
historical experience, anti cipated channel mix, product growth rates and market
share. Novo Nordisk considers the sales performance of products subject to managed
health care rebates and other contract discounts and adjusts the provision periodically
to reflect actual experience.
Wholesaler
charge-backs relate to contractual arrangements Novo Nordisk has with indirect
customers, mainly in the US, to sell products at prices that are lower than
the list price charged to wholesalers. A wholesaler chargeback represents the
difference between the invoice price to the wholesaler and the indirect customers
contract price. Provisions are calculated for estimated charge back using a
combination of factors such as historical experience, current wholesaler inventory
levels, contract terms and the value of claims received yet not processed. Wholesaler
charge-backs are generally settled within one to three months of incurring the
liability.
Novo
Nordisk believes that the accruals and provisions established for sales rebates
are reasonable and appropriate based on current facts and circumstances. However,
the actual amount of rebates and discounts may differ from the amounts estimated
by management.
The
US market has the most complex arrangements for rebates, discounts and allowances.
A reconciliation of gross sales to net sales for North America (includes the
US and Canada) is as follows:
DKK million |
2007
|
2006
|
2005
|
|||
|
||||||
Gross sales |
20,109
|
17,196 | 13,893 | |||
|
||||||
Gross-to-net sales adjustments: | ||||||
Medicaid and Medicare rebates | (1,279 | ) | (1,186 | ) | (1,161 | ) |
Managed health care rebates | (1,333 | ) | (1,073 | ) | (798 | ) |
Prime vendor charge-backs | (2,594 | ) | (2,074 | ) | (1,729 | ) |
Cash discounts | (381 | ) | (310 | ) | (244 | ) |
Sales returns | (432 | ) | (116 | ) | (105 | ) |
Other rebates and allowances | (344 | ) | (157 | ) | (324 | ) |
|
||||||
Total gross-to-net sales adjustments | (6,363 | ) | (4,916 | ) | (4,361 | ) |
|
||||||
Net
sales
|
13,746
|
12,280
|
9,532
|
|||
|
The carrying amount of sales rebate accruals and provisions is DKK 1,833 million at 31 December 2007. Please refer to notes 5 and 25 for further information on sales accruals and provisions.
Indirect
Production Costs (IPC)
Work
in progress and finished goods are stated at cost assigned by using the first-in,
first-out method. Cost comprises direct production costs such as raw materials,
consumables, energy and labour, as well as IPC such as employee costs, depreciation,
maintenance etc.
IPC
are measured based on a standard cost method which is reviewed regularly in
order to ensure relevant measures of utilisation, production lead time and other
relevant factors. Changes in the parameters for calculation of IPC, including
utilisation levels, production lead time etc could have an impact on the gross
margin and the overall valuation of inventories. The carrying amount of IPC
is DKK 4,418 million at 31 December 2007. Please refer to note 18 for further
information.
Allowances
for doubtful trade receivables
Trade
receivables are stated at amortised cost less allowances for potential losses
on doubtful trade receivables. Novo Nordisk maintains allowances for doubtful
trade receivables for estimated losses resulting from the subsequent inability
of the customers to make required payments. If the financial conditions of the
customers were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required in future periods. Management
specifically analyses trade receivables and analyses historical bad debt, customer
concentrations, customer creditworthiness, current economic trends and changes
in the customer payment terms when evaluating the adequacy of the allowance
for doubtful trade receivables.
The
uncertainty connected with the allowance for doubtful trade receivables is considered
limited. The carrying amount of allowances for doubtful trade receivables is
DKK 542 million at 31 December 2007. Please refer to note 19 for further information.
Income
taxes
Management
judgement is required in determining the Groups provision for deferred
income tax assets and liabilities. 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.
The
carrying amount of deferred income tax assets and deferred income tax liabilities
is DKK 2,522 million and DKK 2,346 million respectively at 31 December 2007.
Please refer to note 23 for further information.
Provisions
and contingencies
As part
of normal business Novo Nordisk issues credit notes for expired goods. Consequently
a provision for future returns is made, based on historical statistical product
returns. The pattern in returns in the future may be different from previous
patterns.
Revenue
recognition for new product launches is based on specific facts and circumstances
for the specific products, including estimated demand and acceptance rates from
well-established products with similar market characteristics. In recent years
the products launched by Novo Nordisk have been comparable with either other
products already on the market or products in therapy areas well known to Novo
Nordisk, and therefore uncertainties surrounding products launched have been
limited.
The
carrying amount of provision for returned products is DKK 593 million at 31
December 2007. Please refer to note 25 for further information.
Management
of the Group makes judgements about provisions and contingencies, including
the probability of pending and potential future litigation outcomes that in
nature are dependent on future events that are inherently uncer tain. In making
its determinations of likely outcomes of litigation, etc, management considers
the evaluation of external counsel knowledgeable about each matter, as well
as known outcomes in case law. Provisions for pending litigations are recognised
under Other provisions. Please refer to notes 25 and 36 for a description of
significant litigations pending.
62 | Novo Nordisk Annual Report 2007 |
Financial
definitions
|
ADRs
American
Depositary Receipts.
Basic
earnings per share (EPS)
Net
profit divided by the average number of shares outstanding.
Cash
to earnings
Free
cash flow as a percentage of net profit.
Diluted
earnings per share
Net
profit divided by the sum of average number of shares outstanding including
the dilutive effect of share options in the money in accordance
with IAS 33. 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 and 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 deno minator as an issue of
shares for no consideration.
Effective
tax rate
Income
taxes as a percentage of profit before income taxes.
Equity
ratio
Equity
at year-end as a percentage of the sum of total liabilities and equity at year-end.
Free
cash flow
The
sum of Cash flow from operating activities and Cash flow from investing activities
excluding Net changes in marketable securities.
Gross
margin
Gross
profit as a percentage of sales.
Net
profit margin
Net
profit as a percentage of sales.
Number
of shares outstanding
The
number of shares outstanding is the total number of shares excluding the holding
of treasury shares.
Operating
profit
Earnings
before tax, financial items and share of profit/loss in associated companies.
Operating
profit margin
Operating
profit as a percentage of sales.
Payout
ratio
Total
dividends for the year as a percentage of net profit.
ROIC
(return on invested capital)
Operating
profit after tax (using the effective tax rate) as a percentage of average inventories,
receivables, property, plant and equipment as well as intangible assets less
non-interest bearing liabilities including provisions (the sum of the above
assets and liabilities at the beginning of the year and at year-end divided
by two).
Novo
Nordisk Annual Report 2007
|
63
|
Consolidated financial statements | Notes Consolidated income statement
4 |
Segment
information
|
|
Primary
reporting format Business segments
At 31
December 2007, the Group operates on a worldwide basis in two business segments
(the primary reporting format):
Diabetes
care:
The
business segment includes discovery, development, manufacturing and marketing
of products within the areas of insulin, GLP-1 and related delivery systems
as well as oral antidiabetic products (OAD).
Biopharmaceuticals:
The business segment includes discovery, development, manufacturing and
marketing
of products within the therapy areas haemostasis management (NovoSeven®),
growth hormone therapy, hormone replacement therapy, inflammation therapy and
other therapy areas.
There
are no sales or other transactions between the business segments. Costs have
been split between business segments based on a specific allocation with the
addition of a minor number of corporate overheads allocated systematically to
the segments. Segment assets comprise the assets that are applied directly to
the activities of the segment, including intangible assets, property, plant
and equipment, long-term financial assets, inventories, trade receivables and
other receivables. Segment liabilities comprise liabilities derived from the
activities of the segment, including provisions, trade payables and other liabilities.
Business
segments
|
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
DKK million |
Diabetes
care
|
|||||
|
|
|
|
|
|
|
Segment sales and results | ||||||
|
|
|
|
|
|
|
Sales | ||||||
Modern insulins (insulin analogues) | 14,008 | 10,825 | 7,298 | |||
Human insulins | 12,572 | 13,451 | 13,543 | |||
Insulin-related sales | 1,749 | 1,606 | 1,463 | |||
Oral antidiabetic products (OAD) | 2,149 | 1,984 | 1,708 | |||
|
|
|
|
|
|
|
Diabetes care total | 30,478 | 27,866 | 24,012 | |||
Haemostasis management (NovoSeven®) | ||||||
Growth hormone therapy | ||||||
Hormone replacement therapy | ||||||
Other products | ||||||
|
|
|
|
|
|
|
Biopharmaceuticals total | ||||||
|
|
|
|
|
|
|
Sales | 30,478 | 27,866 | 24,012 | |||
Change in DKK (%) | 9.4% | 16.1% | 16.9% | |||
Change in local currencies (%) | 14.1% | 17.0% | 15.9% | |||
Operating profit | 4,259 | 4,982 | 4,055 | |||
Operating profit adjusted for costs related to discontinuation of AERx® | 5,584 | | | |||
|
|
|
|
|
|
|
Share of profit in associated companies | ||||||
Financial income (net) | ||||||
Profit before income taxes | ||||||
Income taxes | ||||||
|
|
|
|
|
|
|
Net profit | ||||||
|
|
|
|
|
|
|
Other segment items | ||||||
|
|
|
|
|
|
|
Research and development costs | 6,117 | 3,898 | 3,177 | |||
Hereof costs related to discontinuation of AERx® | (1,325 | ) | | | ||
Depreciation and amortisation | 1,774 | 1,632 | 1,446 | |||
Impairment losses in the Income statement | 931 | 45 | 171 | |||
Impairment losses in the Income statement adjusted for discontinuation of AERx® | 61 | | | |||
Additions to property, plant and equipment and intangible assets (net) | 1,995 | 2,499 | 3,510 | |||
Investments in associated companies (net) | | | | |||
Long-term assets | 16,884 | 17,606 | 17,502 | |||
Total assets | 30,257 | 29,714 | 28,484 | |||
Total liabilities | 7,980 | 7,470 | 6,635 | |||
|
|
|
|
|
|
Geographical
segments
|
2007
|
2006
|
2005
|
2007
|
2006
|
2005
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
DKK million | Europe |
North
America
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales *) | 16,350 | 15,300 | 14,020 | 13,746 | 12,280 | 9,532 | ||||||
Change in DKK (%) *) | 6.9% | 9.1% | 8.8% | 11.9% | 28.8% | 27.5% | ||||||
Change in local currencies (%) *) | 6.8% | 8.9% | 8.1% | 21.8% | 29.4% | 26.7% | ||||||
Additions to property, plant and equipment and intangible assets (net) | 1,651 | 2,065 | 2,332 | 509 | 460 | 801 | ||||||
Property, plant and equipment | 16,398 | 16,765 | 16,946 | 998 | 1,480 | 1,212 | ||||||
Total assets | 38,428 | 35,232 | 32,523 | 2,873 | 3,819 | 4,205 | ||||||
|
*) | Comparative sales figures from 2005 and 2006 have been adjusted in order to reflect a changed organisational structure from 1 January 2007 which transfers 8 countries, incl. Bulgaria and Romania, from International Operations to Europe. |
64 | Novo Nordisk Annual Report 2007 |
Notes
Consolidated income statement
|
4 |
Segment
information (continued)
|
|
Secondary
reporting format Geographical segments
The
Group operates in four main geographical areas (the secondary reporting format):
Europe:
EU, EFTA
North
America: The US and Canada
Japan
& Oceania: Japan, Australia and New Zealand
International
Operations: All other countries
Sales are attributed to geographical segments based on the location of the customer.
There are no sales between segments.
Total assets and additions to property, plant
and equipment and intangible assets are based on the location of the assets.
The segments and regions are the same as those used for internal reporting,
allowing a reliable assessment of risk and returns.
2007
|
2006
|
2005
|
2007
|
2006
|
2005
|
2007
|
2006
|
2005
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biopharmaceuticals
|
Corporate/unallocated | Total | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
14,008 | 10,825 | 7,298 | |||||||||||||||
12,572 | 13,451 | 13,543 | |||||||||||||||
1,749 | 1,606 | 1,463 | |||||||||||||||
2,149 | 1,984 | 1,708 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,478 | 27,866 | 24,012 | |||||||||||||||
5,865
|
5,635 | 5,064 | 5,865 | 5,635 | 5,064 | ||||||||||||
3,511
|
3,309 | 2,781 | 3,511 | 3,309 | 2,781 | ||||||||||||
1,668
|
1,607 | 1,565 | 1,668 | 1,607 | 1,565 | ||||||||||||
309
|
326 | 338 | 309 | 326 | 338 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,353
|
10,877 | 9,748 | 11,353 | 10,877 | 9,748 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,353
|
10,877 | 9,748 | 41,831 | 38,743 | 33,760 | ||||||||||||
4.4%
|
11.6% | 14.7% | 8.0% | 14.8% | 16.3% | ||||||||||||
9.9%
|
12.7% | 14.2% | 12.9% | 15.7% | 15.4% | ||||||||||||
4,683
|
4,137 | 4,033 | 8,942 | 9,119 | 8,088 | ||||||||||||
4,683
|
| | 10,267 | | | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,233 | (260 | ) | 319 | 1,233 | (260 | ) | 319 | ||||||||||
796 | 305 | (173 | ) | 796 | 305 | (173 | ) | ||||||||||
10,971 | 9,164 | 8,234 | |||||||||||||||
2,449 | 2,712 | 2,370 | 2,449 | 2,712 | 2,370 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,522 | 6,452 | 5,864 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,421
|
2,418 | 1,908 | | | | 8,538 | 6,316 | 5,085 | |||||||||
|
| | | | | (1,325 | ) | | | ||||||||
263
|
291 | 309 | 37 | 40 | 4 | 2,074 | 1,963 | 1,759 | |||||||||
|
| | 2 | 134 | | 933 | 179 | 171 | |||||||||
|
| | 2 | | | 63 | | | |||||||||
391
|
509 | 727 | | 1 | 4 | 2,386 | 3,009 | 4,241 | |||||||||
|
| | | 112 | | | 112 | | |||||||||
3,470
|
3,684 | 3,625 | 3,075 | 2,567 | 1,273 | 23,429 | 23,857 | 22,400 | |||||||||
6,685
|
6,783 | 6,566 | 10,789 | 8,195 | 6,910 | 47,731 | 44,692 | 41,960 | |||||||||
2,488
|
2,269 | 1,959 | 5,081 | 4,831 | 5,732 | 15,549 | 14,570 | 14,326 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
2006
|
2005
|
2007
|
2006
|
2005
|
2007
|
2006
|
2005
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Operations
|
Japan & Oceania |
Total
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
7,295
|
6,494 | 5,497 | 4,440 | 4,669 | 4,711 | 41,831 | 38,743 | 33,760 | |||||||||
12.3%
|
18.1% | 25.8% | (4.9% | ) | (0.9% | ) | 9.6% | 8.0% | 14.8% | 16.3% | |||||||
17.8%
|
18.7% | 22.4% | 3.1% | 5.0% | 10.5% | 12.9% | 15.7% | 15.4% | |||||||||
222
|
465 | 1,088 | 4 | 19 | 20 | 2,386 | 3,009 | 4,241 | |||||||||
2,031
|
1,897 | 1,546 | 178 | 208 | 237 | 19,605 | 20,350 | 19,941 | |||||||||
5,648
|
4,618 | 4,212 | 782 | 1,023 | 1,020 | 47,731 | 44,692 | 41,960 |
Novo
Nordisk Annual Report 2007
|
65
|
Consolidated financial statements | Notes Consolidated income statement
5 |
Sales
rebate accruals and provisions
|
|
|
|
|
|
|
|
DKK million |
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
At the beginning of the year | 1,847 | 1,872 | 1,031 | |||
Additional rebates deducted from sales | 3,176 | 2,761 | 2,705 | |||
Adjustments to previous years accruals and provisions | (168 | ) | (218 | ) | (68 | ) |
Payments and grants of rebates during the year | (2,835 | ) | (2,372 | ) | (1,943 | ) |
Exchange rate adjustments | (187 | ) | (196 | ) | 147 | |
|
|
|
|
|
|
|
At the end of the year | 1,833 | 1,847 | 1,872 | |||
Specification of sales rebate accruals and provisions: | ||||||
Other liabilities | 89 | 72 | 77 | |||
Current provisions | 1,744 | 1,775 | 1,795 | |||
|
|
|
|
|
|
|
Total sales rebate accruals and provisions | 1,833 | 1,847 | 1,872 | |||
|
|
|
|
|
|
6 |
Employee
costs
|
|
|
|
|
|
|
|
DKK million |
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
Wages and salaries | 10,344 | 9,703 | 8,659 | |||
|
|
|
|
|
|
|
Share-based payment costs (refer to note 33) | 130 | 113 | 223 | |||
Pensions defined contribution plans | 774 | 712 | 618 | |||
Retirement benefit obligations | ||||||
(refer to note 24) | 109 | 111 | 137 | |||
Other contributions to social security | 717 | 652 | 576 | |||
Other employee costs | 1,126 | 940 | 766 | |||
|
|
|
|
|
|
|
Total employee costs | 13,200 | 12,231 | 10,979 | |||
|
|
|
|
|
|
|
Included in the Income statement under the following headings: | ||||||
Cost of goods sold | 3,603 | 3,656 | 3,664 | |||
Sales and distribution costs | 4,498 | 3,904 | 3,380 | |||
Research and development costs | 2,813 | 2,424 | 2,095 | |||
Administrative expenses | 2,121 | 2,055 | 1,751 | |||
|
|
|
|
|
|
|
Total included in the Income statement | 13,035 | 12,039 | 10,890 | |||
|
|
|
|
|
|
|
Included in the Balance sheet as: | ||||||
Capitalised employee costs related to assets in course of construction etc | 58 | 115 | 86 | |||
Change in employee costs included in inventories | 107 | 77 | 3 | |||
|
|
|
|
|
|
|
Total included in the Balance sheet | 165 | 192 | 89 | |||
|
|
|
|
|
|
|
Total employee costs | 13,200 | 12,231 | 10,979 | |||
|
|
|
|
|
|
For information on remuneration to the Board of Directors and Executive Management, please refer to note 34.
|
|
|
|
|
|
|
Average number of full-time employees |
24,344
|
22,590
|
21,146
|
|||
Year-end number of full-time employees |
25,516
|
23,172
|
22,007
|
|||
|
|
|
|
|
|
In addition to the employee costs of DKK 13,200 million NNE Pharmaplan A/S, which is consolidated in the line item Licence fee and other operating income (net), has employee costs in 2007 of DKK 800 million (2006: DKK 545 million, 2005: DKK 519 million) of which DKK 264 million (2006: DKK 545 million, 2005: DKK 519 million) has been capitalised as assets in course of construction in the Group.
7 |
Depreciation,
amortisation and impairment losses
|
|
|
|
|
|
|
|
DKK million |
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
Included in the Income statement under the following headings: | ||||||
Cost of goods sold | 1,652 | 1,682 | 1,525 | |||
Sales and distribution costs | 31 | 56 | 67 | |||
Research and development costs *) | 1,205 | 302 | 231 | |||
Administrative expenses | 119 | 102 | 107 | |||
|
|
|
|
|
|
|
Total depreciation, amortisation and impairment losses | 3,007 | 2,142 | 1,930 | |||
|
|
|
|
|
|
*) Hereof costs of DKK 870 million related to discontinuation of AERx®.
8 |
Fees
to statutory auditors
|
|
|
|
|
|
|
|
DKK million |
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
Statutory audit | 25 | 24 | 24 | |||
Audit-related services | 6 | 7 | 6 | |||
Tax advisory services | 15 | 16 | 20 | |||
Other services | 1 | 1 | 1 | |||
|
|
|
|
|
|
|
Total | 47 | 48 | 51 | |||
|
|
|
|
|
|
9 |
Licence
fees and other operating income (net)
|
|
|
|
|
|
|
|
DKK million |
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
Licence fees and settlements | 229 | 148 | 164 | |||
Net income from IT, engineering and other services | 26 | 55 | 51 | |||
Other income | 66 | 69 | 188 | |||
|
|
|
|
|
|
|
Total licence fees and other operating income (net) | 321 | 272 | 403 | |||
|
|
|
|
|
|
10 |
Financial
Income
|
|
|
|
|
|
|
|
DKK million |
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
Interest income | 322 | 369 | 210 | |||
Capital gain on investments etc (net) | | 153 | | |||
Foreign exchange gain (net) | | | 288 | |||
Foreign exchange gain on derivative financial instruments (net) | 981 | 409 | | |||
|
|
|
|
|
|
|
Total financial income | 1,303 | 931 | 498 | |||
|
|
|
|
|
|
11 |
Financial
expenses
|
|
|
|
|
|
|
|
DKK million |
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
Interest expenses | 324 | 296 | 254 | |||
Capital loss on investments etc (net) *) | 60 | | 20 | |||
Foreign exchange loss (net) | 71 | 268 | | |||
Foreign exchange loss on derivative financial instruments (net) | | | 328 | |||
Other financial expenses | 52 | 62 | 69 | |||
|
|
|
|
|
|
|
Total financial expenses | 507 | 626 | 671 | |||
|
|
|
|
|
|
*) Hereof including unrealised capital loss of DKK 52 million related to Novo Nordisks invest ment in Aradigm Inc.
