Financial Statement for 2008
Novo Nordisk increased operating profit by 38% in 2008
Performance driven by sales of modern insulins and gross margin
improvement. Dividend to be increased by 33%.
* Sales in local currencies increased by 12% in 2008 and by
9% in Danish kroner.
o Sales of modern insulins increased by 28% (24% in Danish
kroner).
o Sales of NovoSeven® increased by 14% (9% in Danish kroner).
o Sales of Norditropin® increased by 12% (10% in Danish
kroner).
o Sales in North America increased by 18% (10% in Danish
kroner).
o Sales in International Operations increased by 21% (15% in
Danish kroner).
* Gross margin improved by 1.7 percentage points in local
currencies and by 1.2 percentage points in Danish kroner to 77.8%
in 2008, primarily reflecting continued productivity improvements
and a negative currency impact of around 0.5 percentage points.
* Reported operating profit increased by 38% to DKK 12,373
million, up from 8,942 DKK million in 2007. Adjusted for the impact
of closure costs for pulmonary diabetes projects in 2007 and 2008
and the impact of currencies, underlying operating profit increased
by more than 25%.
* Net profit increased by 13% to DKK 9,645 million.
Earnings per share (diluted) increased by 16% to DKK 15.54.
* At the Annual General Meeting on 18 March 2009, the Board
of Directors will propose a 33% increase in dividend to DKK 6.00
per share of DKK 1. The ongoing share repurchase programme has been
increased by DKK 1 billion to DKK 18.5 billion and the remaining
DKK 6 billion of the programme is expected to be repurchased before
the end of 2009.
* For 2009, operating profit measured in local currencies
is expected to grow at the level of 10%. Due to a positive currency
impact reported operating profit growth is expected to be around 9
percentage points higher.
* Novo Nordisk reached in 2008 the four long-term financial
targets established in 2006. The four ratios used are still
considered appropriate measures to ensure value creation and
several targets have consequently been increased.
Lars Rebien Sørensen, president and CEO, said: "We are satisfied with
the solid business results achieved in 2008 driven by the continued
penetration of our modern insulins in all key markets. Despite the
general economic downturn we still expect double-digit growth in both
sales and operating profit for 2009 and we are increasing our
long-term financial targets."
Contents
Page
Consolidated financial statement 2008 3
Long-term financial targets 2008 4
Sales development by segments 5
Sales development by regions 5
Diabetes care 5
Biopharmaceuticals 6
Costs, licence fees and other operating income 7
Net financials and tax 8
Capital expenditure and free cash flow 8
Long-term financial targets 9
Outlook 2009 10
Research and development update 11
Equity 12
Corporate governance 13
Sustainability issues update 15
Legal issues update 15
Financial calendar 16
Conference call details 16
Forward-looking statement 17
Management statement 18
Contacts for further information 19
Appendices:
Appendices 1-2: Quarterly numbers in DKK and EUR 20
Appendices 3-4: Income statement and balance sheet 22
Appendix 5: Cash flow statement 24
Appendix 6: Statement of changes in equity 25
Appendix 7: Exchange rates for key currencies 26
Consolidated financial statement 2008
These financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS). The accounting
policies used in this report are consistent with those used in the
Annual Report 2007.
% change
2008 vs
Profit and loss 2008 2007 2006 2005 2004 2007
(Amounts below in DKK
million)
Sales 45,553 41,831 38,743 33,760 29,031 9%
Gross profit 35,444 32,038 29,158 24,583 20,981 11%
Gross margin 77.8% 76.6% 75.3% 72.8% 72.3%
Sales and distribution 12,866 12,371 11,608 9,691 8,280 4%
costs
Percent of sales 28.2% 29.6% 30.0% 28.7% 28.5%
Research and development 7,856 8,538 6,316 5,085 4,352 -8%
costs
- hereof costs related (325) (1,325) - - -
to AERx® 1)
Percent of sales 17.2% 20.4% 16.3% 15.1% 15.0%
Percent of sales (excl 16.5% 17.2% - - -
AERx®) 1)
Administrative expenses 2,635 2,508 2,387 2,122 1,944 5%
Percent of sales 5.8% 6.0% 6.2% 6.3% 6.7%
Licence fees and other 286 321 272 403 575 -11%
operating income
Operating profit 12,373 8,942 9,119 8,088 6,980 38%
Operating margin 27.2% 21.4