66 | Novo Nordisk Annual Report 2007 |
12 |
Income
taxes
|
|
|
|
|
|
|
|
DKK million |
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
Current tax on profit for the year | 2,835 | 2,832 | 2,389 | |||
Deferred tax on profit for the year | (347 | ) | (213 | ) | 40 | |
|
|
|
|
|
|
|
Tax on profit for the year | 2,488 | 2,619 | 2,429 | |||
Adjustments related to previous years current tax | (11 | ) | 964 | (45 | ) | |
Adjustments related to previous years deferred tax | (28 | ) | (871 | ) | (14 | ) |
|
|
|
|
|
|
|
Income taxes in the Income statement | 2,449 | 2,712 | 2,370 | |||
|
|
|
|
|
|
|
Tax on entries in equity related to current tax | 43 | 4 | 18 | |||
Tax on entries in equity related to deferred tax | 50 | 125 | (70 | ) | ||
|
|
|
|
|
|
|
Tax on entries in equity | 93 | 129 | (52 | ) | ||
|
|
|
|
|
|
|
Computation of effective tax rate: | ||||||
Statutory corporate income tax rate in Denmark | 25.0% | 28.0% | 28.0% | |||
Deviation in foreign subsidiaries tax rates compared to Danish tax rate (net) | 2.9% | 2.1% | 3.6% | |||
Non-tax income less non-tax deductible expenses (net) | (3.2% | ) | (0.4% | ) | (1.6% | ) |
Effect on deferred tax related to change in the Danish tax rate in 2005 and 2007 | (2.0% | ) | | (0.7% | ) | |
Other | (0.4% | ) | (0.1% | ) | (0.5% | ) |
|
|
|
|
|
|
|
Effective tax rate | 22.3% | 29.6% | 28.8% | |||
|
|
|
|
|
|
13 |
Earnings
per share
|
|
|
|
|
|
|
|
|
2007
|
2006
|
2005
|
|||||
|
|
|
|
|
|
|
|
Net profit | DKK million | 8,522 | 6,452 | 5,864 | |||
|
|
|
|
|
|
|
|
Average number of shares outstanding *) | in 1,000 shares | 631,783 | 641,862 | 655,422 | |||
Dilutive effect of outstanding share bonus pool and options in the money *), **) | in 1,000 shares | 4,639 | 3,526 | 2,446 | |||
|
|
|
|
|
|
|
|
Average number of shares outstanding incl. dilutive effect of options in the money | in 1,000 shares | 636,422 | 645,388 | 657,868 | |||
|
|
|
|
|
|
|
|
Basic earnings per share *) | DKK | 13.49 | 10.05 | 8.95 | |||
Diluted earnings per share *) | DKK | 13.39 | 10.00 | 8.91 | |||
|
|
|
|
|
|
|
*) | In 2007 there was a stock split of the companys A and B shares. The trade unit was changed from DKK 2 to DKK 1. The comparative figures for 2006 and 2005 have been updated accordingly. |
**) |
For further information on outstanding shares bonus pool and options, please refer to note 33. |
Novo
Nordisk Annual Report 2007
|
67
|
Consolidated financial statements | Notes Consolidated balance sheet
14 |
Intangible
assets
|
|
|
|
|
|
|
|
|
|
DKK million |
Goodwill
|
Patents
and
licences
etc
|
Other
intangible
assets
*)
|
Total
|
||||
|
|
|
|
|
|
|
|
|
2007 | ||||||||
Cost at the beginning of 2007 | 82 | 486 | 491 | 1,059 | ||||
Additions during the year | 52 | 21 | 97 | 170 | ||||
Addition regarding acquisitions | | 26 | 18 | 44 | ||||
Disposals during the year | (1 | ) | (11 | ) | (41 | ) | (53 | ) |
Exchange rate adjustments | | (2 | ) | 7 | 5 | |||
|
|
|
|
|
|
|
|
|
Cost at the end of 2007 | 133 | 520 | 572 | 1,225 | ||||
Amortisation and impairment losses at the beginning of 2007 | 65 | 22 | 333 | 420 | ||||
Amortisation for the year | | 14 | 32 | 46 | ||||
Impairment losses for the year **) | | 117 | | 117 | ||||
Amortisation and Impairment losses reversed on disposals during the year | | (1 | ) | (37 | ) | (38 | ) | |
Exchange rate adjustments | | 1 | 8 | 9 | ||||
|
|
|
|
|
|
|
|
|
Amortisation and impairment losses at the end of 2007 | 65 | 153 | 336 | 554 | ||||
|
|
|
|
|
|
|
|
|
Carrying amount at the end of 2007 | 68 | 367 | 236 | 671 | ||||
|
|
|
|
|
|
|
|
|
2006 | ||||||||
Cost at the beginning of 2006 | 82 | 297 | 470 | 849 | ||||
Additions during the year | | 194 | 28 | 222 | ||||
Disposals during the year | | (2 | ) | (3 | ) | (5 | ) | |
Exchange rate adjustments | | (3 | ) | (4 | ) | (7 | ) | |
|
|
|
|
|
|
|
|
|
Cost at the end of 2006 | 82 | 486 | 491 | 1,059 | ||||
Amortisation and impairment losses at the beginning of 2006 | 65 | 13 | 286 | 364 | ||||
Amortisation for the year | | 9 | 54 | 63 | ||||
Amortisation and impairment losses reversed on disposals during the year | | | (3 | ) | (3 | ) | ||
Exchange rate adjustments | | | (4 | ) | (4 | ) | ||
|
|
|
|
|
|
|
|
|
Amortisation and impairment losses at the end of 2006 | 65 | 22 | 333 | 420 | ||||
|
|
|
|
|
|
|
|
|
Carrying amount at the end of 2006 | 17 | 464 | 158 | 639 | ||||
|
|
|
|
|
|
|
|
*) | Includes primarily internally developed software and costs related to major IT projects. |
**) |
Impairment losses of DKK 117 million relates to discontinuation of AERx®. |
68 | Novo Nordisk Annual Report 2007 |
Notes Consolidated balance sheet
15 |
Property,
plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
DKK million |
Land
and
buildings
|
Plant
and
machinery
|
Other
equipment
|
Payments
on
account
and
assets
in
course
of
construction
|
Total
|
|||||
|
|
|
|
|
|
|
|
|
|
|
2007 | ||||||||||
Cost at the beginning of 2007 | 11,525 | 14,066 | 2,623 |
3,775
|
31,989 | |||||
Additions during the year | 284 | 387 | 203 |
1,434
|
2,308 | |||||
Addition regarding acquisitions | 7 | | 2 |
|
9 | |||||
Disposals during the year | (241 | ) | (720 | ) | (646 | ) |
(33
|
) | (1,640 | ) |
Transfer from/(to) other items | 640 | 1,847 | 129 |
(2,616
|
) | 0 | ||||
Exchange rate adjustments | (7 | ) | (16 | ) | (22 | ) |
(13
|
) | (58 | ) |
|
|
|
|
|
|
|
|
|
|
|
Cost at the end of 2007 | 12,208 | 15,564 | 2,289 |
2,547
|
32,608 | |||||
Depreciation and impairment losses at the beginning of 2007 | 3,231 | 6,677 | 1,731 |
|
11,639 | |||||
Depreciation for the year | 500 | 1,302 | 226 |
|
2,028 | |||||
Impairment losses for the year *) | 30 | 25 | 26 |
735
|
816 | |||||
Depreciation and impairment losses reversed on disposals during the year | (133 | ) | (685 | ) | (609 | ) |
(33
|
) | (1,460 | ) |
Exchange rate adjustments | (10 | ) | (2 | ) | (8 | ) |
|
(20 | ) | |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and impairment losses at the end of 2007 | 3,618 | 7,317 | 1,366 |
702
|
13,003 | |||||
|
|
|
|
|
|
|
|
|
|
|
Carrying amount at the end of 2007 | 8,590 | 8,247 | 923 |
1,845
|
19,605 | |||||
|
|
|
|
|
|
|
|
|
|
|
2006 | ||||||||||
Cost at the beginning of 2006 | 10,017 | 12,670 | 2,492 |
5,195
|
30,374 | |||||
Additions during the year | 285 | 400 | 184 |
2,029
|
2,898 | |||||
Disposals during the year | (90 | ) | (770 | ) | (165 | ) |
|
(1,025 | ) | |
Transfer from/(to) other items | 1,389 | 1,810 | 148 |
(3,347
|
) | | ||||
Exchange rate adjustments | (76 | ) | (44 | ) | (36 | ) |
(102
|
) | (258 | ) |
|
|
|
|
|
|
|
|
|
|
|
Cost at the end of 2006 | 11,525 | 14,066 | 2,623 |
3,775
|
31,989 | |||||
Depreciation and impairment losses at the beginning of 2006 | 2,817 | 5,957 | 1,659 |
|
10,433 | |||||
Depreciation for the year | 486 | 1,188 | 226 |
|
1,900 | |||||
Impairment losses for the year | 15 | 164 | |
|
179 | |||||
Depreciation and impairment losses reversed on disposals during the year | (62 | ) | (593 | ) | (125 | ) |
|
(780 | ) | |
Exchange rate adjustments | (25 | ) | (39 | ) | (29 | ) |
|
(93 | ) | |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and impairment losses at the end of 2006 | 3,231 | 6,677 | 1,731 |
|
11,639 | |||||
|
|
|
|
|
|
|
|
|
|
|
Carrying amount at the end of 2006 | 8,294 | 7,389 | 892 |
3,775
|
20,350 | |||||
|
|
|
|
|
|
|
|
|
|
*) | Impairment losses of DKK 753 million relates to discontinuation of AERx®. |
16 |
Investments
in associated companies
|
|
|
|
|
|
|
|
|
|
DKK million |
Harno
Invest A/S
|
Other
|
2007
|
2006
|
||||
|
|
|
|
|
|
|
|
|
Aggregated financial information of associated companies: | ||||||||
Sales | 8 | 325 | 333 | 1,825 | ||||
Net profit/(loss) | 5,811 | (867 | ) | 4,944 | (782 | ) | ||
Total assets | 1,693 | 1,888 | 3,581 | 4,272 | ||||
Total liabilities | 33 | 847 | 880 | 1,942 | ||||
Novo Nordisks share of profit/(loss) in associated companies | 1,503 | (270 | ) | 1,233 | (260 | ) | ||
Hereof unrealised capital gains/(losses) | 18 | (3 | ) | 15 | (16 | ) | ||
Novo Nordisks carrying amount of investments in associated companies | 159 | 341 | 500 | 788 | ||||
Hereof Novo Nordisks carrying amount of goodwill related to investments in associated companies | 0 | 69 | 69 | 82 | ||||
Market values of shareholdings in listed associated companies: | ||||||||
ZymoGenetics, Inc (NASDAQ symbol: ZGEN) | 1,237 | 1,237 | 1,842 | |||||
Innate Pharma SA (Euronext symbol: IPH) | 128 | 128 | 219 | |||||
|
|
|
|
|
|
|
|
Novo Nordisk recorded in 2007 an income of DKK 1,518 million related to the divestment of the business activities in Dako A/S. As a shareholder in Harno Invest A/S (formerly Dako A/S) Novo Nordisk received a dividend of DKK 1,470 million in December 2007. The divested business activities in Harno Invest A/S contributed with a loss in the period from 1 January 2007 to 28 February 2007 of DKK 1 million. For the full year 2006 the divested business activities in Harno Invest A/S contributed with a loss of DKK 23 million.
Please refer to page 101 for a list of Novo Nordisks associated companies.
Novo
Nordisk Annual Report 2007
|
69
|
Consolidated financial statements | Notes Consolidated balance sheet
17 |
Financial
assets
|
|
|
|
|
|
DKK million |
2007
|
2006
|
||
|
|
|
|
|
Financial assets classified as fair value through profit and loss: | ||||
Derivative financial instruments (refer to note 35) | 1,048 | 814 | ||
Available-for-sale financial assets: | ||||
Listed shares | 5 | 9 | ||
Unlisted shares | 107 | 91 | ||
Bonds | 1,486 | *) | 1,001 | |
Loans: | ||||
Amounts owed by affiliated companies | 35 | 36 | ||
Amounts owed by third parties | 5 | 51 | ||
|
|
|
|
|
Total financial assets | 2,686 | 2,002 | ||
|
|
|
|
*) | Danish AAA-rated mortgage bonds issued by Danish credit institutions governed by The Danish Financial Supervisory Authority. |
Specification of financial assets: | ||||
Long-term (Other financial assets) | 131 | 169 | ||
Current (Marketable securities and financial derivatives) | 2,555 | 1,833 | ||
|
|
|
|
|
Total financial assets | 2,686 | 2,002 | ||
|
|
|
|
|
Revaluation surplus on available-for-sale financial assets recognised in equity during the year | 12 | (27 | ) | |
Bonds with maturity exceeding 12 months from the balance sheet date | 985 | | ||
Duration of the Groups bond portfolio (years) | 1.6 | | ||
Redemption yield on the Groups bond portfolio | 4.4% | | ||
|
|
|
|
18 |
Inventories
|
|
|
|
|
|
DKK million |
2007
|
2006
|
||
|
|
|
|
|
Raw materials and consumables | 1,210 | 1,088 | ||
Work in progress | 6,010 | 4,697 | ||
Finished goods | 1,800 | 2,615 | ||
|
|
|
|
|
Total inventories | 9,020 | 8,400 | ||
|
|
|
|
|
Indirect production costs included in work in progress and finished goods | 4,418 | 4,104 | ||
|
|
|
|
|
Amount of write-down of inventories recognised as expense during the year | 188 | 443 | ||
Amount of reversal of write-down | ||||
of inventories during the year | 81 | 45 | ||
|
|
|
|
19 |
Trade
receivables
|
|
|
|
|
|
DKK million |
2007
|
2006
|
||
|
|
|
|
|
Trade receivables (gross) | 6,634 | 5,622 | ||
|
|
|
|
|
Allowances for doubtful trade receivables: | ||||
Balance at the beginning of the year | 459 | 419 | ||
Change in allowances during the year | 119 | 55 | ||
Realised losses during the year | (36 | ) | (15 | ) |
|
|
|
|
|
Balance at the end of the year | 542 | 459 | ||
|
|
|
|
|
Total trade receivables | 6,092 | 5,163 | ||
|
|
|
|
|
Trade receivables (net) are equal to an average credit period of (days) | 53 | 49 | ||
|
|
|
|
|
Trade receivables (gross) can be specified as follows: | ||||
Not due | 5,255 | 4,319 | ||
Overdue by: | ||||
Between 1 and 179 days | 835 | 873 | ||
Between 180 and 359 days | 182 | 184 | ||
More than 360 days | 362 | 246 | ||
|
|
|
|
|
Total trade receivables (gross) | 6,634 | 5,622 | ||
|
|
|
|
20 |
Other
receivables
|
|
|
|
|
|
DKK million |
2007
|
2006
|
||
|
|
|
|
|
Prepayments *) | 602 | 835 | ||
Interest receivable | 79 | 34 | ||
Amounts owed by affiliated companies | 105 | 99 | ||
Other receivables | 707 | 816 | ||
|
|
|
|
|
Total other receivables | 1,493 | 1,784 | ||
|
|
|
|
*) | In 2007 prepaid costs of DKK 116 million were expensed in connection with the dis -continuation of AERx®. |
70 | Novo Nordisk Annual Report 2007 |
Notes Consolidated balance sheet
21 |
Share
capital
|
|
|
|
|
|
DKK million |
2007
|
2006
|
||
|
|
|
|
|
Development in share capital: | ||||
A share capital | 107 | 107 | ||
B share capital | 540 | 567 | ||
|
|
|
|
|
At the end of the year | 647 | 674 | ||
|
|
|
|
The A share capital remained unchanged at DKK 107 million from 2003 to 2007. In 2007 the B share capital was reduced by DKK 27 million from DKK 567 million to DKK 540 million. In 2006 the B share capital was reduced by DKK 35 million from DKK 602 million to DKK 567 million. The B share capital remained 602 million from 2003 to 2005.
At the end of 2007 the share capital amounted to DKK 107,487,200 in A share capital (equal to 107,487,200 A shares of DKK 1) and DKK 539,472,800 in B share capital (equal to 539,472,800 B shares of DKK 1).
Number
of B
shares
of DKK 1*)
|
As
% of share
capital
before
cancellation
|
As
% of share
capital
after
cancellation
|
Market
value
DKK
million
|
|||||
|
|
|
|
|
|
|
|
|
Treasury shares: | ||||||||
Holding at the beginning of the year | 39,426,138 | 5.85% | 9,285 | |||||
Cancellation of treasury shares | (26,960,000 | ) | (4.00% | ) | 7,786 | |||
|
|
|
|
|
|
|
|
|
Holding of treasury shares, adjusted for cancellation | 12,466,138 | 1.85% | 1.93% | 2,936 | ||||
Purchase during the year | 15,537,012 | 2.40% | 4,835 | |||||
Sale during the year | (2,188,020 | ) | (0.34% | ) | (241 | ) | ||
Value adjustment | 1,118 | |||||||
|
|
|
|
|
|
|
|
|
Holding at the end of the year | 25,815,130 | 3.99% | 8,648 | |||||
|
|
|
|
|
|
|
|
*) | In 2007 there was a stock split of the companys A and B shares. The trade unit was changed from DKK 2 to DKK 1. |
Acquisition of treasury shares during the year is part of the share buy-back programme of up to DKK 10 billion worth of Novo Nordisk B shares announced in January 2007, which was initiated in order to align the capital structure with the expected development in free cash flow. Sale of treasury shares relates to exercised share options.
At the end of the year 9,079,072 of the treasury B shareholding shares are regarded as hedge for the share-based incentive schemes.
22 |
Long-term
debt
|
|
|
|
|
|
DKK million |
2007
|
2006
|
||
|
|
|
|
|
Mortgage debt and other secured loans *) | 504 | 658 | ||
Unsecured loans and other long-term loans **) | 457 | 516 | ||
|
|
|
|
|
Total long-term debt | 961 | 1,174 | ||
|
|
|
|
|
The debt is payable within the following periods as from the balance sheet date: | ||||
Between one and two years | 0 | 159 | ||
Between two and three years | 0 | 1 | ||
Between three and four years | 457 | 1 | ||
Between four and five years | 0 | 510 | ||
After five years | 504 | 503 | ||
|
|
|
|
|
Total long-term debt | 961 | 1,174 | ||
|
|
|
|
|
The debt is denominated in the following currencies: | ||||
DKK | 2 | 3 | ||
EUR | 502 | 657 | ||
USD | 457 | 510 | ||
JPY | 0 | | ||
Other currencies | 0 | 4 | ||
|
|
|
|
|
Total long-term debt | 961 | 1,174 | ||
|
|
|
|
Adjustment of the above loans to market value at year-end 2007 would result in a loss of DKK 2 million (a loss of DKK 6 million in 2006).
*) | Terms to maturity between 20162022 and a weighted average interest rate of 4.96% |
**) | Terms to maturity in 2011 and a weighted average interest rate of 4.94% |
Novo
Nordisk Annual Report 2007
|
71
|
Consolidated financial statements | Notes Consolidated balance sheet |
23 |
Deferred
income tax assets and liabilities
|
|
|
|
|
|
DKK million |
2007
|
2006
|
||
|
|
|
|
|
At the beginning of the year | 87 | 967 | ||
Deferred tax on profit for the year | (347 | ) | (213 | ) |
Adjustment relating to previous years | (28 | ) | (871 | ) |
Deferred tax on items recognised on equity | 50 | 125 | ||
Addition regarding acquisition | 7 | | ||
Exchange rate adjustments | 55 | 79 | ||
|
|
|
|
|
Total deferred tax (assets)/liabilities (net) | (176 | ) | 87 | |
|
|
|
|
|
DKK million |
Assets
|
Liabilities
|
2007
Total
|
Assets
|
Liabilities
|
2006
Total
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Specification | ||||||||||||
The deferred tax assets and liabilities are allocable to the various balance sheet items as follows: | ||||||||||||
Property, plant and equipment | (451 | ) | 1,321 | 870 | (188 | ) | 1,425 | 1,237 | ||||
Intangible assets | (677 | ) | 1 | (676 | ) | (904 | ) | 141 | (763 | ) | ||
Indirect production costs | | 1,103 | 1,103 | | 1,149 | 1,149 | ||||||
Unrealised profit on intercompany sales | (1,643 | ) | | (1,643 | ) | (1,561 | ) | | (1,561 | ) | ||
Allowances for doubtful trade receivables | (61 | ) | 1 | (60 | ) | (110 | ) | | (110 | ) | ||
Tax-loss carry-forward | (22 | ) | | (22 | ) | (7 | ) | | (7 | ) | ||
Other | (1,188 | ) | 1,440 | 252 | (915 | ) | 1,057 | 142 | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,042 | ) | 3,866 | (176 | ) | (3,685 | ) | 3,772 | 87 | ||||
Netting of deferred tax assets and deferred tax liabilities related to income taxes for which there is a legally enforceable right to offset | 1,520 | (1,520 | ) | | 1,774 | (1,774 | ) | | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax (assets)/liabilities (net) | (2,522 | ) | 2,346 | (176 | ) | (1,911 | ) | 1,998 | 87 | |||
|
|
|
|
|
|
|
|
|
|
|
|
Unremitted earnings have been retained by subsidiary companies for reinvestment. No provision is made for income taxes that would be payable upon the distribution of such earnings. If the earnings were remitted, an immaterial income tax charge would result, based on the tax statutes currently in effect.
No deferred tax has been calculated on differences associated with investments in subsidiaries, branches and associates as the differences by nature are permanent differences. However, deferred tax has been calculated if the differences are tax deductible.
Tax-loss carry-forward
Deferred tax assets are recognised on tax-loss carry-forwards that represent income likely to be realised in the future. The deferred tax assets of a tax loss of DKK 224 million (DKK 214 million in 2006) have not been recognised in the Balance sheet. Hereof DKK 7 million expire within three years.
24 |
Retirement
benefit obligations
|
|
|
Most employees in the Group are covered by post-employment retirement plans in the form of primarily defined contribution plans or alternatively defined benefit plans. Group com panies sponsor these plans either directly or by contributing to independently administered funds. The nature of such plans varies according to the legal regula tions, fiscal requirements and economic conditions of the countries in which the employees are employed, and the benefits are generally based on the employees remuneration and years of service. The obligations relate both to existing retirees pensions and to pension entitlements of future retirees.
Other post-employment benefits consist mostly of post-retirement healthcare plans, principally in the United States.
Post-employment benefit plans are usually funded by payments from Group companies and by employees to funds independent of the Group. Where a plan is un funded, a liability for the retirement obligation is recognised in the Groups Balance sheet. In accordance with the Accounting Policies the costs recognised for post-employment benefits are included in Cost of goods sold, Sales and distribution costs, Research and development costs or Administrative expenses.
72 | Novo Nordisk Annual Report 2007 |
Notes
Consolidated balance sheet
|
24 |
Retirement
benefit obligations (continued)
|
|
DKK
million
|
2007
|
2006
|
||
|
|
|
|
|
Balance sheet obligations for: | ||||
Defined benefit pension plans |
738
|
719
|
||
Post-employment medical benefits |
147
|
219
|
||
|
|
|
|
|
Total
retirement obligations
|
885
|
938
|
||
|
|
|
|
|
Income statement charge for: | ||||
Defined benefit pension plans |
79
|
81
|
||
Post-employment medical benefits |
30
|
30
|
||
|
|
|
|
|
Total
income statement charge
|
109
|
111
|
||
|
|
|
|
|
The amounts recognised in the Balance sheet are determined as: | ||||
Present value of funded obligations |
695
|
648
|
||
Fair value of plan assets |
(566
|
)
|
(495
|
)
|
|
|
|
|
|
129 | 153 | |||
Present value of unfunded obligations | 190 | 290 | ||
Unrecognised actuarial gains/(losses) (net) on pension benefit plans | 2 | (74 | ) | |
Unrecognised actuarial gains/(losses) (net) on post-employment medical plans | 44 | (36 | ) | |
Unrecognised past service costs | (3 | ) | (3 | ) |
|
|
|
|
|
Net liability in the Balance sheet | 362 | 330 | ||
|
|
|
|
Amounts recognised in the Balance sheet for post-employment defined benefit pension plans and medical plans are predominantly non-current and are re -ported as either long-term assets or long-term liabilities.
Change/development in the retirement obligations of the year: | ||||
At the beginning of the year | 938 | 875 | ||
Current service cost | 91 | 107 | ||
Interest cost on pension obligation | 32 | 30 | ||
Actuarial (gains)/losses | (151 | ) | 7 | |
Past service costs | | (2 | ) | |
Benefits paid to employees | (23 | ) | (26 | ) |
Addition regarding acquisition | 31 | | ||
Plan amendments | 3 | | ||
Other | | (5 | ) | |
Exchange rate adjustments | (36 | ) | (48 | ) |
|
|
|
|
|
At the end of the year | 885 | 938 | ||
|
|
|
|
|
DKK million |
2007
|
2006
|
||
|
|
|
|
|
Change/development in the fair value of plan assets of the year: | ||||
At the beginning of the year |
495
|
435
|
||
Expected return on plan assets |
18
|
16
|
||
Actuarial gains/(losses) |
3
|
3
|
||
Employer contributions |
68
|
65
|
||
Benefits paid to employees |
(10
|
)
|
(17
|
) |
Addition regarding acquisition |
1
|
|
||
Other |
|
9
|
||
Exchange rate adjustments |
(9
|
)
|
(16
|
) |
|
|
|
|
|
At the end of the year |
566
|
495
|
||
|
|
|
|
The Group expects to contribute DKK 61 million to its defined benefit pension plans in 2008.
Weighted average asset allocation of funded retirement obligations: | ||||
Equities | 27% | 27% | ||
Bonds | 56% | 56% | ||
Cash at bank | 12% | 12% | ||
Property | 5% | 5% | ||
|
|
|
|
||
Amounts recognised in the income statement for the year: | |||||
Current service cost | 91 | 107 | |||
Interest cost on pension obligation | 32 | 30 | |||
Expected return on plan assets | (18 | ) | (16 | ) | |
Actuarial (gains)/losses recognised in the year | 1 | 4 | |||
Curtailment/settlement (gains)/losses | | (18 | ) | ||
Past service cost | 3 | 4 | |||
|
|
|
|
||
Total income statement charge | 109 | 111 | |||
|
|
|
|
||
Actual return on plan assets | 21 | 19 |
|
|
|
|
|
The weighted average assumptions used for computation and valuation of defined benefit plans and post-employment medical benefits are as follows: | ||||
Discount rate | 4% | 4% | ||
Projected return on plan assets | 4% | 4% | ||
Projected future remuneration increases | 3% | 3% | ||
Healthcare cost trend rate | 7% | 10% | ||
Inflation rate | 2% | 2% | ||
|
|
|
|
|
For all major defined benefit plans actuarial computations and valuations are performed annually.
The following shows a five-year summary reflecting the funding of retirement obligations and the impact of historical deviations between expected and actual return on plan assets and actuarial adjustments on plan liabilities:
DKK
million
|
2007
|
2006
|
2005
|
2004
|
2003
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Retirement obligations | 885 | 938 | 875 | 609 | 500 | |||||
Plan assets | (566 | ) | (495 | ) | (435 | ) | (313 | ) | (246 | ) |
Deficit/(surplus) | 319 | 443 | 440 | 296 | 254 | |||||
Actuarial (gains)/losses on plan assets | (3 | ) | (3 | ) | 6 | (2 | ) | (1 | ) | |
Actuarial (gains)/losses on plan liabilities | (151 | ) | 7 | 77 | 16 | 10 | ||||
|
|
|
|
|
|
|
|
|
|
|
Novo
Nordisk Annual Report 2007
|
73
|
Consolidated financial statements | Notes Consolidated balance sheet |
25 |
Other
provisions
|
|
|
|
|
|
|
|
|
|
|
|
DKK million |
Provisions
for
returned
products
|
Provisions
for
sales
rebates
|
Other
provisions
|
2007
Total
|
2006
Total
|
|||||
|
|
|
|
|
|
|
|
|
|
|
At the beginning of the year |
609
|
1,775
|
983
|
3,367
|
2,719
|
|||||
Additional provisions *) |
250
|
2,816
|
444
|
3,510
|
3,410
|
|||||
Adjustments to previous years provisions |
(89
|
)
|
(168
|
)
|
(59
|
)
|
(316
|
)
|
(223
|
) |
Used during the year |
(176
|
)
|
(2,495
|
)
|
(60
|
)
|
(2,731
|
)
|
(2,333
|
) |
Exchange rate adjustments |
(1
|
)
|
(184
|
)
|
(5
|
)
|
(190
|
)
|
(206
|
) |
|
|
|
|
|
|
|
|
|
|
|
At the end of the year |
593
|
1,744
|
1,303
|
3,640
|
3,367
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Specification of other provisions: | ||||||||||
Long-term |
|
|
1,239
|
1,239
|
911
|
|||||
Current |
593
|
1,744
|
64
|
2,401
|
2,456
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Total other provisions |
593
|
1,744
|
1,303
|
3,640
|
3,367
|
|||||
|
|
|
|
|
|
|
|
|
|
*) Under Other Provisions DKK 339 relates to discontinuation of AERx®.
Provisions
for returned products:
Novo
Nordisk issues credit notes for expired goods as a part of normal business.
Consequently, a provision for future returns is made based on historical statistical
product returns, which represents Managements best estimate. The provision
is expected to be used within the normal operating cycle.
Provisions
for sales rebates:
In
some countries the actual rebates depend on which customers purchase the products.
Factors that complicate the rebate calculations are the identification of which
products have been sold subject to a rebate, which customer or government price
terms apply, and the estimated lag time between sale and payment of the rebate.
Please refer to notes 3 and 5 for further information on rebates deducted from
sales.
Other
provisions:
Other
provisions consist of various types of provisions including provisions for legal
disputes, which represents Managements best estimate. Please refer to
note 36 for further information on commitments and contingencies.
26 |
Short-term
debt and financial derivatives
|
|
|
|
|
|
DKK million |
2007
|
2006
|
||
|
|
|
|
|
Bank loans and overdrafts |
206
|
285
|
||
Long-term debt, amounts falling due within one year |
154
|
12
|
||
Derivative financial instruments (refer to note 35) |
45
|
41
|
||
|
|
|
|
|
Total short-term debt |
405
|
338
|
||
|
|
|
|
|
The debt is denominated in the following currencies: | ||||
|
|
|
|
|
DKK |
13
|
18
|
||
EUR |
179
|
196
|
||
USD |
108
|
57
|
||
JPY |
11
|
11
|
||
Other currencies |
94
|
56
|
||
|
|
|
|
|
Total short-term debt | 405 | 338 | ||
|
|
|
|
At year-end, the Group had undrawn committed credit facilities amounting to DKK 7,457 million (DKK 7,456 million in 2006). The undrawn committed credit facilities consist of a EUR 400 million and a EUR 600 million facility committed by a number of Danish and international banks. The facilities mature in 2009 and 2012 respectively.
27 |
Other
liabilities
|
|
|
|
|
|
DKK million |
2007
|
2006
|
||
|
|
|
|
|
Employee costs payable | 2,025 | 1,857 | ||
Taxes and duties payable | 346 | 447 | ||
Accruals and deferred income | 122 | 81 | ||
Amounts owed to affiliated companies | 93 | 86 | ||
Other payables | 2,373 | 2,392 | ||
|
|
|
|
|
Total other liabilities | 4,959 | 4,863 | ||
|
|
|
|
|
74 | Novo Nordisk Annual Report 2007 |
28 |
Other
adjustments for non-cash items
|
|
|
|
|
|
|
|
DKK million |
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
Share-based payment costs | 130 | 113 | 223 | |||
Increase/(decrease) in provisions | 490 | 889 | 890 | |||
(Gain)/loss from sale of property, plant and equipment | 140 | 134 | (64 | ) | ||
|
|
|
|
|
|
|
Change in allowances for doubtful trade receivables | 119 | 65 | 72 | |||
Unrealised (gain)/loss on shares and bonds etc | 54 | (7 | ) | 37 | ||
Unrealised foreign exchange (gain)/loss | 37 | (143 | ) | 96 | ||
Share of (profit)/loss in associated companies | 300 | 244 | 127 | |||
Recognised income of divestment of business activities in the associated company, Harno Invest A/S | (1,518 | ) | | | ||
Unrealised capital gain on investments in | ||||||
associated companies | (15 | ) | 16 | (186 | ) | |
Other, including difference between average exchange rate and year-end exchange rate | (46 | ) | (352 | ) | (86 | ) |
|
|
|
|
|
|
|
Other adjustments for non-cash items | (309 | ) | 959 | 1,109 | ||
|
|
|
|
|
|
|
29 | Cash flows from acquisition of subsidiaries and business units |
|
|
|
|
|
|
|
DKK million |
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
Intangible assets | 44 | | 8 | |||
Property, plant and equipment | 9 | | 345 | |||
Other long-term assets | 18 | | | |||
Current assets | 149 | | 5 | |||
Long-term liabilities | (37 | ) | | | ||
Current liabilities | (176 | ) | | (8 | ) | |
|
|
|
|
|
|
|
Net assets acquired | 7 | | 350 | |||
Goodwill on acquisition | 52 | | | |||
|
|
|
|
|
|
|
Consideration paid | (59 | ) | | (350 | ) | |
Acquired cash and cash equivalents | | | | |||
|
|
|
|
|
|
|
Net cash flow | (59 | ) | | (350 | ) | |
|
|
|
|
|
|
Please refer to note 2 for further information.
30 |
Cash
and cash equivalents
|
|
|
|
|
|
|
|
DKK million |
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
Cash at the end of the year | 4,823 | 3,270 | 3,303 | |||
Short-term bank loans and overdrafts at the end of the year (refer to note 26) | (206 | ) | (285 | ) | (820 | ) |
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the year | 4,617 | 2,985 | 2,483 | |||
|
|
|
|
|
|
At the end of 2007, 2006 and 2005 there were no marketable securities with original maturity of less than three months.
Novo
Nordisk Annual Report 2007
|
75
|
Consolidated financial statements | Notes Additional information |
31 |
Financial
risk
|
|
|
Novo
Nordisk has centralised the management of the Groups financial risks.
The overall objective and policies for the companys financial risk management
are outlined in the 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 allowed 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 within Novo Nordisk and as such
has a significant impact on the Income statement and the Balance sheet.
The
major part of Novo Nordisks sales is in EUR, USD, JPY and GBP, while a
predominant part of production, research and development costs is carried in
DKK. As a consequence Novo Nordisks foreign exchange risk is most significant
in USD, JPY and GBP, leaving out EUR for which the exchange risk is regarded
as low due to the Danish fixed-rate policy vis-à-vis the EUR.
The
overall objective of foreign exchange risk management is to limit the short-term
negative impact on earnings and cash flow from exchange rate fluctua tions,
thereby increasing the predictability of the financial results.
Novo
Nordisk hedges existing assets and liabilities in major currencies as well as
future expected cash flows up to 24 months forward. Currency hedging is based
upon expectations of future exchange rates and takes place using mainly foreign
exchange forwards and foreign exchange options matching the due dates of the
hedged items. Expected cash flows are continuously assessed using historical
inflows, budgets and monthly sales forecasts. Hedge effectiveness is assessed
on a regular basis.
USD
depreciated during 2007 versus DKK ending with a 10.4% decrease. In 2006 the
USD depreciated by 10.5% versus DKK. In 2007, the JPY depreciated by 5.5% whereas
the GBP depreciated by 8.6%, both versus DKK. In 2006, the JPY depreciated by
11.5% whereas the GBP appreciated by 2.0%.
At
year-end 2007, Novo Nordisk has covered the foreign exchange exposures on the
Balance sheet together with 16 months of expected future cash flow in USD. For
JPY and GBP the equivalent cover was 15 months and 10 months of expected future
cash flow respectively. At the end of 2006, the USD cover was 16 months, and
for JPY and GBP the cover was 12 months and 11 months respectively.
A
5% change in the following currencies will have a full-year impact on operating
profit of approximately:
Estimated | Estimated | |||
for | for | |||
DKK million | 2008 | 2007 *) | ||
|
|
|
|
|
USD |
470
|
400
|
||
JPY |
140
|
150
|
||
GBP |
85
|
90
|
||
USD-related currencies |
100
|
90
|
||
|
|
|
|
*) | Definition of USD-related currencies have been changed to CAD, CNY in 2008 from ARS, BRL, CAD, CNY, MXN, SGD, TWD, INR in 2007. Comparative figures for 2007 have been changed accordingly. |
At the end of 2007 a 5% increase in all other currencies versus EUR and DKK would result in a decrease of the value of the net financial instruments of the Group, of approximately DKK 714 million (DKK 644 million in 2006). A 5% decrease in all other currencies versus EUR and DKK would result in an increase of the value of the net financial instruments of the Group of approximately DKK 772 million (DKK 693 million in 2006).
The
financial instruments included in the foreign exchange sensitivity analysis
are the Groups cash, accounts receivable and payable, short- and long-term
loans, short- and long-term financial investments, foreign exchange forwards
and foreign exchange options hedging transaction exposure. Furthermore, interest
rate swaps and cross-currency swaps are included. Not included are anticipated
currency transactions, investments and fixed assets. Cross-currency swaps hedging
translation exposure are excluded from the sensitivity analysis, as the effects
of changing exchange rates hereon are recognised directly under shareholders
funds.
Novo
Nordisk only hedges invested equity in major foreign affiliates to a limited
extent. Equity hedging takes place using long-term cross-currency swaps. At
the end of 2007, hedged equity made up 12% of the Groups JPY equity. At
the end of 2006, 14% of the Groups JPY equity was hedged.
Interest
rate risk
Changes
in the interest rates have a limited effect on Novo Nordisks financial
instruments. At the end of 2007, an increase in the interest rate level of one
percentage point would, everything else being equal, increase the fair value
of Novo Nordisks financial instruments by DKK 15 million (DKK 53 million
in 2006).
DKK
and EUR interest rates rose steadily during the first half of 2007, whereas
the second half of 2007 was much more volatile with an overall declining trend.
The Danish two-year bond yield was 4.23% at the end of 2007, up from 3.94% at
the end of 2006.
The
financial instruments included in the sensitivity analysis consist of marketable
securities, deposits, short- and long-term loans, interest rate swaps and cross-currency
swaps. Not included are foreign exchange forwards and foreign exchange options
due to the limited effect that interest rate changes have on these instruments.
Liquidity
risk
Novo
Nordisk ensures availability of required liquidity through a combination of
cash management, highly liquid investment portfolios, and uncommitted as well
as committed facilities.
Counterparty
risk
The
use of derivative financial instruments and money market deposits gives rise
to counterparty exposure. To manage and reduce the credit risk on financial
counterparties, Novo Nordisk only enters into derivative financial contracts
with financial counterparties having a satisfactory long-term credit rating
assigned by international credit rating agencies. Money market deposits are
only entered into with financial counterparts having a satisfactory credit
rating. The credit risk on bonds is limited as investments are made in highly
liquid bonds with solid credit ratings.
Credit risk on Trade and Other receivables
is limited as Novo Nordisk has no significant concentration of credit risk,
with exposure being spread over a large number of counterparties and customers.
Capital
structure
Novo
Nordisks 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
Nordisks equity ratio, calculated as equity to total liabilities, was
67.4% by the end of the year (67.4% at the end of 2006).
76 | Novo Nordisk Annual Report 2007 |
32 |
Related
party transactions
|
|
|
Novo Nordisk A/S is controlled by Novo A/S (incorporated in Denmark), which owns 25.5% of the shares in Novo Nordisk A/S. The remaining shares are widely held. The ultimate parent of the Group is the Novo Nordisk Foundation (incorporated in Denmark).
In 2000, the Novozymes Group was demerged from the Novo Nordisk Group with Novo A/S retaining a controlling shareholding.
Related parties are considered to be the Novo Nordisk Foundation, Novo A/S, the Novozymes Group (due to the shared controlling shareholder, Novo A/S), asso ciated companies, the Board of Directors and officers of these entities and Management of Novo Nordisk. Novo Nordisk has access to certain assets of and can purchase certain services from Novo A/S and the Novozymes Group and vice versa. All agreements relating to such assets and services are based on the list prices used for sales to third parties where such list prices exist, or the price has been set at what is regarded as market price. The material terms of these agreements are renegotiated annually.
The Group has had the following material transactions with related parties:
2007
|
2006
|
|||
Purchase/ | Purchase/ | |||
DKK million | (sale) | (sale) | ||
|
|
|
|
|
Novo Nordisk Foundation | ||||
Donations to the Group | (30 | ) | (29 | ) |
Novo A/S | ||||
Services provided by the Group | (15 | ) | (14 | ) |
Services provided by Novo A/S | 1 | 40 | ||
Purchase of Novo Nordisk B shares | 2,090 | 1,835 | ||
Net balance | 3 | 0 | ||
The Novozymes Group | ||||
Services provided by the Group | (253 | ) | (207 | ) |
Services provided by the Novozymes Group | 159 | 157 | ||
Net balance | 14 | 30 | ||
Associated companies | ||||
Purchased intangible assets, fees and royalties etc paid to associated companies by Novo Nordisk | 63 | 70 | ||
|
|
|
|
There have not been any material transactions with any director or officer of Novo Nordisk, the Novozymes Group, Novo A/S, the Novo Nordisk Founda tion or associated companies. For information on remuneration to Manage ment of Novo Nordisk A/S, please refer to note 34.
Apart from the balances included in the Balance sheet under Other financial assets, Other receivables and Other liabilities, there are no material unsettled trans actions with related parties at the end of the year.
Novo
Nordisk Annual Report 2007
|
77
|
33 |
Share-based
payment schemes
|
|
|
Long-term
share-based incentive programme
For a description of the programme please refer to page 4445.
In 2007,
the allocation to the bonus pool for the Senior Management Board amounts to
DKK 43 million, corresponding to 6.5 months salary. This amount has
been expensed in 2007. The cash amount has been converted into 166,445 Novo
Nordisk B shares of DKK 1 using a share price of DKK 256.5, equal to the adjusted
average trading price for Novo Nordisk B shares on the OMX Nordic Exchange
Copenhagen from 31 January to 14 February 2007. Based on the split of participants
at the establishment of the bonus pool, approximately 35% of the pool will
be allocated to the members of Executive Management and 65% to the members
of the Senior Management Board.
The
shares allocated to the bonus pool for 2004 (252,688 shares) were released
to the individual participants following the approval of the Annual Report
for 2007 by the Board of Directors on 30 January 2008.
The
total number of shares in the bonus pool relating to the years 2005, 2006
and 2007 now amounts to 659,971 shares split in the following way:
Year allocated to pool | Number of shares | Vesting | |||
|
|
|
|
|
|
2005 | 232,026 | 2009 | |||
2006 | 261,500 | 2010 | |||
2007 | 166,445 | 2011 | |||
|
|
|
|
|
|
659,971 | |||||
|
|
|
|
|
For the management group below the Senior Management Board, a similar share-based incentive programme was introduced in 2007. The allocation to the bonus pool for this group consisting of approximately 500 employees was DKK 135 million in 2007, corresponding to 527,665 shares. The cost of this allo -cation will be amortised equally over the period 20072010.
Share
options
Novo
Nordisk had established share option schemes in 19982006 with the pur
pose of motivating and retaining qualified management group and to ensure
common goals for management and the shareholders. Each option gives the right
to purchase one Novo Nordisk B share. All share options are hedged by treasury
shares. No options were granted in 2007 as the future long-term incentive
programme from 2007 onwards will be based directly on shares.
The
options are exercisable three years after the issue date and will expire after
eight years. For options granted based on performance targets for the financial
years 19971999, the exercise price was equal to the market price of
the Novo Nordisk B share at the time of issuance. The exercise price for options
granted based on performance targets for the financial years 20002006
was equal to the market price of the Novo Nordisk B share at the time when
the plan was established. The options can only be settled in shares.
Assumptions
The
market value of the Novo Nordisk B share options has been calculated using the
Black-Scholes option pricing model.
The assumptions used are shown in the table below:
2007
|
2006
|
2005
|
||||
|
|
|
|
|
|
|
Expected life of the option in years (average) | 6 | 6 | 6 | |||
Expected volatility | 21% | 17% | 15% | |||
Expected dividend per share (in DKK) | 4.50 | 3.50 | 3.00 | |||
Risk-free interest rate | ||||||
(based on Danish government bonds) | 4.25% | 3.60% | 3.25% | |||
Novo Nordisk B share price | ||||||
at the date of grant |
NA
|
195 | 160 | |||
Novo Nordisk B share price | ||||||
at the end of the year | 335.0 | 235.5 | 177.5 | |||
|
|
|
|
|
|
|
Share-based payment expensed in the Income statement | 130 | 113 | 223 | |||
|
|
|
|
|
|
Share
options on Novozymes shares
Options
granted prior to the demerger of Novozymes A/S in 2000 have been split into
one Novo Nordisk option and one Novozymes option. At the end of the year, the
Groups outstanding Novozymes options amount to 45,367 with an average
exercise price of DKK 101 per share of DKK 10 and a market value of DKK 22 million.
These options are hedged by the Groups holding of Novozymes A/S B shares.
78 | Novo Nordisk Annual Report 2007 |
Notes Additional information
33 |
Share-based
payment schemes (continued)
|
|
Average
exercise
|
Market
value
|
Market
|
||||||
price
per option
|
per
option
|
value
|
||||||
Outstanding share options in Novo Nordisk |
Share
options
|
DKK | DKK | DKK million | ||||
|
|
|
|
|
|
|
|
|
Outstanding at the end of 2004 | 8,891,302 | 114 | 50 | 439 | ||||
Granted in respect of 2005 (issued on 31 January 2006) | 1,640,468 | 153 | 29 | 47 | ||||
Employee share options (issued OctDec 2005) *) | 227,080 | 0 | 156 | 35 | ||||
Exercised in 2005: | ||||||||
of 1997 Ordinary share option plan | (19,000 | ) | 95 | 50 | (1 | ) | ||
of 1998 Ordinary share option plan | (103,000 | ) | 63 | 50 | (5 | ) | ||
of 1999 Ordinary share option plan | (207,334 | ) | 99 | 50 | (10 | ) | ||
of 2000 Ordinary share option plan | (183,248 | ) | 99 | 50 | (9 | ) | ||
of Launch-share option plan | (268,080 | ) | 99 | 50 | (13 | ) | ||
Expired/cancelled in 2005 | (26,416 | ) | 114 | 50 | (1 | ) | ||
Value adjustment **) | 152 | |||||||
|
|
|
|
|
|
|
|
|
Outstanding at the end of 2005 | 9,951,772 | 119 | 64 | 634 | ||||
|
|
|
|
|
|
|
|
|
Granted in respect of 2006 (issued on 31 January 2007) | 2,229,084 | 175 | 45 | 99 | ||||
Exercised in 2006: | ||||||||
of 1997 Ordinary share option plan | (27,000 | ) | 95 | 64 | (2 | ) | ||
of 1998 Ordinary share option plan | (161,500 | ) | 63 | 64 | (10 | ) | ||
of 1999 Ordinary share option plan | (270,400 | ) | 99 | 64 | (17 | ) | ||
of 2000 Ordinary share option plan | (280,416 | ) | 99 | 64 | (18 | ) | ||
of Launch-share option plan | (845,880 | ) | 99 | 64 | (54 | ) | ||
of 2001 Ordinary share option plan | (283,600 | ) | 166 | 64 | (18 | ) | ||
of 2002 Launch-share option plan | (36,000 | ) | 161 | 64 | (2 | ) | ||
of 2005 Employee share options *) | (350 | ) | 0 | 64 | 0 | |||
Expired/cancelled in 2006 | (179,306 | ) | 119 | 64 | (11 | ) | ||
Value adjustment **) | 519 | |||||||
|
|
|
|
|
|
|
|
|
Outstanding at the end of 2006 | 10,096,404 | 134 | 111 | 1,120 | ||||
|
|
|
|
|
|
|
|
|
Exercised in 2007: | ||||||||
of 1998 Ordinary share option plan | (73,000 | ) | 63 | 111 | (8 | ) | ||
of 1999 Ordinary share option plan | (287,434 | ) | 99 | 111 | (32 | ) | ||
of 2000 Ordinary share option plan | (306,800 | ) | 99 | 111 | (34 | ) | ||
of 2001 Ordinary share option plan | (356,280 | ) | 166 | 111 | (40 | ) | ||
of Launch-share option plan | (138,680 | ) | 99 | 111 | (15 | ) | ||
of 2001 Launch-share option plan | (21,528 | ) | 166 | 111 | (2 | ) | ||
of 2002 Launch-share option plan | (16,048 | ) | 161 | 111 | (2 | ) | ||
of 2003 Ordinary share option plan | (979,010 | ) | 98 | 111 | (109 | ) | ||
of 2005 Employee share options *) | (840 | ) | 0 | 111 | 0 | |||
Expired/cancelled in 2007 | (278,036 | ) | 134 | 111 | (31 | ) | ||
Value adjustment **) | 688 | |||||||
|
|
|
|
|
|
|
|
|
Outstanding at the end of 2007 | 7,638,748 | 140 | 201 | 1,535 | ||||
|
|
|
|
|
|
|
|
*) | Granted to employees in some countries outside of Denmark with a benefit equal to the employee-share benefit obtained by employees in the rest of the world. |
**) | The market value has been calculated using the Black-Scholes model with the parameters existing at year-end of the respective year. |
Novo
Nordisk Annual Report 2007
|
79
|
Consolidated financial statements | Notes Additional information
33 |
Share-based
payment schemes (continued)
|
|
Exercisable
and outstanding share options in Novo Nordisk |
Issued
share options |
Exercised
share options |
Expired/
cancelled |
Outstanding/
exercisable share options |
Exercise
price
DKK |
Exercise
period
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
1998 Ordinary share option plan *) | 710,000 | (591,166 | ) | (118,834 | ) | 0 | 63 | 25/3 2002 24/3 2007 | ||||
1999 Ordinary share option plan | 1,375,000 | (1,065,500 | ) | (153,000 | ) | 156,500 | 99 | 24/3 2003 23/3 2008 | ||||
2000 Ordinary share option plan | 1,526,000 | (1,056,630 | ) | (46,504 | ) | 422,866 | 99 | 22/2 2004 21/2 2009 | ||||
2001 Ordinary share option plan | 1,369,960 | (639,880 | ) | (86,788 | ) | 643.292 | 166 | 8/2 2005 7/2 2010 | ||||
2000 Launch-share option plan *) | 1,437,200 | (1,437,200 | ) | | 0 | 99 | 1/2 2004 31/1 2007 | |||||
2001 Launch-share option plan | 21,528 | (21,528 | ) | | 0 | 166 | 8/2 2005 7/2 2010 | |||||
2002 Launch-share option plan | 52,048 | (52,048 | ) | | 0 | 161 | 7/2 2006 6/2 2011 | |||||
2003 Ordinary share option plan | 2,185,000 | (979,010 | ) | (77,666 | ) | 1,128,324 | 98 | 6/2 2007 5/2 2012 | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at the end of 2007 | 8,696,736 | (5,842,962 | ) | (482,792 | ) | 2,350,982 | ||||||
2004 Ordinary share option plan | 1,618,832 | | (110,000 | ) | 1,508,832 | 134 | 31/1 2008 30/1 2013 | |||||
2005 Ordinary share option plan | 1,640,468 | | (123,768 | ) | 1,516,700 | 153 | 31/1 2009 30/1 2014 | |||||
2005 Employee share options **) | 227,080 | (1,190 | ) | (51,240 | ) | 174,650 | 0 | 1/11 2008 31/12 2008 | ||||
2006 Ordinary share option plan | 2,229,084 | | (141,500 | ) | 2,087,584 | 175 | 31/1 2010 30/1 2015 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at the end of 2007 ***) | 14,392,200 | (5,844,152 | ) | (909,300 | ) | 7,638,748 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
*) | For 3,750 1998 Ordinary share options and 35,560 2000 Launch-share options, the Board of Directors had extended the exercise period to 3 August 2007. |
**) | Granted to employees in some countries outside of Denmark with a benefit of the 2005 employee share programme equal to the employee-share benefit obtained by employees in the rest of the world. |
***) | All stock options will vest if there is a change of control of Novo Nordisk A/S, cf. note 36 Commitments and contingencies. |
Average market price of Novo Nordisk B shares per trading period in 2007 |
Average
market price DKK |
Exercised
share options |
||
|
|
|
|
|
31 January 14 February |
256.5
|
1,094,120 | ||
2 May 16 May |
285.5
|
612,990 | ||
3 August 17 August |
297.0
|
215,160 | ||
31 October 14 November |
312.5
|
257,350 | ||
|
|
|
|
|
Total exercised options | 2,179,620 | |||
|
|
|
|
80 | Novo Nordisk Annual Report 2007 |
Notes Additional information
34 |
Managements
remuneration, share options and shareholdings
|
|
For information on the Board of Directors, the members of Executive Management and of the Senior Management Board, please refer to pages 4648 of the Annual Report.
Fee to the Board of Directors and the Audit Committee | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Board
of
|
Audit
|
2007
|
Board
of
|
Audit
|
2006
|
|||||||
DKK million | Directors | Committee |
Total
|
Directors | Committee | Total | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Mads Øvlisen (Chairman of the Board until 8 March 2006) | | | |
0.2
|
| 0.2 | ||||||
Sten Scheibye (Chairman of the Board from 8 March 2006, | ||||||||||||
Vice chairman of the Board until 8 March 2006) | 1.0 | | 1.0 |
0.7
|
| 0.7 | ||||||
Göran A. Ando (Vice-chairman of the Board and R&D facilitator | ||||||||||||
from 8 March 2006, board member until 8 March 2006) | 0.6 | | 0.6 |
0.6
|
| 0.6 | ||||||
Kurt Anker Nielsen (Chairman of the Audit Committee) | 0.4 | 0.5 | 0.9 |
0.3
|
0.4 | 0.7 | ||||||
Other Board of Directors/Audit Committee members | 3.2 | 0.4 | 3.6 |
2.4
|
0.3 | 2.7 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total | 5.2 | 0.9 | 6.1 |
4.2
|
0.7 | 4.9 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
Executive Management and the Senior Management Board | ||||||||||||
|
||||||||||||
Fixed
salary
|
Cash
bonus*)
|
Pensions
|
Car
allowance
etc
|
Share-based
payment
|
Total
remuneration
|
|||||||
DKK million | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 | ||||||||||||
Executive Management: | ||||||||||||
Lars Rebien Sørensen | 6.0 | 2.0 | 2.0 |
0.3
|
| 10.3 | ||||||
Jesper Brandgaard | 3.5 | 1.2 | 1.2 |
0.3
|
| 6.2 | ||||||
Lise Kingo | 3.2 | 1.1 | 1.1 |
0.3
|
| 5.7 | ||||||
Kåre Schultz **) | 5.3 | 1.7 | 1.3 |
1.3
|
| 9.6 | ||||||
Mads Krogsgaard Thomsen | 3.5 | 1.2 | 1.2 |
0.3
|
| 6.2 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Management in total | 21.5 | 7.2 | 6.8 |
2.5
|
| 38.0 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Management Board in total ****) | 48.6 | 17.6 | 14.9 |
7.4
|
| 88.5 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Share bonus pool *****) | 42.7 | 42.7 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 | ||||||||||||
Executive Management: | ||||||||||||
Lars Rebien Sørensen | 5.7 | 1.9 | 2.0 |
0.3
|
| 9.9 | ||||||
Jesper Brandgaard | 3.1 | 1.1 | 1.0 |
0.3
|
| 5.5 | ||||||
Lars Almblom Jørgensen ***) | 0.7 | | 0.4 |
0.1
|
| 1.2 | ||||||
Lise Kingo | 2.9 | 1.0 | 1.0 |
0.3
|
| 5.2 | ||||||
Kåre Schultz **) | 4.7 | 1.7 | 1.2 |
1.6
|
| 9.2 | ||||||
Mads Krogsgaard Thomsen | 3.1 | 1.1 | 1.0 |
0.3
|
| 5.5 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Management in total | 20.2 | 6.8 | 6.6 |
2.9
|
| 36.5 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Management Board in total ****) | 39.8 | 13.3 | 10.7 |
5.3
|
| 69.1 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Share bonus pool *****) | 45.8 | 45.8 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
*) | As from Annual Report 2007 Cash bonus disclosed for 2007 is the expected bonus payment in 2008 relating to performance in 2007. The disclosure for Cash bonus disclosed for 2006 has been changed accordingly to bonus paid out in 2007 relating to performance in 2006. |
**) | The total remuneration in 2006 and 2007 is reflecting costs in relation to Kåre Schultz expatriation to Switzerland. Out of the total remuneration approximately 12% related to cost compensation and associated tax effects of being expatriated. Fixed salary for 2006 is adjusted to appropriately reflect the tax implications of the expatriation. |
***) | In addition, Lars Almblom Jørgensen received severance package in 2006 amounting to DKK 16.5 million. |
****) | The total remuneration for 2007 includes remuneration to 25 Senior Vice Presidents of which 5 resigned during the year. The total remuneration for 2006 includes remuneration to 22 Senior Vice Presidents and no one resigned during the year. |
*****) | The share bonus pool 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 bonus pool, approximately 35% of the pool will be allocated to the members of Executive management and 65% to the member of the Senior Management Board (2006: 37% and 63% respectively). In the lock-up period, the bonus pool may potentially be reduced as a result of lower than planned value creation in subsequent years. |
Novo
Nordisk Annual Report 2007
|
81
|
Consolidated financial statements | Notes Additional information
34 |
Managements
remuneration, share options and shareholdings (continued)
|
|
The shares allocated to the bonus pool for 2004 (252,688 shares) were released to the individual participants following the approval by the Board of Directors on 30 January 2008. Based on the share price at the end of 2007, the value of the released shares is as follows:
Market
value*)
|
||||
Value of shares released in 2008 | No of shares | DKK million | ||
|
|
|
|
|
Executive Management: | ||||
Lars Rebien Sørensen | 26,138 | 8.8 | ||
Jesper Brandgaard | 17,426 | 5.8 | ||
Lise Kingo | 17,426 | 5.8 | ||
Kåre Schultz | 17,426 | 5.8 | ||
Mads Krogsgaard Thomsen | 17,426 | 5.8 | ||
|
|
|
|
|
Executive Management in total | 95,842 | 32.0 | ||
|
|
|
|
|
Senior Management Board in total | 156,846 | 52.5 | ||
|
|
|
|
*) | The market value of the shares released in 2008 is based on Novo Nordisk B share price at the end of 2007 of DKK 335. |
The remuneration package for members of the Senior Management Board employed in foreign subsidiaries differs from the general package in respect of other benefit and bonus schemes included in the package in order to ensure an attractive package compared to local conditions. In addition, Executive Management and Senior Management Board members receive ordinary allowances in connection with business travelling, conferences and education etc, which are based on reimbursement of actual costs.
The members of Executive Management are, in the event of termination by the Company or by the individual due to a merger, acquisition or takeover by an external company, entitled to a severance payment of up to 36 months salary plus pension contributions. This equals amounts between DKK 11.7 million and DKK 23.4 million.
Lars Rebien Sørensen serves as a member of the Board of Directors of ZymoGenetics, Inc and does not retain the compensation. Lars Rebien Sørensen furthermore serves as a member of the Supervisory Board of Bertelsmann AG and retains the remuneration of EUR 59 thousand in 2007 (EUR 58 thousand in 2006) and as a member of the Supervisory Board of DONG Energy and retains the remuneration of DKK 113 thousand in 2007 (DKK 0 in 2006). Lise Kingo serves as a member of the Board of Directors of GN Store Nord A/S and retains the remuneration of DKK 350 thousand (DKK 200 thousand in 2006). Mads Krogsgaard Thomsen serves as a member of the Board of Directors of Cellartis AB and DTU and retains the remuneration of SEK 25 thousand (SEK 50 thousand in 2006) from Cellartis AB and DKK 60 thousand (DKK 50 thousand in 2006) from DTU. Jesper Brandgaard serves as a member of the Board of Directors of SimCorp A/S and retains the remuneration of DKK 203 thousand in 2007 (DKK 0 in 2006). Kåre Schultz serves as a member of the Board of Directors of Lego A/S and retains the remuneration of DKK 171 thousand (DKK 0 in 2006).
Managements share options | ||||||||||
|
||||||||||
At
the beginning
of
the year
|
Exercised
during
the year
|
Additions
during
the year
|
At
the end
of
the year
|
Market
value*)
DKK
million
|
||||||
Share options in Novo Nordisk | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
Executive Management: | ||||||||||
Lars Rebien Sørensen | 127,000 | 36,000 | | 91,000 | 19.5 | |||||
Jesper Brandgaard | 85,060 | 38,560 | | 46,500 | 10.0 | |||||
Lise Kingo | 41,000 | 21,000 | | 20,000 | 4.7 | |||||
Kåre Schultz | 57,500 | 23,000 | | 34,500 | 7.2 | |||||
Mads Krogsgaard Thomsen | 90,560 | 44,060 | | 46,500 | 10.0 | |||||
|
|
|
|
|
|
|
|
|
|
|
Executive Management in total | 401,120 | 162,620 | | 238,500 | 51.4 | |||||
Senior Management Board in total **) | 546,078 | 327,528 | 105,350 | 323,900 | 66.6 | |||||
|
|
|
|
|
|
|
|
|
|
|
Total | 947,198 | 490,148 | 105,350 | 562,400 | 118.0 | |||||
|
|
|
|
|
|
|
|
|
|
*) | Calculation of market values at year-end has been based on the Black-Scholes option pricing model applying the assumptions shown in note 33. |
**) | Additions during the year cover the holdings of share options by Senior Management Board members appointed in 2007. |
82 | Novo Nordisk Annual Report 2007 |
Notes Additional information
34 |
Managements
remuneration, share options and shareholdings (continued)
|
|
Managements
holding of Novo Nordisk shares
The internal
rules for board members, executives and certain employees
trading in Novo Nordisk securities only permit trading in the 15-calendar-day
period following each quarterly announcement.
At
the beginning
of the year
|
Purchased
during
the year
|
Sold
during the year
|
At
the end
of the year
|
Market
value DKK
million
|
*) | |||||
Shares in Novo Nordisk | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
Board of Directors: | ||||||||||
Sten Scheibye | 800 | | | 800 | 0.3 | |||||
Göran A. Ando | | 1,200 | | 1,200 | 0.4 | |||||
Anne Marie Kverneland | 3,320 | | | 3,320 | 1.1 | |||||
Henrik Gürtler | | | | | | |||||
Johnny Henriksen | 660 | | | 660 | 0.2 | |||||
Jørgen Wedel | 8,000 | | | 8,000 | 2.7 | |||||
Kurt Anker Nielsen **) | 80,904 | | 18,000 | 62,904 | 21.1 | |||||
Kurt Briner | | | | | | |||||
Niels Jacobsen | 22,000 | | | 22,000 | 7.4 | |||||
Stig Strøbæk | 320 | | | 320 | 0.1 | |||||
Søren Thuesen Pedersen | 520 | | 400 | 120 | 0.0 | |||||
|
|
|
|
|
|
|
|
|
|
|
Board of Directors in total | 116,524 | 1,200 | 18,400 | 99,324 | 33.3 | |||||
Executive Management: | ||||||||||
Lars Rebien Sørensen | 820 | 36,000 | 36,000 | 820 | 0.3 | |||||
Jesper Brandgaard | 320 | 38,560 | 38,560 | 320 | 0.1 | |||||
Lise Kingo | 3,230 | 21,000 | 24,110 | 120 | 0.0 | |||||
Kåre Schultz | 320 | 23,000 | 23,000 | 320 | 0.1 | |||||
Mads Krogsgaard Thomsen | 320 | 44,060 | 44,060 | 320 | 0.1 | |||||
|
|
|
|
|
|
|
|
|
|
|
Executive Management in total | 5,010 | 162,620 | 165,730 | 1,900 | 0.6 | |||||
Senior Management Board in total | 59,706 | 213,528 | 250,198 | 23,036 | 7.7 | |||||
|
|
|
|
|
|
|
|
|
|
|
Share bonus pool for Executive Management and Senior Management Board ***) | 746,214 | 166,445 | | 912,659 | 305.7 | |||||
|
|
|
|
|
|
|
|
|
|
|
Total | 927,454 | 543,793 | 434,328 | 1,036,919 | 347.3 | |||||
|
|
|
|
|
|
|
|
|
|
*) | Calculation of the market value is based on the quoted share prices of DKK 335 at the end of the year. |
**) | In addition to the shareholdings, Kurt Anker Nielsen has share options in Novo Nordisk, issued by Novo A/S. At the end of 2007, 42,000 of these options were outstanding. |
***) | The annual allocation to the share bonus 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 at the establishment of the bonus pool, between 3540% of the pool will be allocated to the members of Executive Management and between 6065% to the members of the Senior Management Board. In the lock-up period, the bonus pool may potentially be reduced as a result of lower than planned value creation in subsequent years. |
Novo
Nordisk Annual Report 2007
|
83
|
Consolidated financial statements | Notes Additional information
35 |
Derivative
financial instruments
|
|
Novo Nordisk uses a number of financial instruments to hedge currency exposure and, in line with the Groups treasury policies, Novo Nordisk only hedges commercial exposures and consequently does not enter into derivative transactions for trading or speculative purposes. Novo Nordisks currency hedging activities are categorised into hedging of forecasted transactions (cash flow hedges), hedging of assets and liabilities (fair value hedges) and hedging of net investments.
Hedging
of forecasted transactions
The table
below shows the fair value of cash flow hedging activities for 2007 and 2006
specified by hedging instrument and the major currencies. The fair value of
the financial instruments qualifying for hedge accounting under IAS 39 Financial
instruments is recognised directly under equity until the hedged items
are recognised in the Income statement. At year-end a gain of DKK 691 million
is deferred via equity (a gain of DKK 420 million in 2006). The fair values
of the financial instruments not qualifying for hedge accounting under IAS 39
are recognised directly in the Income statement.
Financial instruments hedging forecasted transactions qualifying for hedge accounting under IAS 39 | ||||||||||||
|
||||||||||||
2007
|
2006
|
|||||||||||
|
|
|||||||||||
Contract
amount
at year-end
|
Positive
fair
values
at
year-end
|
Negative
fair
values
at year-end
|
Contract
amount
at year-end
|
Positive
fair
values
at year-end
|
Negative
fair
values at
year-end
|
|||||||
DKK million | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward contracts, net sales: | ||||||||||||
USD | 10,043 | 534 | | 7,029 | 254 | | ||||||
JPY | 2,765 | 88 | | 1,847 | 129 | | ||||||
GBP | 840 | 34 | | 896 | | 17 | ||||||
Other | 357 | | 7 | 357 | 20 | | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total forward contracts | 14,005 | 656 | 7 | 10,129 | 403 | 17 | ||||||
Cross currency and interest rate swaps: | ||||||||||||
EUR/EUR *) | 251 | 17 | | 319 | 14 | | ||||||
EUR/USD *) | 504 | 25 | | 460 | 20 | | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cross currency and interest rate swaps | 755 | 42 | | 779 | 34 | | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hedging of forecasted transactions | ||||||||||||
qualifying for hedge accounting under IAS 39 | 14,760 | 698 | 7 | 10,908 | 437 | 17 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments hedging forecasted transactions qualifying for hedge accounting under IAS 39, but for which hedge accounting is not applied | ||||||||||||
|
||||||||||||
Cross currency and interest rate swaps: | ||||||||||||
DKK/DKK | 310 | | 7 | 310 | | 14 | ||||||
EUR/EUR *) | | | 8 | 183 | | 1 | ||||||
EUR/USD *) | | | 51 | 44 | 2 | | ||||||
JPY/JPY | | | | 380 | 2 | | ||||||
JPY/DKK | 314 | 101 | | 314 | 99 | | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hedging of forecasted transactions qualifying for hedge accounting under IAS 39, but for which hedge accounting is not applied |
624
|
101
|
66
|
1,231
|
103
|
15
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
*) | For financial instruments including both currency and interest rate swaps, hedge accounting is applied for the interest rate part whereas hedge accounting is not applied for the currency part. |
The contract value is disclosed only in the upper table. |
Financial instruments hedging forecasted transactions, but not qualifying for hedge accounting under IAS 39 | ||||||||||||
|
||||||||||||
Currency options: | ||||||||||||
EUR/USD (purchased USD put) | 2,498 | 44 | | 1,536 | 13 | | ||||||
EUR/JPY (purchased JPY put) | 224 | 3 | | | | | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hedging of forecasted transactions not qualifying for hedge accounting under IAS 39 | 2,722 | 47 | | 1,536 | 13 | | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hedging of forecasted transactions | 18,106 | 846 | 73 | 13,675 | 553 | 32 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
84 | Novo Nordisk Annual Report 2007 |
Notes
Additional information
|
35 |
Derivative
financial instruments (continued)
|
|
2007
|
2006
|
|
|
||
The financial contracts existing at the end of the year (cash flow hedges) | ||
are expected to be recognised in the Income statement within the | ||
following number of months: | ||
USD |
16
months
|
16
months
|
JPY |
15
months
|
12
months
|
GBP |
10
months
|
11
months
|
|
||
The cash flows covered by the above financial contracts are expected | ||
to occur within the following number of months: | ||
USD |
17
months
|
18
months
|
JPY |
16
months
|
13
months
|
GBP |
13
months
|
13
months
|
The maturity of the swaps existing at the end of 2007 is December 2011 and December 2012 (December 2007, December 2011 and December 2012 at the end of 2006) and the interest margins are (0.57%) to 4.05% ((1.46%) to 4.05% at year-end 2006).
Hedging
of assets and liabilities
The table
below shows the fair value of fair value hedging activities for 2007 and 2006
specified by hedging instrument and the major currencies. All changes in fair
values are recognised in the Income statement amounting to a gain of DKK 221
million in 2007 (a gain of DKK 248 million in 2006). 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.
2007
|
2006
|
|||||||||||
|
|
|||||||||||
Contract
amount at
year-end
|
Positive
fair values at
year-end
|
Negative
fair values at
year-end
|
Contract
amount
at year-end
|
Positive
fair values at
year-end
|
Negative
fair
values at
year-end
|
|||||||
DKK million | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward contracts, net sales: | ||||||||||||
USD | 1,937 | 145 |
|
3,137 | 166 |
|
||||||
JPY | 679 | 55 |
|
810 | 86 |
|
||||||
GBP | 389 | 22 |
|
312 | |
9
|
||||||
Other | 276 | 4 |
5
|
1,795 | 5 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total forward contracts | 3,281 | 226 |
5
|
6,054 | 257 |
9
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hedging of assets and liabilities | 3,281 | 226 |
5
|
6,054 | 257 |
9
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
The financial contracts existing at the end of the year hedge the currency exposure on assets and liabilities in the Groups major currencies other than DKK and EUR, i.e. assets and liabilities in USD, JPY and GBP.
Novo
Nordisk Annual Report 2007
|
85
|
Consolidated financial statements | Notes Additional information |
35 |
Derivative
financial instruments (continued)
|
|
Hedging
of net investments in foreign subsidiaries
The table
below shows the fair value of hedging activities relating to net investments
in foreign subsidiaries for 2007 and 2006 specified by hedging instrument and
the major currencies. All changes in fair values relating to currency are recognised
directly under equity, amounting to DKK 9 million in 2007 (DKK 4 million in
2006). All changes relating to interest rates are recognised in the Income statement,
amounting to DKK 1 million in 2007 (DKK 0 million in 2006).
2007
|
2006
|
|||||||||||
|
|
|||||||||||
Contract
amount
at year-end
|
Positive
fair
values
at year-end
|
Negative
fair
values at
year-end
|
Contract
amount
at year-end
|
Positive
fair
values
at year-end
|
Negative
fair values at
year-end
|
|||||||
DKK million | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross currency swaps: | ||||||||||||
JPY/DKK |
100
|
9
|
|
100
|
4
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hedging of net investments in foreign subsidiaries |
100
|
9
|
|
100
|
4
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
The maturity of the swap existing at the end of 2007 is October 2009 (October 2009 at the end of 2006) and the interest margin is 2.94% (2.94% at year-end 2006).
The financial contracts existing at the end of the year hedge the following share of the major net investments:
2007
|
2006
|
|||||||||||
DKK million | Net investment | % covered | Net investment | % covered | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
USD | 2,017 | 0% | 1,906 | 0% | ||||||||
JPY | 746 | 12% | 691 | 14% | ||||||||
GBP | 204 | 0% | 159 | 0% | ||||||||
EUR *) | 10,238 | 0% | 4,399 | 0% | ||||||||
Other | 3,746 | 0% | 3,511 | 0% | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total | 16,951 | 10,666 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
*) | Including subsidiaries with EUR as functional currency regardless of the local currency in the subsidiary. |
Total
hedging activities
The table
below summarises the fair values of all the hedging activities of Novo Nordisk.
2007
|
2006
|
|||||||||||
|
|
|||||||||||
Contract
amount at
year-end
|
Positive
fair
values at
year-end
|
Negative
fair
values at
year-end
|
Contract
amount
at year-end
|
Positive
fair
values at
year-end
|
Negative
fair
values
at year-end
|
|||||||
DKK million | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency-related instruments: | ||||||||||||
Forward contracts | 17,286 | 882 | 12 | 16,183 | 660 | 26 | ||||||
Currency options | 2,722 | 47 | | 1,536 | 13 | | ||||||
Cross currency swaps | 918 | 143 | 59 | 918 | 125 | | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total currency-related instruments | 20,926 | 1,072 | 71 | 18,637 | 798 | 26 | ||||||
Interest-related instruments: | ||||||||||||
Interest rate swaps | 561 | 9 | 7 | 1,192 | 16 | 15 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-related instruments | 561 | 9 | 7 | 1,192 | 16 | 15 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
21,487 | 1,081 | 78 | 19,829 | 814 | 41 | |||||||
Financial instruments with both positive and negative fair values recognised net in the balance | | (33 | ) | (33 | ) | | | | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative financial instruments included in marketable securities and in short-term debt | 21,487 | 1,048 | 45 | 19,829 | 814 | 41 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair values at year-end are recognised in: | ||||||||||||
Income statement | 374 | 71 | 373 | 24 | ||||||||
Equity: | ||||||||||||
Cash flow hedges | 698 | 7 | 437 | 17 | ||||||||
Equity swaps (included in exchange rate adjustment | ||||||||||||
of investments in subsidiaries) | 9 | | 4 | | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fair values | 1,081 | 78 | 814 | 41 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
86 |
Novo Nordisk Annual Report 2007 |
Notes
Additional information
|
36 |
Commitments
and contingencies
|
|
|
DKK
million
|
2007
|
2006
|
|
|
|
|
|
Commitments | |||
|
|
|
|
Operating lease commitments | |||
The operating lease commitments below are related to non-cancellable operating leases primarily related to premises, company cars and office equipment. Approximately 55% of the commitments are related to leases outside Denmark. The lease costs for 2007 and 2006 were DKK 886 million and DKK 806 million respectively. | |||
Lease commitments expiring within the following periods as from the balance sheet date: | |||
Within one year |
728
|
651
|
|
Between one and two years |
609
|
553
|
|
Between two and three years |
445
|
437
|
|
Between three and four years |
355
|
339
|
|
Between four and five years |
312
|
286
|
|
After five years |
719
|
602
|
|
|
|
|
|
Total |
3,168
|
2,868
|
|
|
|
|
|
Purchase obligations |
2,018
|
1,595
|
|
|
|
|
|
The purchase obligations primarily relate to contractual obligations to 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 flows from operations. The figure for 2006 includes DKK 660 million related to purchase obligations of energy in a houseowners association/energy guild which is consolidated in the Annual Report. In 2006 this amount was not included in the Annual Report. | |||
Obligations relating to research and development projects |
2,471
|
2,313
|
|
|
|
|
|
Novo Nordisk has engaged in research and development projects with a number of external corporations. The major part of the obligations comprises fees on the NovoSeven® expansion programmes and liraglutide. | |||
Other guarantees |
347
|
215
|
|
|
|
|
|
Other guarantees primarily relate to guarantees issued by Novo Nordisk in relation to rented property. | |||
Security for debt |
2,166
|
2,025
|
|
|
|
|
|
Land, buildings and equipment etc at carrying amount. |
World
Diabetes Foundation
At the
Annual General Meeting of Novo Nordisk A/S in 2002 the shareholders agreed on
a donation to the World Diabetes Foundation, 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.
However, annual donations shall not exceed the lower of DKK 65 million or 15%
of the taxable income of Novo Nordisk A/S in the financial year in question.
The donation of DKK 65 million in 2007 is recognised in the Income statement.
Contingencies |
|
See note 3 for the principles for making accounting estimates and judgments about pending and potential future litigation outcomes. |
Pending
litigation against Novo Nordisk
As of
January 21, 2008 Novo Nordisk Inc, along with a majority of the hormone therapy
product manufacturers in the US, is a defendant in product liability lawsuits
related to hormone therapy products. These lawsuits currently involve a total
of 45 individuals (as compared to 43 individuals in January 2007) who allege
to have used a Novo Nordisk hormone therapy pro duct. These pro ducts (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, 27 individuals (as compared to 21 individuals in January
2007) currently allege, in relation to similar lawsuits against Pfizer Inc,
that they also have used a Novo Nordisk hormone therapy product.
Novo
Nordisk does not have any court trials scheduled for 2008 and does not presently
expect to have a trial scheduled before Q3 2008. Novo Nordisk does not expect
the pending claims to have a material impact on Novo Nordisks financial
position.
In November
2006, Novo Nordisk A/S and its 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 alleges that Novo Nordisk breached an alleged contract with Menarini
for the sale and distribution of insulin and insulin analogues in the Italian
market or, in the alternative, has incurred a pre-contractual or extra contractual
liability arising from negotiations between the parties.
Novo
Nordisk disputes the claims made by Menarini. A hearing in the matter is scheduled
to take place in April 2008. Novo Nordisk cannot predict how long the litigation
will take or when it will be able to provide additional information. At this
point in time, Novo Nordisk does not expect the pending claim to have a material
impact on Novo Nordisks financial position.
Novo Nordisk Inc is currently a defendant in five separate cases filed in the US alleging that Novo Nordisk and a number of other pharmaceutical com panies provided a false Average Wholesale Price for certain drugs covered by Medicaid. These cases have been brought by the State of Alabama, and the counties of Oswego, Erie, Schenectady and Orange, New York. Novo Nordisk was dismissed from a similar action brought by the State of Mississippi. Further, in 2005, Novo Nordisk was dismissed in 38 similar cases brought by counties in the State of New York. Novo Nordisk does not expect the pending claims to have a material impact on Novo Nordisks financial position.
In March 2007, Novo Nordisk was informed that the Superior Court in Brazil reversed a decision from a lower court in an anti-dumping case against Novo Nordisk initiated by the Brazilian authorities. According to the decision Novo Nordisk had to pay anti-dumping duties and interest related to the period 20012005. Duties and interest have been deposited in Brazil and are re -cognised in the Annual Report. Novo Nordisk disputes the anti-dumping claim and has appealed the decision to the Supreme Court in Brazil. A decision is expected in 2008.
Pending
claims against Novo Nordisk and investigations involving Novo Nordisk
In December
2005, the office of the US Attorney for the Eastern District of New York served
Novo Nordisk with a subpoena calling for the production of documents relating
to the companys US marketing and promotional practices. The company believes
that the investigation is limited to its insulin products. The subpoena indicates
that the documents are necessary for the investigation of potential criminal
offences relating to healthcare benefit programmes. Novo Nordisk is cooperating
with the US Attorney in this investigation. At this point in time, Novo Nordisk
cannot determine or predict the outcome of the investigations. In addition,
Novo Nordisk cannot predict how long the investigations will take or when the
company will be able to provide additional information.
Novo
Nordisk Annual Report 2007
|
87
|
Consolidated financial statements | Notes Additional information
36 |
Commitments
and contingencies (continued)
|
|
|
In
February 2006, Novo Nordisk received a subpoena from the US Securities and
Exchange Commission (SEC) calling for Novo Nordisk to produce documents relating
to the United Nations Oil-for-Food Programme. Other companies have disclosed
that they have received similar subpoenas. Novo Nordisk has been discussing
the matter with the SEC and the US Department of Justice, and has fully cooperated
with the US authorities. Further, since 21 September 2006, the Danish Prosecutor
has investigated the possibility of disgorging profits earned under the Programme.
Novo Nordisk can neither determine or predict the outcome of these investigations,
nor predict how long they will take.
At
this point in time, Novo Nordisk does not expect the pending claim to have
a material impact on Novo Nordisks financial position.
Other
litigation proceedings
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
are not expected to have a material effect on the financial position.
Liability
for the debts and obligations of Novozymes following the demerger of Novozymes
in 2000
Novo Nordisk
A/S and Novozymes A/S are subject to joint and several liability for any obligation
which existed at the time of the announcement of the demerger in 2000. At the
end of the year the remaining part of the joint and several liability in Novozymes
A/S amounted to DKK 557 million (DKK 557 million in 2006).
Debts and obligations pertaining to the period before 1 January 2000, which are recognised after 1 January 2000 and which cannot be clearly attributed to either Novo Nordisk A/S or Novozymes A/S, will be distributed proportionally between the two companies according to an agreement established in connection with the demerger in November 2000.
Disclosure
regarding Change of Control
The EU
Take-Over 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 see Share -holder information on pp 4250. For information on change of control clauses in share option programmes please see pp 7880 with note 33 Share based payment schemes, and in relation to employment contracts of executive mana -ge ment of Novo Nordisk, please see note 34 Managements remuneration, share options and shareholdings on pp 8283.
In addition, Novo Nordisk discloses that the company has significant agreements to which the company is a party and which take effect, alter or terminate upon a change of control of the company following implementation of a take -over bid. If effected, a takeover could at the discretion of the counterparty lead to the termination of such agreements and the loss of approximately 5% of Novo Nordisks turnover, corresponding to approximately 4% of Novo Nordisks gross profit.
88 | Novo Nordisk Annual Report 2007 |
Consolidated non-financial statements | Overview of non-financial reporting
This is the fourth year that Novo Nordisk reports on the companys financial and non-financial performance in one, inclusive document, the Annual Report. Novo Nordisk continues the process to drive integration of the financial and non-financial perspectives to business and seeks to reflect this in the approach to reporting. In the absence of global standards for inclusive reporting, this approach takes its point of departure in current standards for mandatory, financial reporting and current guidelines for voluntary, non-financial reporting. The aim is to drive business performance and enhance shareholder value by exploring the interactions between financial and non-financial objectives. This entails alignment of key priorities, target-setting and definition of key performance indicators, in consultations that involve internal and external stakeholders.
The Annual Report is prepared in respect of current best practice and the principles of materiality, completeness and responsiveness. Stakeholder engagement informs the process, which also incorporates independent expert reviews of the companys annual reporting. The selection of information included in the annual reporting reflects evolving priorities in response to business and societal challenges.
Based on engagements with stakeholders, this years annual status and regular updates of non-financial performance will be available online at novonordisk.com/sustainability. Click: Values in action
Defining
materiality
It is Novo Nordisks responsibility to ensure that those areas are
addressed in which the company has significant impact or where it has a responsibility
to and ability to act. Novo Nordisk has sought inspiration in AccountAbilitys
materiality test to define what is material to Novo Nordisk, what should be
included in the Annual Report and on which grounds topics should be excluded.
Applying the materiality test as a tool, sustainability-related issues are
prioritised to be reported either in the printed Annual Report (most material;
business critical), online (material, often to specific stakeholder interests)
or not reported (not material). The same process applies for the assurance
providers recommendations. Read the recommendations and Novo Nordisks
response below and at novonordisk.com/sustainability.
Click: Values in action
The outcomes of formal reviews, research, stakeholder engagement and internal materiality discussions are presented as a proposal for the annual reporting to Executive Management and the Board of Directors, and subsequently approved. In addition, Novo Nordisks external assurance provider is requested to assure whether the non-financial performance included in the Annual Report covers the material aspects. The conclusion is available in the Assurance Report on Non-financial Reporting 2007. Read more about how Novo Nordisk defines materiality at novonordisk.com/sustainability. Click: Values in action
Ongoing stakeholder engagement and trendspotting help identify new issues which are or could become material to Novo Nordisk. The Novo Nordisk learning curve is a tool that aligns the process of defining materiality with integration into business practices. Emerging issues that are identified as relevant and potentially material are included at the bottom of the learning curve. Following a review of its implications for Novo Nordisks long-term business, a strategy is framed for those issues that are deemed material and subsequently data, indicators and targets are identified. Stakeholder engagement is part of this process. Once management of the issue has been embedded in the organisation so that it is fully integrated into business processes, the strategy will be revisited as appropriate. Moreover, issues that are included on the learning curve are monitored as part of the integrated risk management process.
Assurance
providers recommendations
An important element of the assurance process is the disclosure of recommendations
from the assurance provider*). In previous years, Novo Nordisk
has disclosed these in the online report. To increase transparency, the recommendations
and Novo Nordisks responses are included below.
2006 recommendations | |
1. | The Eco Intensity Ratios (EIR) for water and energy in the Diabetes area have been developed to measure the eco-efficiency of Novo Nordisks production by measuring annual energy and water consumption against annual production. We recommend that Novo Nordisk revises the calculation method for the EIR for water and energy in the Diabetes area in 2007 to ensure that the indicator covers all the steps of the production process. |
|
|
*) | The assurance providers recommendations to the Annual Report 2006 and Novo Nordisks response are available at annualreport.novonordisk.com/how-we-are-accountable Click: Recommendations |
Novo
Nordisks response
The EIR concept and the long-term targets will be evaluated and revised
if necessary in the beginning of 2007 on the basis of the 2006 process.
The first year was considered as a test period for the new EIR concept. Our
assurance provider will be invited to review the EIR calculation method no later
than mid March 2007.
Conclusion
The EIR methodology was reviewed in 2007. Novo Nordisk has not found a solution
to how to cover all steps of the production process. There was therefore no
change in the EIR methodology in 2007 and there will be no change in the 2008
calculations. The 2007 review will continue into 2008 and Novo Nordisk expects
to either have a revised EIR methodology or a new indicator for reporting in
2009.
2. | In view of Novo Nordisks commitment and overall efforts to promote internationalisation and integration in lines of business of Triple Bottom Line issues as well as the continuously evolving sustainability agenda, we recommend Novo Nordisk to consider whether the existing governance structures, including committee memberships and mandates, are fully aligned to support these commitments and efforts. |
Novo
Nordisks response
Triple Bottom Line issues continue to evolve and faster than ever. In Novo
Nordisk, the responsibility for managing issues is allocated to a committee,
and all current issues are anchored with a committee. However, Novo Nordisk
will review the governance structure for Triple Bottom Line issues to ensure
alignment between committees, target-setting and reporting.
Conclusion
The review of the governance structure showed that all issues are dealt with
by the existing committees.
3. | We recommend Novo Nordisk to continue its work on developing longer-term targets for its non-financial performance with a view to drive performance by targets and objectives aligned with vision and strategy as well as to identify and report performance targets in key areas such as business ethics, internationalisation, and customer care and product quality. |
Novo
Nordisks response
As part of the review of the internal governance structure for Triple Bottom
Line issues, special focus will be placed on identifying indicators to measure
the performance and impact of the activities, and on setting targets wherever
possible. This will rely on the ability to define meaningful and relevant indicators.
Conclusion
A non-financial indicators and targets table has been introduced as part
of the reporting. See p 90.
2007
recommendations
In 2007, the assurance provider had no recommendations for Novo Nordisk.
Global
standards
Novo Nordisks non-financial reporting follows the accountability standard,
AA1000 Framework. It states that reporting must provide a complete, accurate,
relevant and balanced picture of the organisations approach to and impact
on society. As a signatory to the United Nations Global Compact, a platform
to promote good corporate principles and learning in the areas of human rights,
labour, environment and anti-corruption, Novo Nordisk reports on actions during
2007 to implement its 10 principles in a Communication on Progress. In 2007,
Novo Nordisk signed the UN Global Compact initiative Caring for Climate.
A specific reporting on this initiative has been included in this years
Communication on Progress.
In 2007, Novo Nordisk upgraded its reporting against the Global Reporting Initiatives (GRIs) Sustainability Reporting Guidelines from the 2002 version to the G3. Complete reporting according to the 11 principles and against the list of indicators covering economic, environmental and social aspects of the business performance can be found at novonordisk.com/sustainability. Click: Reporting
Novo Nordisk reports on the GRI G3 because the G3 is the only international recognised set of indicators. By reporting on the indicators, it is possible for our stakeholders to compare Novo Nordisk performance to other organisations performance.
Novo
Nordisk Annual Report 2007
|
89
|
Consolidated non-financial statements | Non-financial indicators and targets
Non-financial indicators and targets |
|
Novo Nordisk is committed to continuous improvement in the companys environ mental, social and economic performance. Setting high objectives and targets and reporting on progress in meeting these targets are core elements of the Novo Nordisk Way of Management. Against this governance framework, targets are set to provide direction and impetus for moving forward. The table | shows the extent to which targets were met in 2007 in terms of non-financial performance. This set of top-level Triple Bottom Line targets and indicators links into Novo Nordisks Balanced Scorecard, which also focuses on sustainable develop ment. In addition to the non-financial performance targets, process targets are also identified. |
Strategy
area
|
Indicator
|
Target
|
2007
performance measured against target
|
|||
|
|
|
|
|
|
|
Access
to health
|
LDCs
where Novo Nordisk operates
|
Best
possible pricing scheme in all LDCs
|
38
|
|||
LDCs
where Novo Nordisk sells insulin at or below the policy price
|
Best
possible pricing scheme in all LDCs
|
36
|
||||
|
|
|
|
|
|
|
Business
ethics
|
Employees
in sales and marketing trained in business ethics
|
90%
by 2008
|
95%
|
|||
|
|
|
|
|
|
|
Climate
change
|
CO2
emissions
|
10%
reduction by 2014 compared to 2004
|
12%
|
|||
|
|
|
|
|
|
|
Company
reputation
|
Maintain
or improve company reputation with external key stakeholders
|
Positive
or negative deviation of <01 deviation from mean brand score
by 2008
|
The
rating is undertaken every second year. The next rating is due in 2008.
|
|||
|
|
|
|
|
|
|
Compliance
|
Breaches
of regulatory limit values
|
50%
reduction by 2010 compared to 2005
|
(87%)
|
|||
Accidental
releases
|
50%
reduction by 2010 compared to 2005
|
1%
|
||||
|
|
|
|
|
|
|
Employees
|
Engaging
culture (employee engagement)
|
Maintain
level of 4.0 or above up to 2014
|
4.1
|
|||
Opportunity
to use and develop employee
competences/skills
|
Maintain
level of 3.5 or above up to 201
|
4.0
|
||||
People
from diverse backgrounds have equal opportunities
|
Maintain
level of 3.5 or above up to 2014
|
4.0
|
||||
|
|
|
|
|
|
|
Health
& Safety
|
Frequency
of occupational injuries
|
Continuous
decrease
|
5.9
|
|||
Fatalities
|
0
|
0
|
||||
|
|
|
|
|
|
|
Quality*)
|
Number
of warning letters and re-inspections
|
0
|
0
|
|||
|
|
|
|
|
|
|
Resource
efficiency
|
EIRWater
Diabetes care
|
10%
reduction by 2010 compared to 2005
|
(6%)
|
|||
EIRWater
Biopharmaceuticals
|
10%
reduction by 2010 compared to 2005
|
(15%)
|
||||
EIREnergy
Diabetes care
|
10%
reduction by 2010 compared to 2005
|
(7%)
|
||||
EIREnergy
Biopharmaceuticals
|
10%
reduction by 2010 compared to 2005
|
(14%)
|
||||
|
|
|
|
|
|
|
Values
|
Importance
of social and environmental issues for the future of the company
|
Maintain
level of 3.5 or above up to 2014
|
4.4
|
|||
Managers
behaviour consistent with Novo Nordisks values
|
Maintain
level of 3.5 or above up to 2014
|
4.2
|
||||
Fulfilment
of action points from facilitations of the NNWoM
|
Maintain
level of 80% or above up to 2014
|
99%
|
||||
|
|
|
|
|
|
|
*) In 2008, a new quality indicator on quality cost will be developed.
The consolidated non-financial statements on pp 9399 present and discuss performance during 2007 and include comparative data for 20052007.
90 | Novo Nordisk Annual Report 2007 |
Accounting policies for non-financial data |
|
In 2007, there have been no significant changes to the accounting policies for non-financial data. The following changes have been made to the basis for the non-financial data compared to 2006: | |
The activities in Novo Nordisk Servicepartner were taken back into Novo Nordisk A/S as of 1 January 2007 and there is therefore no longer a separate legal entity for the future reporting. | |
Due to a change in the recommendation from the Danish Energy Agency on how to calculate the CO2 emission factors (changed from the 200% calculation method to the 125% calculation method), Novo Nordisk has revised its emission calculations. This affects the reported emissions from 2000 to 2006. |
To Novo Nordisk, the AA1000 Assurance Standard (AA1000AS) is an essential component in creating a generally applicable approach to assessing and strengthening the credibility of the companys public reporting of non-financial data. Novo Nordisks assurance process has been designed to ensure that the qualitative and quantitative data that document sustainability performance plus the systems that underpin the data and performance are assured. The principles outlined by the AA1000AS have been applied as described below.
1.
Completeness
As
a pharmaceutical company with global reach, Novo Nordisk is engaged in a range
of activities to support sustainable development. All of these are founded on
the companys corporate governance framework, the Novo Nordisk Way of Management.
The Annual Report aims to capture the organisations footprint
in terms of social, environmental and economic impacts on society. Hence, performance
is accounted for in relation to targets, major achievements and key issues.
The report does not provide full coverage of all the companys non -financial
activities. A full coverage of the companys non-financial activities can
be found at www.novonordisk.com/sustainability.
See scope of the report below.
2.
Materiality
Key
issues are identified through ongoing stakeholder engagement and addressed by
programmes or action plans with clear and measurable targets. Stretch targets
are set to guide the long-term efforts in strategic areas, such as global access
to health. The issues presented in the Annual Report are deemed to have a significant
impact on the companys future business performance and may support stakeholders
in their decision-making and are therefore regarded as Novo Nordisks material
issues.
3.
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 single element of interaction and communication with the company. It reflects
how the company has addressed stakeholder concerns and interests in dealing
with the dilemmas and issues. Stakeholder dialogue is an invaluable part of
Novo Nordisks efforts as a responsible business, and readers are en -couraged
to give their feedback.
Scope
Accounting policies for the non-financial data in the Annual Report are based
on data for Novo Nordisk A/S, including NNIT A/S, NNE A/S and subsidiaries.
Environmental data cover the significant environ mental impact of the organisations
activities at the production sites, which produce approved products for the
market 13 in total. No pro duction sites were added in 2007. New pro
-duction activities were initiated at site Værløse in May 2007.
The environmental impact from site Værløse has therefore been included
for 2007. Social data cover all employees. Economic data cover the Novo Nordisk
Group. Engage -ments in joint ventures and contract licensees are not included
in the report scope. However, data for animal testing include testing taking
place at contract research organisations.
Data
To
ensure consistency of data, all data have been defined and described in company
guidelines. Internal control procedures have been established to ensure that
data are reported according to the definitions.
Economic
data
The
economic indicators are based on data from the financial registrations. See
financial definitions.
R&D | |
The R&D investments and sales are calculated based on Novo Nordisks global financial registrations. |
Investments | |
The total investments and sales are calculated based on Novo Nordisks global financial registrations. |
Remuneration | |
The cash value distribution is calculated based on Novo Nordisks global financial registrations. |
Corporate tax | |
All types of tax reported are based on financial registrations of taxes paid in Denmark, except corporate tax as a share of sales. |
Employment | |
Direct and indirect effects on the number of jobs, job income and income tax are calculated using financial registrations and general statistics from public sources such as Statistics Denmark, Updated Economic Multipliers for the US Economy 2003 (Economic Policy Institute) and China Statistical Yearbook. The indicators are an estimate of the effects created by Novo Nordisk in Denmark and globally. |
Exports | |
Novo Nordisk exports as a share of Danish exports are based on Finans -ministeriets Økonomiske Redegørelse. |
Environmental
data
The environmental
data cover those activities which, based on an overall environmental assessment,
could have a significant impact on the environment.
Resources | |
Water consumption includes consumption of drinking water, industrial water and steam. Data are based on meter readings and checked against invoices. | |
Energy consumption (direct and indirect supply) includes both direct supply of energy (internal produced energy), eg natural gas, fuel oil and other types, and indirect supply of external energy (external produced energy), eg electricity, steam and district heat. The consumption of fuel and externally produced energy is based on meter readings and invoices. | |
Raw materials and packaging materials comprise materials for production and related processes and packaging of products. Consumption of raw materials and packaging is converted to tons. Data are based on registrations in Novo Nordisks stock system. |
Wastewater | |
Quantities of components such as COD, nitrogen and phosphorous are calculated based on test results or standard factors. |
Waste | |
Total waste is the sum of non-hazardous and hazardous waste. The disposal of waste is registered based on weight receipts. | |
The recycling percentage is calculated as the proportion of waste recycled of the total waste. Waste for recycling can be both non-hazardous and hazardous. The remaining part of the hazardous waste is waste for special treatment. |
Emissions to air | |
Emissions of CO2 from energy (total) are based on standard factors for fuel and for energy on a three-year average of available emission factors from the external suppliers of energy. Hence, emission factors for 2007 are the three-year average of 2004 to 2006. The emissions are calculated according to the GHG protocol. | |
Organic solvents cover the sum of emissions of different types of organic solvent such as acetone, ethanol etc, exclusive of emissions of ozone-depleting substances. Data are based on measurement and ensuring calculations. |
Novo
Nordisk Annual Report 2007
|
91
|
Consolidated non-financial statements | Notes Accounting policies for non-financial data
Accounting policies for non-financial data (continued) |
|
Eco Intensity Ratios (EIRs) for water and energy | |
Environmental performance relative to production size is monitored by the production-related KPI Eco Intensity Ratio in short EIR defined as: | |
EIR = Resource consumption per produced or released unit | |
By using the performance indicator EIR, the total performance, measured for water and energy, of a production facility or a business area can be cal -culated by adding the EIR ratios in standard units from each process step or intermediary product in the process flow from eg fermentation to packaging of the finished product. The consolidation of the EIR ratios does not account for spills, changes in stock and production of intermediatry products for external clients. |
Compliance | |
Compliance data consist of breaches of regulatory limits and accidental releases. All data are based on information from departments and test results. All breaches and accidental releases are reported to the authorities. |
Social
data
The social
data cover all employees included in Novo Nordisks headcount.
Living our values | |
Average of respondents answers as to whether social and environmental issues are important for the future of the company is based on employee feedback on the question in the employee survey database eVoice. The average is a simple average calculated in the database of answers given by the employees. | |
Average of respondents answers as to whether my managers behaviour is consistent with the Novo Nordisk values is based on employee feedback on the question in the employee survey database eVoice. The average is a simple average calculated in the database of answers given by the employees. | |
The percentage of fulfilment of action points planned arising from facilitations of the Novo Nordisk Way of Management is calculated as the number of overdue action points at year-end per total number of action points with deadline in the period, minus the action points abolished during the year due to organisational changes. |
Access to health | |
Novo Nordisk A/S has formulated a pricing policy for the Least Developed Countries (LDCs). The purpose of the policy is to offer insulin to the worlds LDCs at or below a price of 20% of the average prices for insulin in the western world. The western world is defined as Europe (EU, Switzerland, Norway), the United States, Canada and Japan. | |
The term operates in does not denote actual physical presence by Novo Nordisk. It is defined as direct or indirect sales by Novo Nordisk via government tender or private market sales to wholesalers, distributors, NGOs etc. | |
The estimated number of healthcare professionals trained or educated includes healthcare professionals directly trained, educated, interacted with or reached through awareness campaigns. The estimated number is based on registrations by subsidiaries and corporate functions in Novo Nordisk in the Best Practice Database of the activities conducted within various National Changing Diabetes® programmes. The number covers the total number Novo Nordisk has engaged with since the National Changing Diabetes® program -mes were initiated in 2002. | |
The estimated number of people with diabetes trained or treated includes people with diabetes targeted with training, awareness or treatment. The estimated number is based on registrations by subsidiaries and corporate functions in Novo Nordisk in the Best Practice Database of the activities conducted within various National Changing Diabetes® programmes. The indicator covers all types of activities, hence it encompasses people with diabetes directly treated and trained in Less Developed Countries, in developing and developed countries. The number covers the total number Novo Nordisk has engaged with since the National Changing Diabetes® programmes were initiated in 2002. |
Our employees | |
All basic employee statistics are based on registrations in the companys SAP Human Resource system. The number of employees is calculated as the actual number of employees at year-end. | |
Rate of absence: For employees in Denmark excluding FeF Chemicals, absence data are registered in the SAP Human Resource system. For em -ployees outside Denmark, data for rate of absence are based on local registra tions. Types of absence include absence due to the employees own illness, pregnancy-related sick leave, and occupational injuries and illnesses per total available working hours in the year adjusted for national holidays. | |
Rate of employee turnover: The rate of employee turnover is calculated as the number of employees who left Novo Nordisk during the financial year compared to the average number of employees in the financial year. | |
Average of respondents answers to ten selected questions related to employees engagement in Novo Nordisk in the employee survey database eVoice. The average is a simple average calculated in the database of answers given by the employees. | |
Average of respondents answers as to whether their work gives them an opportunity to use and develop their competences and skills is based on employee feedback on the question in the employee survey database eVoice. The average is a simple average calculated in the database of answers given by the employees. | |
Average of respondents answers as to whether people from diverse backgrounds have equal opportunities is based on employee feedback on the question in the employee survey database eVoice. The average is a simple average calculated in the database of answers given by the employees. |
Health & Safety | |
The frequency of occupational injuries is the number of injuries reported for all employees per million working hours. An occupational injury is any work -related injury causing at least one day of absence in addition to the day of the injury. | |
The number of fatalities is based on registrations cen trally and locally in subsidiaries. |
Training costs | |
Training costs are all costs recorded in a specific account in the financial accounts. The amount covers internal and external training posted in the financial accounts. |
Patent families | |
Patent families are the number of active patent families to date and the new patent families (first filing). |
Animals | |
Animals purchased for testing are the number of animals purchased for all testing undertaken for Novo Nordisk either in-house or at Contract Research Organisations (CROs). The number of animals purchased is based on internal registration of purchased animals and yearly reports from CROs. |
All data are documented and evidence has been submitted to the assurance providers.
92 | Novo Nordisk Annual Report 2007 |
Economics |
|
The development in the economic indicators was as expected. Expenditure on R&D is an important capacity builder for society and a source of innovation creating future profitability for Novo Nordisk. The ratio of expenditure on R&D to expenditure on tangible investments (3.2:1) reflects the continued increasing importance of R&D for Novo Nordisk. In the period 20032007 this ratio varied from 1.8:1 to 3.2:1. The increase in the share of R&D as a share of sales (from 16.3% in 2006 to 17.2% in 2007, adjusted for the effect of AERx®) reflects the fact that R&D expenditure has risen by 14% while sales have risen by 8%. The wage share of R&D (39%) is an indication of the companys impact as a capa city builder in the community. Most production facilities, 49% of the full-time employees and 76% of tangible assets are in Denmark. The level and location of the absolute investment is a measure of the companys economic capacity in the near future and reflects its aim to supply the market with products and to continue its internationalisation. In 2007, Novo Nordisk invested DKK 2.3 billion primarily in Denmark (67%), but also in production facilities globally (in the US, Brazil, China and France), down from DKK 2.8 billion in 2006. Remuneration constituted 51% of the cash added value, mainly in the developed world, and particularly in Denmark (55%), where nearly half (49%) of Novo Nordisks workforce is located. However, the share of full-time positions in International Operations increased from 18% in 2006 to 19% in 2007. The sales per employee is DKK 1.6 million and the cash added value per employee is 1 million, indicating a high productivity of Novo Nordisks employees. |
In 2007, Novo Nordisk created 2,344 new positions globally and had 25,516 full-time positions; measured as full-time equivalents (FTE). These jobs translate into 56,100 indirect global jobs in the supply chain from production needs and employees private consumption. The majority is due to production (40,300) but also the effect of private consumption from Novo Nordisk employees is significant (15,800). Measured by sales in 2006, Novo Nordisk is the ninth largest company in Denmark, up one rank from 2005. In terms of R&D investments Novo Nordisk is the largest Danish company and ranks as number 30 on a European scale (in 2006 numbers), up from number 33. Among European pharmaceutical com panies Novo Nordisk ranks as number seven by sales and regarding R&D invest ments number five, up from number seven, indicating that in terms of R&D Novo Nordisk is investing at a higher rate than the European pharma industry on average. In 2007, total corporate taxes constituted 5.9% of sales. In Denmark 13% of corporate taxes are paid as local taxes and 87% as state taxes. In 2007, Novo Nordisk accounted for an estimated 4.5% of Danish corporate taxes. Novo Nordisk employees accounted for an estimated 0.6% of total Danish income taxes and an estimated 0.5% of employment in Denmark. In total, Novo Nordisks income taxes in Denmark for the year amounted to DKK 1,212 million. Novo Nordisks sales in 2007 accounted for 2.4% measured as a share of Danish GDP, ie the same level as in 2006, and 3.4% of Danish exports compared to 4.0% in 2006. |
Unit
|
2007
|
2006
|
2005
|
|||
|
|
|
|
|
|
|
Ratio of R&D expenditure to tangible investments |
3.2:1
|
2.3:1
|
1.4:1
|
|||
R&D as share of sales |
%
|
17.2
|
16.3
|
15.1
|
||
Capital expenditure (net) |
DKK
million
|
2,268
|
2,787
|
3,665
|
||
Remuneration as share of cash received |
%
|
32
|
33
|
34
|
||
Employment impact worldwide (direct and indirect) |
Number
of jobs
|
81,600
|
82,700
|
78,000
|
||
Total corporate tax as share of sales |
%
|
5.9
|
7.0
|
*)
|
7.0
|
|
Novo Nordisk exports as share of Danish exports (estimated) |
%
|
3.4
|
4.0
|
4.7
|
||
|
|
|
|
|
|
|
*) | Previously reported as 9.1. Reporting error now corrected. |
Novo
Nordisk Annual Report 2007
|
93
|
Consolidated non-financial statements Notes | Economic stakeholder model
Cash value distribution (2007)*)
DKK
million
|
Cash
received
|
Cash
added value
|
|||||
|
|
|
|
|
|
|
|
Customers | Cash received for products and services (from sales) | 40,902 | 100% | ||||
Suppliers | Cash payments for materials, facilities and services **) | 15,143 | 37% | ||||
Company cash | Cash added value (cash received minus cash payments) | 25,759 | 100% | ||||
|
|
|
|
|
|
|
|
Employees | Remuneration | 13,032 | 32% | 51% | |||
Investors/funders | Dividend, share repurchase and interest payments | 7,157 | 18% | 28% | |||
Public sector | Taxes | 2,607 | 6% | 10% | |||
Management | Future growth | 2,963 | 7% | 11% | |||
|
|
|
|
|
|
|
**) | Research and development costs have been adjusted for the discontinuation of AERx® as these do not have any cash outflow. |
**) | Cash payments outside Novo Nordisk. The figure includes cash received from licence fees, realised exchange rate gains and interest income. |
94 | Novo Nordisk Annual Report 2007 |
Notes Performance indicators |
Environment |
|
Resources The performance data for water and energy show a slight increase from 2006 to 2007 of 8% and 3% respectively. The consumption of water and energy increased due to increased production at Novo Nordisks production sites. The energy screening programmes are continuing at all sites, identifying additional |
areas for reduction of energy consumption. The consumption of materials increased by 7%. This increase was mainly due to production increases at site Hillerød and site Kalundborg in Denmark. |
Unit
|
2007
|
2006
|
2005
|
||||||
|
|
|
|
|
|
|
|
|
|
Water consumption |
1,000
m3
|
3,231
|
2,995
|
3,014
|
|||||
Energy consumption |
1,000
GJ
|
2,784
|
2,712
|
2,679
|
|||||
Materials |
1,000
tons
|
152
|
142
|
135
|
|||||
|
|
|
|
|
|
|
|
|
Wastewater The total volume of wastewater increased by 7% from 2006 to 2007. In the same period, the discharged quantity of COD decreased from 1,000 tons to 813 tons, corresponding to a 19% decrease. The quantity of nitrogen remained at 107 tons. The discharged quantity of phosphorus was reduced from 19 tons to |
14 tons, corresponding to a decrease of 26%. The significant reductions of COD and phosphorus were partly due to improved efficiency of the wastewater treatment plant in Kalundborg, owned by Novozymes A/S, and the closure of the insulin purification factory in Bagsværd in 2006. |
Unit
|
2007
|
2006
|
2005
|
||||||
|
|
|
|
|
|
|
|
|
|
COD |
Tons
|
813
|
1,000
|
1,303
|
|||||
Nitrogen |
Tons
|
107
|
107
|
126
|
|||||
Phosphorus |
Tons
|
14
|
19
|
22
|
|||||
|
|
|
|
|
|
|
|
|
Waste In 2007, there was a decrease in the total waste amount of 27% compared to 2006. This was due to a decrease in hazardous waste of 56%, counterbalanced by an increase in non-hazardous waste of 10%. The recycling percentage increased to 38% from 35% in 2006. The 10% increase in non-hazardous waste can be explained by smaller increases in different non-hazardous waste fractions. There were increases in the waste fractions construction and demolition, electric and electronic equipment, food, glass, waste for landfill and wood at |
several sites. The non-hazardous waste sent for special treatment is wastewater containing certain chemicals that is treated at a hazardous waste treatment facility for precautionary reasons. The 56% decrease in hazardous waste was mainly due to a significant decrease in the amount of contaminated soil and ethanol waste from site Kalundborg. Together these two waste fractions decreased by 68% from 2006. |
Unit
|
2007
|
2006
|
2005
|
||||||
|
|
|
|
|
|
|
|
|
|
Total waste |
Tons
|
17,576
|
24,165
|
23,776
|
|||||
Non-hazardous waste |
Tons
|
11,604
|
10,594
|
12,145
|
|||||
Recycled |
%
|
48
|
39
|
|
|||||
Incinerated *) |
%
|
26
|
33
|
|
|||||
Landfill |
%
|
13
|
10
|
|
|||||
Special treatment |
%
|
13
|
18
|
|
|||||
Hazardous waste |
Tons
|
5,972
|
13,571
|
11,631
|
|||||
Recycled ethanol **) |
%
|
18
|
17
|
|
|||||
Incinerated ethanol ***) |
%
|
40
|
48
|
|
|||||
Recycling percentage |
%
|
38
|
35
|
33
|
|||||
|
|
|
|
|
|
|
|
|
*)
|
98% with energy recovery. | |
**)
|
Ethanol recycled in eg biogas or wastewater treatment plants. | |
***)
|
Incinerated at combined heat and power plants or at plants for special treatment of hazardous waste with energy recovery. |
Novo
Nordisk Annual Report 2007
|
95
|
Consolidated non-financial statements | Performance indicators |
Environment (continued) |
|
Emissions
to air Novo Nordisks total energy consumption increased by 3% in 2007, which translates into an increase in the energy-related emissions of CO2 from 229,000 tons in 2006 to 236,000 tons in 2007, corresponding to a 3% increase. The increase in CO2 was primarily due to increased emissions from the production sites in Clayton, Kalundborg and Måløv. This was mainly due to increased energy consumption in combination with increases in CO2 emission factors for some external energy suppliers. Total CO2 emission increased by 12% compared to the base line year 2004. However, Novo Nordisk has implemented energy-saving projects since 2005 that have resulted in an estimated 12,000-ton reduction in |
|
Unit
|
2007
|
2006
|
2005
|
||||||
|
|
|
|
|
|
|
|
|
|
CO2 *) |
1,000
tons
|
236
|
229
|
228
|
|||||
Organic solvents |
Tons
|
81
|
102
|
124
|
|||||
|
|
|
|
|
|
|
|
|
*) Data have been restated due to changed emission factors in Denmark.
Eco
Intensity Ratios (EIR)
|
|
Unit
|
2007
|
2006
|
2005
|
||||||
|
|
|
|
|
|
|
|
|
|
EIRWater | |||||||||
Diabetes care |
m3/MU
|
7.3
|
7.8
|
|
|||||
Biopharmaceuticals |
m3/g
API
|
4.1
|
4.8
|
|
|||||
EIREnergy | |||||||||
Diabetes care |
GJ/MU
|
5.1
|
5.5
|
|
|||||
Biopharmaceuticals |
GJ/API
|
7.9
|
9.2
|
|
|||||
|
|
|
|
|
|
|
|
|
Compliance There were no accidental releases of GMOs in 2007. |
|
Unit
|
2007
|
2006
|
2005
|
||||||
|
|
|
|
|
|
|
|
|
|
Breaches of regulatory limit values |
Number
|
22
|
123
|
174
|
|||||
related to pH in wastewater |
Number
|
16
|
119
|
164
|
|||||
Accidental releases |
Number
|
105
|
135
|
104
|
|||||
releases of cooling agents |
Number
|
82
|
82
|
67
|
|||||
|
|
|
|
|
|
|
|
|
96 | Novo Nordisk Annual Report 2007 |
Notes
Performance indicators
|
Social |
|
Living
our values |
|
Unit
|
2007
|
2006
|
2005
|
||||||
|
|
|
|
|
|
|
|
|
|
Importance of social and environmental issues for the future of the company *) |
4.4
|
4.3
|
4.2
|
||||||
Managers behaviour consistent with Novo Nordisks values *) |
4.2
|
4.1
|
4.0
|
||||||
Fulfilment of action points planned arising from facilitations of the NNWoM |
%
|
99
|
99
|
100
|
|||||
|
|
|
|
|
|
|
|
|
*) On a scale from 15, with 5 being the highest.
Our
employees |
|
Unit
|
2007
|
2006
|
2005
|
||||||
|
|
|
|
|
|
|
|
|
|
Employees (total) |
Number
|
26,008
|
23,613
|
22,460
|
|||||
Female |
%
|
49.4
|
49.2
|
48.8
|
|||||
Male |
%
|
50.6
|
50.8
|
51.2
|
|||||
Rate of absence |
%
|
2.7
|
3.0
|
3.2
|
|||||
Rate of employee turnover |
%
|
11.6
|
10.0
|
8.0
|
|||||
Engaging culture (employee engagement) *) |
4.1
|
4.0
|
|
||||||
Opportunity to use and develop competences/skills *) |
4.0
|
3.9
|
3.8
|
||||||
People from diverse backgrounds have equal opportunities *) |
4.0
|
3.9
|
3.9
|
||||||
|
|
|
|
|
|
|
|
|
*) On a scale from 15, with 5 being the highest.
Novo
Nordisk Annual Report 2007
|
97
|
Consolidated non-financial statements | Performance indicators |
Social (continued) |
|
Health
& safety Performance on the health & safety indicator frequency of occupational injuries was satisfactory, as the frequency decreased from 6.2 to 5.9 in 2007, meeting the target of a continuous decrease. There were no fatalities in 2007. There is a continued focus on ensuring health & safety standards for employees |
in Novo Nordisk. In 2007, adoption continued of a health & safety management system certifiable according to OHSAS 18001 for Novo Nordisk in Denmark and Product Supply globally. The first certifications are expected in 2008. |
Unit
|
2007
|
2006
|
2005
|
||||
|
|
|
|
|
|
|
|
Frequency of occupational injuries | Per million working hours | 5.9 | 6.2 | 7.3 | |||
Fatalities | Number | 0 | 0 | 0 | |||
|
|
|
|
|
|
|
Training
costs |
in training in Novo Nordisk, since on-the-job training, internal seminars and other activities are not included. Moreover, the fact that the company took on board some 4,200 new employees during the year, has required that additional resources be spent on induction training. |
Unit
|
2007
|
2006
|
2005
|
||||
|
|
|
|
|
|
|
|
Annual training costs per employee | DKK |
13,130
|
11,293
|
9,899
|
|||
|
|
|
|
|
|
|
Access
to health For 2007, Novo Nordisk offered its best possible pricing scheme, as part of the global health initiatives, to all 50 Least Developed Countries (LDCs) as defined by the United Nations. During 2007 Novo Nordisk sold insulin to either governments or to the private market in a total of 36 of the LDCs at or below a price of 20% of the average prices for insulin in the western world, compared to 34 in 2006. In 12 countries Novo Nordisk is not selling insulin at all, for various reasons. The two LDC countries in which Novo Nordisk does not sell insulin at the policy price are Cambodia and Gambia. The public authorities in both countries have been offered the opportunity to buy insulin at the policy price. The insulin sold in Cambodia and Gambia in 2007 is to the private market. In several cases, the government has not responded to the offer, there are no private wholesalers or other partners with whom to work, or wars or political unrest sometimes make it impossible to do business. While Novo Nordisk prefers to sell insulin at the preferential price through government tenders, the |
company is willing to sell to private distributors and agents. The target is to offer the best possible pricing scheme to the governments of all LDCs. Unfortunately, there is no way to guarantee that the price at which Novo Nordisk sells the insulin will be reflected in the final price on the pharmacists shelf. Wholesalers and pharmacies may mark up the drug before selling it to the consumer. A measure of the companys contribution to global health is the number of healthcare professionals directly trained, educated, interacted with or reached through awareness campaigns and the number of people with diabetes targeted with training, awareness or treatment. The aim is to continue activities to educate healthcare professionals and to train and treat people with diabetes. Since 2002, 336,000 healthcare professionals were trained or educated and 1,260,000 people with diabetes were trained or treated. |
Unit
|
2007
|
2006
|
2005
|
||||
|
|
|
|
|
|
|
|
LDCs where Novo Nordisk operates | Number | 38 | 35 | 35 | |||
LDCs where Novo Nordisk sells insulin at or below the policy price | Number | 36 | 34 | 32 | |||
Healthcare professionals trained or educated | Number | 336,000 | 297,000 | | |||
People with diabetes trained or treated | Number | 1,260,000 | 1,060,000 | | |||
|
|
|
|
|
|
|
Patent
families The number of Novo Nordisk patent families developed as expected in 2007. The number of active patent families to date has increased by 10%. The number |
of new patent families (first filing) decreased from 149 in 2006 to 116 in 2007 a decrease of 22%. |
Unit
|
2007
|
2006 | 2005 | ||||
|
|
|
|
|
|
|
|
Active patent families to date | Number | 1,003 | 913 | 812 | |||
New patent families (first filing) | Number | 116 | 149 | 130 | |||
|
|
|
|
|
|
|
98 | Novo Nordisk Annual Report 2007 |
Notes
Performance indicators
|
Social (continued) |
|
Animals Novo Nordisk sets goals to reduce, refine and replace experiments on animals and to improve animal welfare. Despite a significantly higher level of research activity in early phases, when animal experimentation is required, the number |
of animals purchased in 2007 decreased by 3% to 54,675 animals, of which 95% were mice, transgenic mice and rats. In 2007, Novo Nordisk only housed animals in Denmark. |
Unit
|
2007
|
2006
|
2005
|
||||
|
|
|
|
|
|
|
|
Animals purchased | Number | 54,675 | 56,533 | 57,905 | |||
|
|
|
|
|
|
|
To ensure transparency, more details on reported data and additional non-financial reporting are available online along with interactive charts for underlying data at novonordisk.com/sustainability. Click: Values in action
Novo
Nordisk Annual Report 2007
|
99
|
Consolidated financial statements | Companies in the Novo Nordisk Group
Country |
Year
of incorporation /
acquisition |
Issued
share capital /paid-in capital
|
Percentage
of shares owned
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent company | ||||||||||||||
Novo Nordisk A/S |
Denmark
|
1931
|
DKK
|
646,960,000
|
|
¤ | ¤ | ¤ | ¤ | |||||
Subsidiaries by region | ||||||||||||||
Europe | ||||||||||||||
Novo Nordisk Pharma GmbH | Austria |
1974
|
EUR
|
36,336
|
100
|
¤ | ||||||||
S.A. Novo Nordisk Pharma N.V. | Belgium |
1974
|
EUR
|
69,000
|
100
|
¤ | ||||||||
Novo Nordisk Pharma EAD | Bulgaria |
2005
|
BGN
|
5,880,000
|
100
|
¤ | ||||||||
Novo Nordisk Hrvatska d.o.o. | Croatia |
2004
|
HRK
|
5,000,000
|
100
|
¤ | ||||||||
Novo Nordisk s.r.o. | Czech Republic |
1997
|
CZK
|
14,500,000
|
100
|
¤ | ||||||||
Novo Nordisk Region Europe A/S | Denmark |
2002
|
DKK
|
108,370,500
|
100
|
¤ | ||||||||
Novo Nordisk Farma OY | Finland |
1972
|
EUR
|
420,500
|
100
|
¤ | ||||||||
Novo Nordisk Pharmaceutique SAS | France |
2003
|
EUR
|
5,821,140
|
100
|
¤ | ||||||||
Novo Nordisk Production SAS | France |
1959
|
EUR
|
57,710,220
|
100
|
¤ | ||||||||
Novo Nordisk Pharma GmbH | Germany |
1973
|
EUR
|
614,062
|
100
|
¤ | ||||||||
Novo Nordisk Hellas Epe | Greece |
1979
|
EUR
|
1,050,000
|
100
|
¤ | ||||||||
Novo Nordisk Hungary Sales and Trading Ltd. | Hungary |
1996
|
HUF
|
371,000,000
|
100
|
¤ | ||||||||
Novo Nordisk Limited | Ireland |
1978
|
EUR
|
635
|
100
|
¤ | ||||||||
Novo Nordisk Farmaceutici S.P.A. | Italy |
1980
|
EUR
|
516,500
|
100
|
¤ | ||||||||
UAB Novo Nordisk Pharma | Lithuania |
2005
|
LTL
|
2,150,000
|
100
|
¤ | ||||||||
Novo Nordisk Farma dooel | Macedonia |
2006
|
MKD
|
14,068,285
|
100
|
¤ | ||||||||
Novo Nordisk Farma B.V. | Netherlands |
1983
|
EUR
|
61,155
|
100
|
¤ | ||||||||
Novo Nordisk Scandinavia AS | Norway |
1965
|
NOK
|
250,000
|
100
|
¤ | ||||||||
Novo Nordisk Pharma Sp z.o.o. | Poland |
1996
|
PLN
|
29,021,000
|
100
|
¤ | ||||||||
Novo Nordisk Comércio Produtos Farmacêuticos Lda. | Portugal |
1984
|
EUR
|
250,000
|
100
|
¤ | ||||||||
Novo Nordisk Farma S.R.L. | Romania |
2005
|
RON
|
2,795,000
|
100
|
¤ | ||||||||
Novo Nordisk Pharma d.o.o. Belgrade (Serbia) | Serbia & Montenegro |
2005
|
EUR
|
640,000
|
100
|
¤ | ||||||||
Novo Nordisk Slovakia s.r.o. | Slovakia |
2007
|
SKK
|
8,000,000
|
100
|
¤ | ||||||||
Novo Nordisk, trenje farmacevtskih izdelkov d.o.o. | Slovenia |
2006
|
EUR
|
2,679,286
|
100
|
¤ | ||||||||
Novo Nordisk Pharma S.A. | Spain |
1978
|
EUR
|
1,502,500
|
100
|
¤ | ||||||||
Novo Nordisk Scandinavia AB | Sweden |
1971
|
SEK
|
100,000
|
100
|
¤ | ||||||||
Novo Nordisk FemCare AG | Switzerland |
2003
|
CHF
|
1,100,000
|
100
|
¤ | ¤ | ¤ | ||||||
Novo Nordisk Health Care AG | Switzerland |
2000
|
CHF
|
159,325,000
|
100
|
¤ | ¤ | ¤ | ||||||
Novo Nordisk Pharma AG | Switzerland |
1968
|
CHF
|
50,000
|
100
|
¤ | ||||||||
Novo Nordisk Holding Ltd. | United Kingdom |
1977
|
GBP
|
2,802,130
|
100
|
¤ | ||||||||
Novo Nordisk Limited | United Kingdom |
1978
|
GBP
|
2,350,000
|
100
|
¤ | ||||||||
North America | ||||||||||||||
Novo Nordisk Canada Inc. | Canada |
1983
|
CAD
|
200
|
100
|
¤ | ||||||||
Novo Nordisk Region North America A/S | Denmark |
2003
|
DKK
|
500,000
|
100
|
¤ | ||||||||
Novo Nordisk Delivery Technologies Inc. | United States |
2005
|
USD
|
20,001,000
|
100
|
¤ | ||||||||
Novo Nordisk US Holdings Inc. | United States |
2007
|
USD
|
50,000
|
100
|
|||||||||
Novo Nordisk Production Holdings Inc. | United States |
2007
|
USD
|
50,000
|
100
|
|||||||||
Novo Nordisk of North America Inc. | United States |
1988
|
USD
|
283,835,600
|
100
|
¤ | ||||||||
Novo Nordisk Pharmaceutical Industries Inc. | United States |
1991
|
USD
|
55,000,000
|
100
|
¤ | ||||||||
Novo Nordisk Inc. | United States |
1982
|
USD
|
2,000
|
100
|
¤ | ||||||||
Japan & Oceania | ||||||||||||||
Novo Nordisk Pharmaceuticals Pty Ltd. | Australia |
1985
|
AUD
|
500,001
|
100
|
¤ | ||||||||
Novo Nordisk Region Japan & Oceania A/S | Denmark |
2002
|
DKK
|
15,500,000
|
100
|
¤ | ||||||||
Novo Nordisk Pharma Ltd. | Japan |
1980
|
JPY
|
2,104,000,000
|
100
|
¤ | ¤ | |||||||
Novo Nordisk Pharmaceuticals Ltd. | New Zealand |
1990
|
NZD
|
1,000,000
|
100
|
¤ |
100 | Novo Nordisk Annual Report 2007 |
Companies in the Novo Nordisk Group
Country |
Year
of incorporation /
acquisition |
Issued
share capital /paid-in capital
|
Percentage
of shares owned
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Operations | ||||||||||||||
Aldaph SpA | Algeria | 1994 | DZD | 1,742,650,000 | 100 | ¤ | ¤ | |||||||
Novo Nordisk Pharma Argentina S.A. | Argentina | 1997 | ARS | 7,465,150 | 100 | ¤ | ||||||||
Novo Nordisk Pharma (Private) Limited | Bangladesh | 2007 | BDT | 17,500,000 | 100 | ¤ | ||||||||
Novo Nordisk Produção Farmacêutica do Brasil Ltda. | Brazil | 2002 | BRL | 736,280,984 | 100 | ¤ | ¤ | |||||||
Novo Nordisk Farmacêutica do Brasil Ltda | Brazil | 1990 | BRL | 84,727,136 | 100 | ¤ | ||||||||
Novo Nordisk Farmacêutica Limitada | Chile | 2006 | CLP | 758,581,245 | 100 | ¤ | ||||||||
Novo Nordisk (China) Pharmaceuticals Co, Ltd | China | 1994 | USD | 35,000,000 | 100 | ¤ | ¤ | |||||||
Beijing Novo Nordisk Pharmaceuticals Science & | ||||||||||||||
Technoloy Co., Ltd. | China | 2006 | USD | 2,000,000 | 100 | ¤ | ||||||||
Novo Nordisk Region International Operation A/S | Denmark | 2002 | DKK | 113,302,310 | 100 | ¤ | ||||||||
Novo Nordisk Egypt, LLC | Egypt | 2004 | EGP | 50,000 | 100 | ¤ | ||||||||
Novo Nordisk Hong Kong Limited | Hong Kong | 2001 | HKD | 500,000 | 100 | ¤ | ||||||||
Novo Nordisk India Private Limited | India | 1994 | INR | 265,000,000 | 100 | ¤ | ||||||||
PT. Novo Nordisk Indonesia | Indonesia | 2003 | IDR | 827,900,000 | 100 | ¤ | ||||||||
Novo Nordisk Pars | Iran | 2005 | IRR | 10,000,000 | 100 | ¤ | ||||||||
Novo Nordisk Ltd | Israel | 1997 | ILS | 100 | 100 | ¤ | ||||||||
Novo Nordisk Lebanon s.a.r.l. | Lebanon | 2007 | LBP | 600,000,000 | 100 | ¤ | ||||||||
Novo Nordisk Pharma (Malaysia) Sdn Bhd | Malaysia | 1992 | MYR | 200,000 | 100 | ¤ | ||||||||
Novo Nordisk Mexico S.A. de C.V. | Mexico | 2004 | MXN | 138,491,127 | 100 | ¤ | ¤ | |||||||
Novo Nordisk Pharma SAS | Morocco | 2006 | MAD | 2,597,000 | 100 | ¤ | ||||||||
Novo Nordisk Pharma Limited | Nigeria | 2006 | NGN | 10,000,000 | 100 | ¤ | ||||||||
Novo Nordisk Pharma P.V.T. | Pakistan | 2005 | PKR | 10,000,000 | 100 | ¤ | ||||||||
Novo Nordisk Pharmaceuticals (Philippines) Inc | Philippines | 1999 | PHP | 50,000,000 | 100 | ¤ | ||||||||
Novo Nordisk Limited Liability Company | Russia | 2003 | RUB | 188,243,360 | 100 | ¤ | ||||||||
Novo Investment Pte Ltd. | Singapore | 1994 | SGD | 12,000,000 | 100 | ¤ | ||||||||
Novo Nordisk Asia Pacific Pte Ltd. | Singapore | 1997 | SGD | 2,000,000 | 100 | ¤ | ||||||||
Novo Nordisk Pharma (Singapore) Pte Ltd. | Singapore | 1997 | SGD | 200,000 | 100 | ¤ | ||||||||
Novo Nordisk (Pty) Ltd | South Africa | 1959 | ZAR | 8,000 | 100 | ¤ | ||||||||
Novo Nordisk Pharma Korea Ltd | South Korea | 1994 | KRW | 6,108,400,000 | 100 | ¤ | ||||||||
Novo Nordisk Pharma (Taiwan) Ltd | Taiwan | 1990 | TWD | 9,000,000 | 100 | ¤ | ||||||||
Novo Nordisk Pharma (Thailand) Ltd | Thailand | 1983 | THB | 15,500,000 | 49 | ¤ | ||||||||
Novo Nordisk Tunisie SARL | Tunisia | 2004 | TND | 400,000 | 100 | ¤ | ||||||||
Novo Nordisk Saglik Ürünleri Tic Ltd Sti | Turkey | 1993 | TRY | 25,296,300 | 100 | ¤ | ||||||||
Novo Nordisk Pharma Gulf FZ-LLC | United Arab Emirates | 2005 | AED | 100,000 | 100 | ¤ | ||||||||
Novo Nordisk Venezuela Casa de Representación C.A. | Venezuela | 2004 | VEB | 2,250,000,000 | 100 | ¤ | ||||||||
Other subsidiaries | ||||||||||||||
FeF Chemicals A/S | Denmark | 1989 | DKK | 10,000,000 | 100 | ¤ | ¤ | |||||||
NNIT A/S *) | Denmark | 1998 | DKK | 1,000,000 | 100 | ¤ | ||||||||
NNE Pharmaplan A/S *) | Denmark | 1989 | DKK | 500,000 | 100 | ¤ | ||||||||
Novo Nordisk Servicepartner A/S | Denmark | 1998 | DKK | 1,000,000 | 100 | ¤ | ||||||||
Associated companies | ||||||||||||||
Harno Invest A/S | Denmark | 1992 | DKK | 70,419,910 | 30 | |||||||||
Innate Pharma SA | France | 2006 | EUR | 1,249,139 | 19 | ¤ | ||||||||
ZymoGenetics, Inc | United States | 1988 | USD | 752,966,000 | 30 | ¤ | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*) | In addition to the listed companies NNIT A/S and NNE Pharmaplan have own subsidiaries. |
Novo
Nordisk Annual Report 2007
|
101
|
Consolidated financial statements | Summary of financial data 20032007
DKK million |
2003
|
2004
|
2005
|
2006
|
2007
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Sales | 26,158 | 29,031 | 33,760 | 38,743 | 41,831 | |||||
Sales by business segments: | ||||||||||
Modern insulins (insulin analogues) | 2,553 | 4,507 | 7,298 | 10,825 | 14,008 | |||||
Human insulins | 13,140 | 13,033 | 13,543 | 13,451 | 12,572 | |||||
Insulin-related sales | 1,352 | 1,350 | 1,463 | 1,606 | 1,749 | |||||
Oral antidiabetic products (OAD) | 1,430 | 1,643 | 1,708 | 1,984 | 2,149 | |||||
Diabetes care total | 18,475 | 20,533 | 24,012 | 27,866 | 30,478 | |||||
Haemostasis management (NovoSeven®) | 3,843 | 4,359 | 5,064 | 5,635 | 5,865 | |||||
Growth hormone therapy | 2,133 | 2,317 | 2,781 | 3,309 | 3,511 | |||||
Hormone replacement therapy | 1,322 | 1,488 | 1,565 | 1,607 | 1,668 | |||||
Other products | 385 | 334 | 338 | 326 | 309 | |||||
Biopharmaceuticals total | 7,683 | 8,498 | 9,748 | 10,877 | 11,353 | |||||
Sales by geographical segments: | ||||||||||
Europe *) | 12,053 | 12,887 | 14,020 | 15,300 | 16,350 | |||||
North America | 6,219 | 7,478 | 9,532 | 12,280 | 13,746 | |||||
International Operations *) | 3,871 | 4,368 | 5,497 | 6,494 | 7,295 | |||||
Japan & Oceania | 4,015 | 4,298 | 4,711 | 4,669 | 4,440 | |||||
|
|
|
|
|
|
|
|
|
|
|
Licence fees and other operating income (net) | 1,036 | 575 | 403 | 272 | 321 | |||||
Operating profit | 6,422 | 6,980 | 8,088 | 9,119 | 8,942 | |||||
Operating profit (excl. AERx®) **) | | | | | 10,267 | |||||
Net financials | 954 | 477 | 146 | 45 | 2,029 | |||||
Profit before income taxes | 7,376 | 7,457 | 8,234 | 9,164 | 10,971 | |||||
Income taxes | 2,543 | 2,444 | 2,370 | 2,712 | 2,449 | |||||
Net profit | 4,833 | 5,013 | 5,864 | 6,452 | 8,522 | |||||
|
|
|
|
|
|
|
|
|
|
|
Total assets | 34,564 | 37,433 | 41,960 | 44,692 | 47,731 | |||||
Total current liabilities | 7,032 | 7,280 | 10,581 | 10,157 | 10,641 | |||||
Total long-term liabilities | 2,756 | 3,649 | 3,745 | 4,413 | 4,908 | |||||
Equity | 24,776 | 26,504 | 27,634 | 30,122 | 32,182 | |||||
|
|
|
|
|
|
|
|
|
|
|
Investments in property, plant and equipment (net) | 2,273 | 2,999 | 3,665 | 2,787 | 2,268 | |||||
Investments in intangible assets and long-term financial assets (net) | 40 | 312 | (136 | ) | 244 | 118 | ||||
Free cash flow ***) | 3,846 | 4,278 | 4,833 | 4,707 | 9,012 | |||||
Net cash flow | (64 | ) | 2,136 | (634 | ) | 463 | 1,638 | |||
|
|
|
|
|
|
|
|
|
|
Ratios | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
Sales in percent: | ||||||||||
Modern
insulins (insulin analogues)
|
9.8%
|
15.5%
|
21.6%
|
27.9%
|
33.5%
|
|||||
Human
insulins
|
50.2%
|
44.9%
|
40.1%
|
34.7%
|
30.1%
|
|||||
Insulin-related
sales
|
5.2%
|
4.6%
|
4.3%
|
4.2%
|
4.2%
|
|||||
Oral
antidiabetic products (OAD)
|
5.5%
|
5.7%
|
5.1%
|
5.1%
|
5.1%
|
|||||
Diabetes
care total
|
70.6%
|
70.7%
|
71.1%
|
71.9%
|
72.9%
|
|||||
Haemostasis
management (NovoSeven®)
|
14.7%
|
15.0%
|
15.0%
|
14.5%
|
14.0%
|
|||||
Growth
hormone therapy
|
8.2%
|
8.0%
|
8.2%
|
8.6%
|
8.4%
|
|||||
Hormone
replacement therapy
|
5.1%
|
5.1%
|
4.6%
|
4.2%
|
4.0%
|
|||||
Other
products
|
1.5%
|
1.2%
|
1.0%
|
0.8%
|
0.7%
|
|||||
Biopharmaceuticals
total
|
29.4%
|
29.3%
|
28.9%
|
28.1%
|
27.1%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Sales outside Denmark as a percentage of sales |
99.3%
|
99.3%
|
99.2%
|
99.2%
|
99.2%
|
|||||
Gross margin ***) |
71.7%
|
72.3%
|
72.8%
|
75.3%
|
76.6%
|
|||||
Sales and distribution costs as a percentage of sales |
28.5%
|
28.5%
|
28.7%
|
30.0%
|
29.6%
|
|||||
Research and development costs as a percentage of sales |
15.5%
|
15.0%
|
15.1%
|
16.3%
|
20.4%
|
|||||
Research and development costs as a percentage of sales (excl. AERx®) **) |
|
|
|
|
17.2%
|
|||||
Administrative expenses as a percentage of sales |
7.1%
|
6.7%
|
6.3%
|
6.2%
|
6.0%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Net profit margin ***) |
18.5%
|
17.3%
|
17.4%
|
16.7%
|
20.4%
|
|||||
Effective tax rate ***) |
34.5%
|
32.8%
|
28.8%
|
29.6%
|
22.3%
|
|||||
Equity ratio ***) |
71.7%
|
70.8%
|
65.9%
|
67.4%
|
67.4%
|
|||||
Payout ratio ***) |
30.8%
|
31.8%
|
33.2%
|
34.4%
|
32.8%
|
|||||
Payout ratio adjusted for impact of Dako and AERx® discontinuation |
|
|
|
|
34.9%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Long-term financial targets | ||||||||||
Operating profit margin ***) |
24.6%
|
24.0%
|
24.0%
|
23.5%
|
21.4%
|
|||||
Operating profit margin (excl. AERx®) **) |
|
|
|
|
24.5%
|
|||||
Growth in operating profit ***) |
8.4%
|
8.7%
|
15.9%
|
12.7%
|
(1.9%
|
) | ||||
Growth in operating profit (excl. AERx®**) |
|
|
|
|
12.6%
|
|||||
Growth in operating profit, three-year average ***) |
11.0%
|
8.9%
|
11.0%
|
12.4%
|
8.9%
|
|||||
ROIC ***) |
20.4%
|
21.5%
|
24.7%
|
25.8%
|
27.2%
|
|||||
Cash to earnings ***) |
79.6%
|
85.3%
|
82.4%
|
73.0%
|
105.7%
|
|||||
Cash to earnings, three-year average ***) |
32.3%
|
59.0%
|
82.4%
|
80.2%
|
87.0%
|
|||||
Cash to earnings adjusted for net profit impact of AERx® discontinuation |
|
|
|
|
94.2%
|
|||||
|
|
|
|
|
|
|
|
|
|
102 | Novo Nordisk Annual Report 2007 |
Summary
of financial data 20032007
Supplementary
information in EUR
EUR
million
|
2003
|
2004
|
2005
|
2006
|
2007
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Sales
|
3,520
|
3,902
|
4,531
|
5,194
|
5,614
|
|||||
Sales
by business segments:
|
||||||||||
Modern
insulins (insulin analogues)
|
344
|
606
|
979
|
1,451
|
1,880
|
|||||
Human
insulins
|
1,768
|
1,752
|
1,819
|
1,804
|
1,687
|
|||||
Insulin-related
sales
|
182
|
181
|
196
|
215
|
235
|
|||||
Oral
antidiabetic products (OAD)
|
192
|
221
|
229
|
266
|
288
|
|||||
Diabetes
care total
|
2,486
|
2,760
|
3,223
|
3,736
|
4,090
|
|||||
Haemostasis
management (NovoSeven®)
|
517
|
586
|
680
|
755
|
788
|
|||||
Growth
hormone therapy
|
287
|
311
|
373
|
444
|
471
|
|||||
Hormone
replacement therapy
|
178
|
200
|
210
|
215
|
224
|
|||||
Other
products
|
52
|
45
|
45
|
44
|
41
|
|||||
Biopharmaceuticals
total
|
1,034
|
1,142
|
1,308
|
1,458
|
1,524
|
|||||
Sales
by geographical segments:
|
||||||||||
Europe
*)
|
1,622
|
1,732
|
1,882
|
2,051
|
2,194
|
|||||
North
America
|
837
|
1,005
|
1,279
|
1,646
|
1,845
|
|||||
International
Operations *)
|
521
|
587
|
738
|
871
|
979
|
|||||
Japan
& Oceania
|
540
|
578
|
632
|
626
|
596
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Licence
fees and other operating income (net)
|
139
|
77
|
54
|
36
|
43
|
|||||
Operating
profit
|
864
|
938
|
1,085
|
1,223
|
1,200
|
|||||
Operating
profit (excl. AERx®) **)
|
|
|
|
|
1,378
|
|||||
Net
financials
|
129
|
64
|
20
|
6
|
272
|
|||||
Profit
before income taxes
|
993
|
1,002
|
1,105
|
1,229
|
1,472
|
|||||
Income
taxes
|
343
|
328
|
318
|
364
|
328
|
|||||
Net
profit
|
650
|
674
|
787
|
865
|
1,144
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
4,643
|
5,033
|
5,624
|
5,994
|
6,401
|
|||||
Total
current liabilities
|
945
|
979
|
1,418
|
1,362
|
1,427
|
|||||
Total
long-term liabilities
|
370
|
491
|
502
|
592
|
658
|
|||||
Equity
|
3,328
|
3,563
|
3,704
|
4,040
|
4,316
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Investments
in property, plant and equipment (net)
|
305
|
403
|
492
|
374
|
304
|
|||||
Investments
in intangible assets and long-term financial assets (net)
|
5
|
42
|
(18
|
)
|
33
|
16
|
||||
Free
cash flow ***)
|
517
|
575
|
649
|
631
|
1,210
|
|||||
Net
cash flow
|
(9
|
)
|
287
|
(85
|
)
|
62
|
220
|
|||
|
|
|
|
|
|
|
|
|
|
|
Share
data ****)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share in DKK ***)
|
7.09
|
7.45
|
8.95
|
10.05
|
13.49
|
|||||
Diluted
earnings per share in DKK ***)
|
7.08
|
7.42
|
8.91
|
10.00
|
13.39
|
|||||
Dividend
per share in DKK
|
2.20
|
2.40
|
3.00
|
3.50
|
4.50
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Number
of shares at year-end (million)
|
709.4
|
709.4
|
709.4
|
674.0
|
647.0
|
|||||
Number
of shares outstanding at year-end (million) ***)
|
676.4
|
664.2
|
647.4
|
634.4
|
621.1
|
|||||
Average
number of shares outstanding (million) ***)
|
682.4
|
673.2
|
655.4
|
641.9
|
631.8
|
|||||
Average
number of shares outstanding incl. dilutive effect of options in
the money (million)
|
683.2
|
676.2
|
657.9
|
645.4
|
636.4
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Employees
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
Total
full-time employees at year-end
|
18,756
|
20,285
|
22,007
|
23,172
|
25,516
|
|||||
Denmark
|
11,414
|
11,839
|
12,160
|
12,214
|
12,401
|
|||||
Rest
of Europe
|
2,430
|
2,454
|
2,702
|
2,944
|
3,281
|
|||||
North
America
|
1,590
|
1,949
|
2,465
|
2,846
|
3,935
|
|||||
International
Operations
|
2,455
|
3,104
|
3,746
|
4,188
|
4,882
|
|||||
Japan
& Oceania
|
867
|
939
|
934
|
980
|
1,017
|
|||||
|
|
|
|
|
|
|
|
|
|
*) | Comparative figures from 20032006 have been adjusted in order to reflect a changed organisational structure from 1 January 2007 which transfers 8 countries, incl. Bulgaria and Romania, from International Operations to Europe. |
**) | Excluding costs related to the discontinuation of AERx®. |
***) | For definitions, please refer to page 63. |
****) | In 2007 there was a stock split of the companys A and B shares. The trade unit was changed from DKK 2 to DKK 1. The comparative figures for 2003 to 2006 have been updated accordingly. |
Key figures are translated into EUR as supplementary information the translation of income statement items is based on the average exchange rate in 2007 (EUR 1 = DKK 7.45078) and the translation of balance sheet items is based on the exchange rate at the end of 2007 (EUR 1 = DKK 7.45660). The figures in DKK reflect the economic substance of the underlying events and circumstances of the Group.
Novo
Nordisk Annual Report 2007
|
103
|
Consolidated financial statements | Quarterly figures 2006 and 2007 (unaudited)
2006
|
2007
|
|||||||||||||||
DKK
million
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2
|
Q3
|
Q4
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
8,946
|
9,727
|
9,583
|
10,487
|
9,818
|
10,563
|
10,504
|
10,946
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
by business segments:
|
||||||||||||||||
Modern
insulins (insulin analogues)
|
2,324
|
2,678
|
2,701
|
3,122
|
3,065
|
3,464
|
3,568
|
3,911
|
||||||||
Human
insulins
|
3,325
|
3,301
|
3,306
|
3,519
|
3,136
|
3,222
|
3,098
|
3,116
|
||||||||
Insulin-related
sales
|
378
|
406
|
391
|
431
|
419
|
437
|
445
|
448
|
||||||||
Oral
antidiabetic products (OAD)
|
477
|
483
|
516
|
508
|
523
|
529
|
585
|
512
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diabetes
care total
|
6,504
|
6,868
|
6,914
|
7,580
|
7,143
|
7,652
|
7,696
|
7,987
|
||||||||
Haemostasis
management (NovoSeven®)
|
1,265
|
1,507
|
1,393
|
1,470
|
1,411
|
1,508
|
1,427
|
1,519
|
||||||||
Growth
hormone therapy
|
709
|
882
|
821
|
897
|
784
|
924
|
878
|
925
|
||||||||
Hormone
replacement therapy
|
373
|
396
|
383
|
455
|
406
|
411
|
414
|
437
|
||||||||
Other
products
|
95
|
74
|
72
|
85
|
74
|
68
|
89
|
78
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biopharmaceuticals
total
|
2,442
|
2,859
|
2,669
|
2,907
|
2,675
|
2,911
|
2,808
|
2,959
|
||||||||
Sales
by geographical segments:
|
||||||||||||||||
Europe
*)
|
3,541
|
3,903
|
3,843
|
4,013
|
3,931
|
4,035
|
4,036
|
4,348
|
||||||||
North
America
|
2,764
|
2,968
|
3,062
|
3,486
|
3,214
|
3,424
|
3,500
|
3,608
|
||||||||
International
Operations *)
|
1,617
|
1,648
|
1,539
|
1,690
|
1,696
|
1,953
|
1,870
|
1,776
|
||||||||
Japan
& Oceania
|
1,024
|
1,208
|
1,139
|
1,298
|
977
|
1,151
|
1,098
|
1,214
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
6,531
|
7,475
|
7,246
|
7,906
|
7,498
|
8,205
|
7,990
|
8,345
|
||||||||
Sales
and distribution costs
|
2,728
|
2,850
|
2,699
|
3,331
|
3,048
|
3,110
|
2,993
|
3,220
|
||||||||
Research
and development costs
|
1,419
|
1,498
|
1,489
|
1,910
|
1,647
|
1,754
|
1,724
|
3,413
|
||||||||
Research
and development costs (excl. AERx®) **)
|
|
|
|
|
|
|
|
2,088
|
||||||||
Administrative
expenses
|
580
|
557
|
605
|
645
|
614
|
594
|
623
|
677
|
||||||||
Licence
fees and other operating income (net)
|
76
|
59
|
49
|
88
|
138
|
60
|
31
|
92
|
||||||||
Operating
profit
|
1,880
|
2,629
|
2,502
|
2,108
|
2,327
|
2,807
|
2,681
|
1,127
|
||||||||
Operating
profit (excl. AERx®) **)
|
|
|
|
|
|
|
|
2,452
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
financials
|
(151
|
)
|
(138
|
)
|
32
|
302
|
47
|
1,587
|
175
|
220
|
||||||
Profit
before taxation
|
1,729
|
2,491
|
2,534
|
2,410
|
2,374
|
4,394
|
2,856
|
1,347
|
||||||||
Income
taxes
|
518
|
748
|
760
|
686
|
665
|
742
|
672
|
370
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
profit
|
1,211
|
1,743
|
1,774
|
1,724
|
1,709
|
3,652
|
2,184
|
977
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation,
amortisation and impairment losses
|
460
|
508
|
600
|
574
|
509
|
516
|
586
|
1,396
|
||||||||
Depreciation,
amortisation and impairment losses
|
||||||||||||||||
(excl.
AERx®) **)
|
|
|
|
|
|
|
|
526
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
27,042
|
28,908
|
28,288
|
30,122
|
29,676
|
33,475
|
33,161
|
32,182
|
||||||||
Total
assets
|
41,299
|
43,145
|
43,744
|
44,692
|
44,742
|
48,300
|
48,423
|
47,731
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
73.0%
|
76.8%
|
75.6%
|
75.4%
|
76.4%
|
77.7%
|
76.1%
|
76.2%
|
||||||||
Sales
and distribution costs as a percentage of sales
|
30.5%
|
29.3%
|
28.2%
|
31.8%
|
31.0%
|
29.4%
|
28.5%
|
29.4%
|
||||||||
Research
and development costs as a percentage of sales
|
15.9%
|
15.4%
|
15.5%
|
18.2%
|
16.8%
|
16.6%
|
16.4%
|
31.2%
|
||||||||
Research
and development costs as a percentage of sales
|
||||||||||||||||
(excl.
AERx®**)
|
|
|
|
|
|
|
|
19.1%
|
||||||||
Administrative
expenses as a percentage of sales
|
6.5%
|
5.7%
|
6.3%
|
6.2%
|
6.3%
|
5.6%
|
5.9%
|
6.2%
|
||||||||
Operating
profit margin
|
21.0%
|
27.0%
|
26.1%
|
20.1%
|
23.7%
|
26.6%
|
25.5%
|
10.3%
|
||||||||
Operating
profit margin (excl. AERx®) **)
|
|
|
|
|
|
|
|
22.4%
|
||||||||
Equity
ratio
|
65.5%
|
67.0%
|
64.7%
|
67.4%
|
66.3%
|
69.3%
|
68.5%
|
67.4%
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
data ***)
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share/ADR (in DKK)
|
1.87
|
2.70
|
2.77
|
2.72
|
2.69
|
5.75
|
3.46
|
1.56
|
||||||||
Diluted
earnings per share/ADR (in DKK)
|
1.86
|
2.69
|
2.76
|
2.70
|
2.68
|
5.71
|
3.43
|
1.55
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
number of shares outstanding (million) basic
|
647.2
|
645.8
|
640.2
|
634.2
|
635.0
|
635.8
|
632.0
|
624.4
|
||||||||
Average
number of shares outstanding (million) diluted
|
650.4
|
649.0
|
643.6
|
638.4
|
639.4
|
640.2
|
636.4
|
629.6
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of full-time employees at the end of the period
|
22,556
|
22,792
|
23,071
|
23,172
|
24,045
|
24,729
|
25,206
|
25,516
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*) | Comparative figures from 2006 have been adjusted in order to reflect a changed organisational structure from 1 January 2007 which transfers 8 countries, incl. Bulgaria and Romania, from International Operations to Europe. |
**) | Excluding costs related to the discontinuation of AERx®. |
***) | In December 2007 there was a stock split of the companys A and B shares. The trade unit was changed from DKK 2 to DKK 1. The comparative figures have been updated accordingly. |
104 | Novo Nordisk Annual Report 2007 |
Financial statements of the Parent company Novo Nordisk A/S
Financial
statements
of the Parent company
Novo Nordisk A/S
for 2007
Novo
Nordisk Annual Report 2007
|
105
|
Financial statements of the Parent company Novo Nordisk A/S | Income statement |
DKK
million
|
Note
|
2007
|
2006
|
||||||
|
|
|
|
|
|
|
|
|
|
Sales
|
2
|
26,023
|
26,430
|
||||||
Cost
of goods sold
|
3
|
9,871
|
11,834
|
||||||
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
16,152
|
14,596
|
|||||||
Sales
and distribution costs
|
3
|
5,754
|
5,574
|
||||||
Research
and development costs
|
3
|
7,142
|
5,194
|
||||||
Administrative
expenses
|
3,
4
|
1,187
|
1,168
|
||||||
Licence
fees and other operating income (net)
|
5
|
478
|
360
|
||||||
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
2,547
|
3,020
|
|||||||
Profit
before tax in subsidiaries
|
10
|
6,450
|
6,242
|
||||||
Share
of profit in associated companies
|
10
|
1,490
|
(25
|
)
|
|||||
Financial
income
|
6
|
1,351
|
573
|
||||||
Financial
expenses
|
6
|
871
|
651
|
||||||
|
|
|
|
|
|
|
|
|
|
Profit
before income taxes
|
10,967
|
9,159
|
|||||||
Income
taxes
|
7
|
2,449
|
2,712
|
||||||
|
|
|
|
|
|
|
|
|
|
Net
profit
|
8,518
|
6,447
|
|||||||
|
|
|
|
|
|
|
|
|
|
Proposed
appropriation of net profit:
|
|||||||||
Dividends
|
2,795
|
2,221
|
|||||||
Net
revaluation reserve according to the equity method
|
5,883
|
5,472
|
|||||||
Retained
earnings
|
(160
|
)
|
(1,246
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
8,518
|
6,447
|
||||||||
|
|
|
|
|
|
|
|
|
|
106 | Novo Nordisk Annual Report 2007 |
Balance
sheet
|
DKK
million
|
Note
|
31
Dec 2007
|
31
Dec 2006
|
||||||
|
|
|
|
|
|
|
|
|
|
Assets
|
|||||||||
|
|
|
|
|
|
|
|
|
|
Intangible
assets
|
8
|
430
|
504
|
||||||
Property,
plant and equipment
|
9
|
15,242
|
15,561
|
||||||
Financial
assets
|
10
|
16,014
|
14,012
|
||||||
|
|
|
|
|
|
|
|
|
|
Total
long-term assets
|
31,686
|
30,077
|
|||||||
|
|
|
|
|
|
|
|
|
|
Inventories
|
11
|
8,146
|
6,788
|
||||||
Trade
receivables
|
889
|
929
|
|||||||
Amounts
owed by affiliated companies
|
6,840
|
6,443
|
|||||||
Tax
receivables
|
|
218
|
|||||||
Other
receivables
|
499
|
836
|
|||||||
Marketable
securities and financial derivatives
|
2,547
|
1,810
|
|||||||
Cash
at bank and in hand
|
4,460
|
2,839
|
|||||||
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
23,381
|
19,863
|
|||||||
|
|
|
|
|
|
|
|
|
|
Total
assets
|
55,067
|
49,940
|
|||||||
|
|
|
|
|
|
|
|
|
|
Equity
and liabilities
|
|||||||||
|
|
|
|
|
|
|
|
|
|
Share
capital
|
647
|
674
|
|||||||
Net
revaluation reserve according to the equity method
|
21,815
|
15,932
|
|||||||
Retained
earnings
|
9,489
|
13,342
|
|||||||
Exchange
rate adjustments
|
209
|
156
|
|||||||
|
|
|
|
|
|
|
|
|
|
Total
equity
|
12
|
32,160
|
30,104
|
||||||
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
13
|
961
|
1,168
|
||||||
Deferred
income tax liabilities
|
14
|
768
|
948
|
||||||
Amounts
owed to affiliated companies
|
82
|
68
|
|||||||
Other
provisions
|
15
|
342
|
129
|
||||||
|
|
|
|
|
|
|
|
|
|
Total
long-term liabilities
|
2,153
|
2,313
|
|||||||
|
|
|
|
|
|
|
|
|
|
Short-term
debt and financial derivatives
|
270
|
250
|
|||||||
Trade
payables
|
956
|
983
|
|||||||
Amounts
owed to affiliated companies
|
15,781
|
13,325
|
|||||||
Tax
payables
|
172
|
|
|||||||
Other
liabilities
|
3,085
|
2,405
|
|||||||
Other
provisions
|
15
|
490
|
560
|
||||||
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
20,754
|
17,523
|
|||||||
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
22,907
|
19,836
|
|||||||
|
|
|
|
|
|
|
|
|
|
Total
equity and liabilities
|
55,067
|
49,940
|
|||||||
|
|
|
|
|
|
|
|
|
|
Novo
Nordisk Annual Report 2007
|
107
|
Financial statements of the Parent company Novo Nordisk A/S | Notes Income statement |
1 |
Accounting
policies
|
|
The
Parent companys financial statements have been prepared in accordance
with the Danish Financial Statements Act (Class D), and other accounting regulations
for companies listed on the OMX Nordic Exchange Copenhagen.
The
accounting policies for the Parent company are unchanged compared to last financial
year and are the same as for the Group with the following additions. For a description
of the accounting policies of the Group please see note 1 Summary of
significant accounting policies, pp 5861.
Supplementary accounting policies for the Parent Company
Financial
assets
In the
financial statements of the Parent company investments in subsidiaries and associated
companies are recorded under the equity method, ie at the re -spective share
of the net asset values in subsidiaries and associated com panies. Any cost
in excess of net assets in the acquired company is capitalised in the Parent
company under Financial assets as part of investments in subsidiaries (Good
will). Amortisation of goodwill is provided under the straight-line method
over a period not exceeding 20 years, based on estimated useful life. Net profit
of subsidiaries less unrealised intercompany 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 and associated companies is transferred to
net revaluation reserve according to the equity method under equity.
Fair
value adjustments of financial assets categorised as Available for sale
are recognised in the Parent company in the income statement.
Tax
The Parent
company is assessed jointly for Danish tax purposes with its dome -stic 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.
Cash
flow statement
No separate
cash flow statement has been prepared for the Parent company please see
the Consolidated cash flow statement and financial resources in the Annual Report,
page 56.
2 |
Sales
|
|
DKK million |
2007
|
2006
|
|||
|
|
|
|
|
|
Sales by business segments *) | |||||
Diabetes care total |
25,316
|
23,242
|
|||
Biopharmaceuticals total |
707
|
3,188
|
|||
|
|
|
|
|
|
Total sales |
26,023
|
26,430
|
|||
|
|
|
|
|
|
Sales by geographic segment *) | |||||
Europe |
10,972
|
11,560
|
|||
North America |
6,482
|
6,144
|
|||
International Operations |
5,631
|
5,180
|
|||
Japan & Oceania |
2,938
|
3,546
|
|||
|
|
|
|
|
|
Total sales |
26,023
|
26,430
|
|||
|
|
|
|
|
|
Sales are attributed to geographical areas based on location of the customer.
*) For definitions of the segments please refer to consolidated accounts note 4, page 64.
3 |
Employee
costs
|
|
DKK million |
2007
|
2006
|
|||
|
|
|
|
|
|
Wages and salaries |
5,200
|
4,867
|
|||
Share-based payment costs |
75
|
64
|
|||
Pensions |
471
|
430
|
|||
Other contributions to social security |
147
|
123
|
|||
Other employee costs |
261
|
246
|
|||
|
|
|
|
|
|
Total employee costs |
6,154
|
5,730
|
|||
|
|
|
|
|
|
Included in the Balance sheet as change | |||||
in employee costs included in inventories |
143
|
(4
|
)
|
||
|
|
|
|
|
|
For information regarding remuneration to the Board of Directors and Executive Management please refer to consolidated accounts note 34, page 81. Reference is furthermore made to consolidated accounts note 33, page 78, and consolidated accounts note 34, page 81, for information regarding share-based payment schemes to the Board of Directors, Executive Management and the Senior Management Board.
2007
|
2006
|
||||
|
|
|
|
|
|
Average number of full-time | |||||
employees in Novo Nordisk A/S |
10,412
|
10,293
|
|||
|
|
|
|
|
|
4 |
Fees
to statutory auditors
|
|
DKK million |
2007
|
2006
|
|||
|
|
|
|
|
|
PricewaterhouseCoopers |
21
|
19
|
|||
of which statutory audit fee to PricewaterhouseCoopers |
8
|
8
|
|||
|
|
|
|
|
|
5 |
Licence
fees and other operating income (net)
|
|
For information regarding Licence fees and other operating income (net) please refer to consolidated accounts note 9, page 66.
6 |
Financial
income and Financial expenses
|
|
DKK million |
2007
|
2006
|
|||
|
|
|
|
|
|
Interest income relating to subsidiaries | |||||
included in Financial income |
162
|
85
|
|||
Interest expenses relating to subsidiaries | |||||
included in Financial expenses |
608
|
406
|
|||
Foreign exchange loss (net) recognised | |||||
in the Income statement |
51
|
222
|
|||
|
|
|
|
|
|
7 |
Income
taxes
|
|
Of the
total tax payment of DKK 2,607 million by the group in 2007, the parent companys
share of paid taxes amounts to DKK 1,298 million, which was positively impacted
by a tax refund of DKK 83 million relating to prior years.
In
2006 the total tax payment by the group amounted to DKK 3,514 million of which
the parent companys share of paid taxes relating to current year amounted
to DKK 2,378 million. Of the paid tax in the parent company in 2006, DKK 572
million was payment relating to prior years.
For specification of income taxes please refer to consolidated accounts notes 12 and 23, pages 67 and 72.
108 | Novo Nordisk Annual Report 2007 |
Notes
Balance sheet
|
8 |
Intangible
assets
|
|
Goodwill
|
Patents
and
|
Software
|
2007
|
2006
|
|||||||
DKK million |
licences
|
Total
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Cost at the beginning of the year |
51
|
407
|
342
|
800
|
581
|
||||||
Additions during the year |
|
21
|
59
|
80
|
219
|
||||||
Disposals during the year |
|
(10
|
) |
(39
|
) |
(49
|
) |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
Cost at the end of the year |
51
|
418
|
362
|
831
|
800
|
||||||
Amortisation at the beginning of the year |
51
|
22
|
223
|
296
|
263
|
||||||
Amortisation during the year |
|
8
|
18
|
26
|
33
|
||||||
Impairment losses for the year *) |
|
117
|
|
117
|
|
||||||
Depreciation reversed on disposals during the year |
|
|
(38
|
) |
(38
|
) |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation at the end of the year |
51
|
147
|
203
|
401
|
296
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount at the end of the year |
0
|
271
|
159
|
430
|
504
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
*) Impairment losses of DKK 117 million relates to AERx® discontinuation.
9 |
Property,
plant and equipment
|
|
Land
and
|
Plant
and
|
Other
|
Payments
|
2007
|
2006
|
||||||||
buildings
|
machinery
|
equipment
|
on
account
|
Total
|
Total
|
||||||||
and
assets
|
|||||||||||||
in
course of
|
|||||||||||||
DKK million |
construction
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost at the beginning of the year |
8,853
|
12,426
|
1,688
|
2,219
|
25,186
|
24,174
|
|||||||
Additions during the year |
174
|
288
|
86
|
904
|
1,452
|
1,828
|
|||||||
Disposals during the year |
(211
|
) |
(691
|
) |
(448
|
) |
(33
|
) |
(1,383
|
) |
(816
|
) | |
Transfer from/(to) other items |
496
|
1,043
|
74
|
(1,613
|
) |
0
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost at the end of the year |
9,312
|
13,066
|
1,400
|
1,477
|
25,255
|
25,186
|
|||||||
Depreciation and impairment losses at the beginning of the year |
2,642
|
5,845
|
1,138
|
|
9,625
|
8,616
|
|||||||
Depreciation for the year |
338
|
1,086
|
125
|
|
1,549
|
1,473
|
|||||||
Impairment losses for the year |
3
|
19
|
3
|
33
|
58
|
173
|
|||||||
Depreciation reversed on disposals during the year |
(110
|
) |
(652
|
) |
(424
|
) |
(33
|
) |
(1,219
|
) |
(637
|
) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and impairment losses at the end of the year |
2,873
|
6,298
|
842
|
0
|
10,013
|
9,625
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount at the end of the year |
6,439
|
6,768
|
558
|
1,477
|
15,242
|
15,561
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The latest official valuation of properties of the Parent company for property tax purposes amounts to a total of DKK 2,447 million (DKK 2,057 million in 2006). Cost of property not officially valued amounts to DKK 658 million (DKK 710 million in 2006).
Novo
Nordisk Annual Report 2007
|
109
|
Financial statements of the Parent company Novo Nordisk A/S | Notes Balance sheet |
10 |
Financial
assets
|
|
DKK million |
Investments
in subsidiaries
|
Amounts
owed by affiliated companies
|
Investments
in associated companies
|
Other
securities and investments
|
2007
Total |
2006
Total |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost at the beginning of the year |
6,443
|
80
|
296
|
397
|
7,216
|
6,983
|
|||||||
Additions during the year |
|
20
|
|
21
|
41
|
398
|
|||||||
Disposals during the year |
|
(27
|
) |
(1
|
) |
(42
|
) |
(70
|
) |
(165
|
) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost at the end of the year |
6,443
|
73
|
295
|
376
|
7,187
|
7,216
|
|||||||
Value adjustments at the beginning of the year |
15,466
|
|
41
|
(275
|
) |
15,232
|
10,126
|
||||||
Profit/(loss) before tax |
7,068
|
|
1,494
|
|
8,562
|
5,799
|
|||||||
Income taxes on profit for the year |
(1,035
|
) |
|
|
|
(1,035
|
) |
192
|
|||||
Amortisation and impairment of goodwill |
|
|
(4
|
) |
|
(4
|
) |
(5
|
) | ||||
Dividends received |
(150
|
) |
|
(1,470
|
) |
|
(1,620
|
) |
(539
|
) | |||
Disposals during the year |
|
|
|
|
|
|
|||||||
Exchange rate adjustments |
(93
|
) |
|
|
|
(93
|
) |
(127
|
) | ||||
Other adjustments |
(104
|
) |
|
(77
|
) |
(8
|
) |
(189
|
) |
(214
|
) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value adjustments at the end of the year |
21,152
|
|
(16
|
) |
(283
|
) |
20,853
|
15,232
|
|||||
Offset against amounts owed by subsidiaries | |||||||||||||
at the beginning of the year |
11
|
|
|
|
11
|
7
|
|||||||
Additions during the year |
153
|
|
|
|
153
|
4
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the year |
164
|
|
|
|
164
|
11
|
|||||||
Unrealised internal profit at the beginning of the year |
(8,447
|
) |
|
|
|
(8,447
|
) |
(5,625
|
) | ||||
Change for the year |
(4,015
|
) |
|
|
|
(4,015
|
) |
(3,289
|
) | ||||
Exchange rate adjustments |
272
|
|
|
|
272
|
467
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the year |
(12,190
|
) |
|
|
|
(12,190
|
) |
(8,447
|
) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount at the end of the year |
15,569
|
73
|
279
|
93
|
16,014
|
14,012
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount of investments in subsidiaries does not include capitalised goodwill at the end of the year. No additions or disposals were made during the year.
Carrying amount of investments in associated companies includes net capitalised goodwill of DKK 65 million at the end of the year (DKK 69 million in 2006).
A list of companies in the Novo Nordisk Group is included on pages 100101.
11 |
Inventories
|
|
DKK million |
2007
|
2006
|
|||
|
|
|
|
|
|
Raw materials and consumables |
1,077
|
1,032
|
|||
Work in progress |
6,048
|
4,402
|
|||
Finished goods |
1,021
|
1,354
|
|||
|
|
|
|
|
|
Total inventories |
8,146
|
6,788
|
|||
|
|
|
|
|
|
Indirect production costs included in work in progress and finished goods |
4,027
|
3,127
|
|||
|
|
|
|
|
|
Amount of write-down of inventories recognised as expense during the year |
188
|
443
|
|||
Amount of reversal of write-down of inventories during the year |
81
|
45
|
|||
|
|
|
|
|
|
110 | Novo Nordisk Annual Report 2007 |
Notes
Balance sheet
|
12 |
Statement
of changes in equity
|
|
DKK million |
Share
capital
|
Net
revaluation reserve
|
Retained
earnings
|
Exchange
rate adjustments
|
2007
Total |
2006
Total |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of the year |
674
|
15,932
|
13,342
|
156
|
30,104
|
27,621
|
|||||||
Appropriated from net profit for the year |
(160
|
) |
(160
|
) |
(1,246
|
) | |||||||
Proposed dividends |
2,795
|
2,795
|
2,221
|
||||||||||
Appropriated from net profit for the year to net | |||||||||||||
revaluation reserve according to the equity method |
5,883
|
5,883
|
5,472
|
||||||||||
Purchase of treasury shares |
(4,835
|
) |
(4,835
|
) |
(3,000
|
) | |||||||
Sale of treasury shares |
241
|
241
|
210
|
||||||||||
Share-based payments |
75
|
75
|
64
|
||||||||||
Reduction of the B share capital |
(27
|
) |
27
|
|
|
||||||||
Dividends |
(2,221
|
) |
(2,221
|
) |
(1,945
|
) | |||||||
Exchange rate adjustment of investments in subsidiaries |
53
|
53
|
14
|
||||||||||
Deferred (gain)/loss on cash flow hedges at the beginning | |||||||||||||
of the year recognised in the Income statement |
(420
|
) |
(420
|
) |
345
|
||||||||
Deferred gain/(loss) on cash flow hedges at the end of the year |
691
|
691
|
420
|
||||||||||
Other adjustments |
(46
|
) |
(46
|
) |
(72
|
) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year |
647
|
21,815
|
9,489
|
209
|
32,160
|
30,104
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regarding
average number of shares please refer to note 13, page 67.
Regarding
total number of A and B shares in Novo Nordisk A/S and treasury shares please
refer to consolidated accounts note 21, page 71.
13 |
Long-term
debt
|
|
DKK million |
2007
|
2006
|
|||
|
|
|
|
|
|
Mortgage debt |
504
|
658
|
|||
Other long-term debt |
457
|
510
|
|||
|
|
|
|
|
|
Total long-term debt |
961
|
1,168
|
|||
|
|
|
|
|
|
Long-term debt falling due after more than five years from the balance sheet date amounts to |
504
|
504
|
|||
|
|
|
|
|
|
At the end of 2007 none of the long-term debt was falling due within one year.
14 |
Deferred
income tax liabilities
|
|
DKK million |
2007
|
2006
|
|||
|
|
|
|
|
|
The deferred tax assets and liabilities are allocated to the various balance sheet items as follows: | |||||
Property, plant and equipment |
1,274
|
1,406
|
|||
Indirect production costs |
1,007
|
876
|
|||
Unrealised profit on intercompany sales |
(1,270
|
) |
(1,326
|
) | |
Other |
(243
|
) |
(8
|
) | |
|
|
|
|
|
|
Total income tax liabilities |
768
|
948
|
|||
|
|
|
|
|
|
The deferred income tax has been calculated using a tax rate of 25%.
Novo
Nordisk Annual Report 2007
|
111
|
Financial statements of the Parent company Novo Nordisk A/S | Notes Balance sheet |
15 |
Other
provisions
|
|
DKK million |
Provisions
for returned products
|
Other
provisions
|
2007
Total |
2006
Total |
|||||
|
|
|
|
|
|
|
|
|
|
At the beginning of the year |
560
|
129
|
689
|
617
|
|||||
Additional provisions |
183
|
213
|
396
|
228
|
|||||
Adjustments to previous years provisions |
(171
|
) |
|
(171
|
) |
14
|
|||
Used during the year |
(82
|
) |
|
(82
|
) |
(170
|
) | ||
|
|
|
|
|
|
|
|
|
|
At the end of the year |
490
|
342
|
832
|
689
|
|||||
|
|
|
|
|
|
|
|
|
|
Specification of provisions: | |||||||||
Long-term |
|
342
|
342
|
129
|
|||||
Current |
490
|
|
490
|
560
|
|||||
|
|
|
|
|
|
|
|
|
|
Total other provisions |
490
|
342
|
832
|
689
|
|||||
|
|
|
|
|
|
|
|
|
|
16 |
Commitments
and contingencies
|
|
DKK
million
|
2007
|
2006
|
|||
|
|
|
|
|
|
Commitments | |||||
Lease commitments |
612
|
635
|
|||
Contractual obligations relating to | |||||
investments in Property, plant and equipment |
84
|
64
|
|||
Guaranties given for subsidiaries |
1,515
|
1,427
|
|||
Obligations related to research and | |||||
development projects |
2,471
|
2,313
|
|||
Other guarantees and commitments |
1,478
|
1,489
|
|||
Leasing commitments expiring within the following periods as from the balance sheet date | |||||
Within one year |
107
|
104
|
|||
Between one and five years |
254
|
265
|
|||
After five years |
251
|
266
|
|||
|
|
|
|
|
|
Total lease commitments |
612
|
635
|
|||
|
|
|
|
|
|
The lease costs for 2007 and 2006 were DKK 233 million and DKK 200 million respectively.
Security for debt | |||||
Land, buildings and equipment etc at carrying amount |
1,989
|
1,963
|
|||
|
|
|
|
|
|
For information on pending litigation and other contingencies please refer to consolidated accounts note 36, page 87.
17 |
Related
party transactions
|
|
For information on transactions with related parties please refer to consolidated accounts note 32, page 77.
18 |
Financial
risk
|
|
For information on financial risk please refer to consolidated accounts note 31, page 76.
112 | Novo Nordisk Annual Report 2007 |
Consolidated
financial statements | Management statement
|
The Annual Report has the below Management Statement and Auditors Reports as provided on pp 114115.
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 2007. The Consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB), and with International Financial Reporting Standards as adopted by the EU, and the Financial Statements of the Parent Company, Novo Nordisk A/S, have been prepared in accordance with the Danish Financial Statements Act. Further, the Annual Report has been prepared in accordance with the additional Danish annual report requirements for listed com panies. In our opinion, the accounting policies used are appropriate and the Annual Report gives a true and fair view of the Groups and the Companys assets, liabilities, equity, financial position and results, and the consolidated cash flows.
Novo Nordisks non-financial statements have been prepared in accordance with the non-financial reporting principles of materiality, completeness and responsiveness of AA 1000AS and include Communication on Progress in support of the United Nations Global Compact. It represents a balanced and reasonable presentation of the organisations economic, environmental and social performance.
Gladsaxe, 30 January 2008
Novo
Nordisk Annual Report 2007
|
113
|
Consolidated financial statements | Auditors reports |
Auditors
report on the Annual Report for 2007
To
the Shareholders of Novo Nordisk A/S
We
have audited the Annual Report of Novo Nordisk A/S for the financial year 2007,
which comprises Management Statement, the Management Report, significant accounting
policies, income statement, balance sheet, statement of changes in equity and
notes for the Group as well as for the Parent Company and consolidated cash
flow statement. The Consolidated Financial Statements are prepared in accordance
with International Financial Reporting Standards as issued by the International
Accounting Standards Board, and with International Financial Reporting Standards
as adopted by the EU, and the Parent Company Financial Statements are prepared
in accordance with the Danish Financial Statements Act. Further, the Annual
Report is prepared in accordance with additional Danish disclosure requirements
for annual reports of listed companies.
Managements
Responsibility for the Annual Report
Management
is responsible for the preparation and fair presentation of the Annual Report
in accordance with the said legislation and accounting standards. This responsibility
includes: designing, implementing and maintaining internal control relevant
to the preparation and fair presentation of an Annual Report that is free from
material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable
in the circumstances.
Auditors
Responsibility
Our responsibility
is to express an opinion on the Annual Report based on our audit. We conducted
our audit in accordance with International and Danish Auditing Standards. Those
Standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance that the Annual Report is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Annual Report. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the Annual Report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Companys preparation and fair presentation of the Annual Report 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 Management, as well as evaluating the overall presentation of the Annual Report. We believe that the audit evidence we have obtained is sufficient and ap propriate to provide a basis for our audit opinion.
Our audit has not resulted in any qualification.
Opinion
In our
opinion, the Annual Report gives a true and fair view of the financial position
at 31 December 2007 of the Group and of the results of the Group operations
and consolidated cash flows for the financial year 2007 in ac -cordance with
International Financial Reporting Standards as issued by the International Accounting
Standards Board, and with International Financial Reporting Standards as adopted
by the EU, and additional Danish disclosure requirements for annual reports
of listed companies.
In addition, in our opinion, the Annual Report gives a true and fair view of the financial position at 31 December 2007 of the Parent Company and of the results of the Parent Company operations for the financial year 2007 in accordance with the Danish Financial Statements Act and additional Danish disclosure requirements for annual reports of listed companies.
Gladsaxe, 30 January 2008
PricewaterhouseCoopers
Statsautoriseret
Revisionsaktieselskab
Mogens
Nørgaard Mogensen
Danish
State Authorised Public Accountant
114 | Novo Nordisk Annual Report 2007 |
Auditors reports
Assurance
Report on Non-Financial Reporting 2007
Subject,
responsibilities, objective, and scope of assurance statement
We have
reviewed the non-financial information in the Annual Report of Novo Nordisk
A/S for the financial year 2007, which comprises Management Statement, the
Management Report, non-financial Accounting policies and the Consolidated
non-financial statements, and the non-financial information in the section
Values in action at novonordisk.com (the non-financial reporting).
Our review has been performed with a view to express a conclusion on the non-financial
reporting against the principles of materiality, completeness and responsiveness
of the AA1000 Assurance Standard (AA1000AS) and to express a conclusion on
whether this reporting is free of material misstatements and has been presented
in accordance with the accounting policies. Further, we express a conclusion
on whether Novo Nordisks policies, systems and activities support Novo
Nordisks commitment to the United Nations Global Compact.
Managements
responsibility
Management
is responsible for the collection and presentation of the non-financial information
in the non-financial reporting.
Basis
of conclusion
Our work
was undertaken to perform an evaluation of the non-financial reporting against
the principles of materiality, completeness and responsiveness of the AA1000AS.
Moreover, we planned and performed our work in accordance with the International
Standard on Assurance Engagements (ISAE) 3000 Assurance Engagements other
than Audits or Review of Historical Financial Information to obtain limited
assurance that the non-financial reporting is free of material misstatements
and that the information has been presented in accordance with the non-financial
accounting policies.
Based on an assessment of materiality and risk, our work included on a sample basis a review of management systems, reporting structures and boundaries. The assurance obtained is limited, as our work compared to that of an engagement with reasonable assurance has been limited to, principally, inquiries, interviews as well as analytical procedures related to registration and communication systems, data and underlying documentation. We reviewed whether data and the underlying components are accounted for in such a way as to fulfil the assertions of materiality and completeness in accordance with Novo Nordisks non-financial accounting policies. In addition, our work comprised an assessment of stakeholder engagement and of the materiality of reporting against peer-reporting, media reports and industry knowledge. Three major production sites were visited in Kalundborg and Hillerød, Denmark and Chartres, France. Our work also included an assessment of significant estimates made by Management.
We have reviewed Novo Nordisks own assessment of how the non-financial reporting and the underlying policies, systems and activities are aligned to and support the principles of the UN Global Compact.
We believe that the work performed provides a reasonable basis for our conclusion.
Conclusion
Based
on the work performed we state our conclusion in relation to each of the key
principles of the AA1000 Assurance Standard: materiality, completeness and responsiveness.
Materiality
Nothing
has come to our attention that would cause us not to believe that
the non-financial reporting presents a fair and balanced representation of Novo Nordisks material corporate non-financial performance and impacts. | ||
the reported non-financial targets and indicators in general are used in strategic and operational decision-making and some of these are included in top management, management, and business units balanced scorecard. |
|
the Annual Report, designed primarily to meet the information needs of share holders, financial analysts and other corporate stakeholders, includes significant non-financial information material to Novo Nordisks corporate stakeholders. Objectives, policies, processes and performance in respect of other key non-financial issues e.g. bioethics, human rights and environmental management are more comprehensively addressed in the non-financial reporting in the section Values in action at novonordisk.com/ sustainability. | |
the inclusion of information is aligned with robust and well-functioning governance and risk management structures and processes as well as regular and informal stakeholder engagement and systematic trend spotting activities ensuring attention to key corporate stakeholder concerns and expectations. |
Completeness
Nothing
has come to our attention that would cause us not to believe that
Novo Nordisk can identify and understand material aspects of its corporate non-financial performance as well as significant impacts outside the boundaries of which it has direct management control including upstream and downstream issues such as social and environmental performance of suppliers, animal health practices of contract research organisations, carbon emissions of energy suppliers, training of health care professionals, and accessibility for less developed countries to medicine at reduced prices. | ||
Novo Nordisk has an effective process in place at corporate level for identifying, exploring and defining its approach to material impacts while an as effective approach is not mirrored in some local levels of the organisation. |
Responsiveness
Nothing
has come to our attention that would cause us not to believe that
through the non-financial reporting and other communications, Novo Nordisk is responsive to significant issues raised by corporate stakeholders in an accessible manner. |
||
Novo Nordisk has an effective process and relevant governance structures in place for defining its response to corporate stakeholders as well as processes in place to promote integration of such responses in management and business processes. In some areas such as responsible purchasing, promotion of equal opportunities and business ethics additional controls could be put in place to ensure consistent and effective implementation of responses. | ||
Novo Nordisk has corporate policies, programmes and procedures to address material stakeholder concerns in key pharmaceutical industry areas such as business ethics and marketing practices, bioethics including clinical trials and animal welfare, access to health and advocacy. |
Based on our work nothing has come to our attention that disproves that Novo Nordisks policies, systems and activities taken as a whole support Novo Nordisks commitment to the UN Global Compact.
In addition, based on our review, nothing has come to our attention that causes us not to believe that the non-financial information in the Annual Report of Novo Nordisk for the financial year 2007 is free of material misstatements and has been presented in accordance with the accounting policies.
Commentary
According
to AA1000AS, we are required to include recommendations for improvements in
relation to environmental and social responsibility. The recommendations as
well as our statement of independence and competencies are stated in the section
Assurance at novonordisk.com/sustainability/values in action. Our
recommendations do not affect the above stated conclusion.
Gladsaxe, 30 January 2008
PricewaterhouseCoopers
Statsautoriseret
Revisionsaktieselskab
Mogens
Nørgaard Mogensen
Danish
State-Authorised Public Accountant
Novo
Nordisk Annual Report 2007
|
115
|
This index might be of help if you are looking for specific information. It includes topics covered in this Annual Report and additional information available online at novonordisk.com.
Topic
of interest
|
Covered
in this report
|
Online
information
|
|
||
About
Novo Nordisk
|
pp
45
|
novonordisk.com/about_us
|
|
||
Access
to health
|
pp
2829, 98
|
novonordisk.com/sustainability/values_in_action
Click:
Access
to health
|
|
||
Accountability
|
pp
89, 91
|
novonordisk.com
/sustainability/values_in_action Click:
Assurance
|
|
||
Advocacy
|
pp
2627
|
novonordisk.com/sustainability/values_in_action
Click:
Advocacy
|
|
||
Animal
welfare
|
p
99
|
novonordisk.com/sustainability/values_in_action
Click:
Bioethics
|
|
||
Audit
and assurance
|
pp
4445, 114115
|
novonordisk.com/sustainability/values_in_action
Click:
Assurance
|
|
||
Awards
and recognitions
|
novonordisk.com/sustainability/awards_and_recognition
|
|
|
||
Biopharmaceuticals
|
pp
3841
|
novonordisk.com/about_us
|
|
||
Board
of Directors
|
pp
4647
|
novonordisk.com/about_us/management/board_of_directors
|
|
||
Brand
and reputation management
|
p
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116 | Novo Nordisk Annual Report 2007 |
Novo Nordisk values stakeholders reviews of the companys reporting and welcomes any questions or comments concerning the report or the companys performance. Visit the corporate website at novonordisk.com This report is about how we do business. When it comes to building relations that is what Novo Nordisk people across the globe are doing every day. If reading the report inspires you to learn more or to get involved in some of the work, please get in touch. Enquiries, comments and suggestions are very welcome. Headquarters Media |
Investor
Relations Transfer
agents |
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Produced
by: Corporate Branding, February 2008 Contributing writer: Amy Brown Translation: Anne Nielsen and Corporate Communications Photos: Arrowood Photography, Asger Carlsen, Philip Elberling, Peter Elmholt, Finn Fons, Willi Hansen, Thorkild Jensen, Shane Kelly, Kevin J McCormick, Jesper Westley and Novo Nordisk Design and production: Branded Design ApS Accounts and notes production: team2graphics Printed in Denmark by Bording A/S (DS/EN ISO 14001:1996) |
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Accounting
The Novo Nordisk Annual Report covers the fiscal year 2007. It is issued in February 2008 for approval by shareholders at the Annual General Meeting in March. The Financial Statements of the parent company, Novo Nordisk A/S, are included (see pp 105112). The |
Annual
Report is filed with the Danish Commerce and Companies Agency. The Annual Report and the Financial Statements 2007 of the parent company are available for online reading and downloads at novonordisk.com/ investors. Click: Download centre. As a supplement, the company provides additional information and a full data set on environmental and social performance in its online reporting. |
See
annualreport2007.novonordisk.com. The accuracy, completeness and reliability of the companys reporting is verified through internal controls, assurance and independent audits. Compliance with codes and regulations is further supported by management processes such as the Quality Management System, assurance and internal and external audits. |
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The report makes reference to several publications. The list below provides titles and publication details of the key studies, reports and reviews referred to. Information on Novo Nordisks clinical trials and pipeline can be found at novonordisk-trials.com
1 | ) | International Diabetes Federation, Diabetes Atlas, Third Edition, 2006, p.5. |
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2 | ) | International Diabetes Federation & Novo Nordisk, Changing Diabetes® Barometer, First Report, 2007. |
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3 | ) | Economist
Intelligence Unit, The Silent Epidemic, an economic study of diabetes
in developed and developing countries, 2007. |
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4 | ) | Henk-Jan Aanstoot et al, Novo Nordisk & International Diabetes Federation, Diabetes Youth Charter, 2007. |
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5 | ) | Novo Nordisk, DAWN (Diabetes Attitudes, Wishes and Needs), 2001. |
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6 | ) | R
R Holman et al, Addition of biphasic, prandial, or basal insulin to oral
therapy in type 2 diabetes. N Engl J Med, 2007 Oct 25;357(17):1759-61. |
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7 | ) | E
S Kilpatrick et al, Global Task Force on Glycaemic Control & Novo Nordisk,
HbA1c: the gap between guidelines and clinical reality across eight countries, 2007. |
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8 | ) | World Health Organization, Global Strategy on Diet, Physical Activity and Health, Obesity and Overweight, Factsheet. |
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9 | ) | A Dornhorst et al. Safety and efficacy of insulin detemir in clinical practice. Int J Clin Pract 2007; 61(3):5238. |
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10 | ) | T
L Christensen et al: An evaluation of the relationship between adult height
and health-related quality of life in the general UK population. Clinical Endocrinology (2007) 67, 407412. |
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11 | ) | ISS Europe, ECGI, Shearman & Sterling: Report on the proportionality principle in the European Union, 2007. |
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This report makes reference to European product trade names. The list below provides an overview of European trade names with accompanying generic names. Trade and generic names may differ in the US and Japan. For a complete overview of country-specific product names, please visit novonordisk.com Click: Your COUNTRY.
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Diabetes care | Modern insulins | |||
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Levemir® | Insulin detemir | |||
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NovoRapid® | Insulin aspart | |||
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NovoMix® | Biphasic insulin aspart | |||
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Insulatard® | Insulin human | |||
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Actrapid® | Insulin human | |||
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Mixtard® | Insulin human | |||
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FlexPen® | Prefilled insulin delivery system | |||
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NovoPen® 4 | Durable insulin delivery system | |||
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InnoLet® | Prefilled insulin delivery system | |||
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NovoFine® | Needles | |||
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GlucaGen® | Glucagon | |||
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NovoNorm® | Repaglinide | |||
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Biopharmaceuticals | Haemostasis | |||
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NovoSeven® | Recombinant factor VIIa | |||
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norditropin® | Norditropin® | Somatropin (rDNA origin) | ||
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NordiFlex® | Prefilled multi-dose delivery system | |||
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NordiFlex PenMate | Automatic needle insertion accessory | |||
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NordiLet® | Prefilled multi-dose delivery system | |||
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HRT | ||||
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Activelle® | Estradiol/norethisterone acetate | |||
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Estrofem® | Estradiol | |||
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Novofem® | Estradiol/norethisterone acetate | |||
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Vagifem® | Estradiol hemihydrate | |||
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United
to change diabetes |
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On World Diabetes Day, 14 November 2007, Novo Nordisk employees across the globe organised human blue circles, the symbol of the Unite for Diabetes campaign. More than a quarter of a million people in 50 countries took part in this global advocacy effort to promote awareness and action on diabetes. | which Novo Nordisk was an active and supportive partner. It recognises the urgent need to pursue multilateral efforts to promote and improve human health and encourages member states to develop national policies for the prevention, treatment and care of diabetes in line with the sustainable development of their healthcare systems. | |
World Diabetes Day marks the birthday of Sir Frederick Banting, the Canadian physician and Nobel laureate who co-discovered insulin, the pancreatic hormone used for treating diabetes. For years, it has been marked around the world, but in 2007, for the first time, the event was endorsed by the United Nations. The UN Resolution on diabetes, adopted in December 2006, was the successful result of a tireless multi-stakeholder campaign, led by the International Diabetes Federation, in |
In New York City, home of the United Nations, Novo Nordisks Changing Diabetes® Bus and a Diabetes Village on Union Square offered the 5,500 visitors an opportunity to have their waist and blood sugar measured and learn about the prevention and management of diabetes. Together with our partners, Novo Nordisk stands united to change diabetes. |
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Novo
Nordisk A/S CVR no 24 25 67 90 novonordisk.com |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: FEBRUARY 11, 2008 |
NOVO NORDISK A/S Lars Rebien Sørensen, President and Chief Executive Officer |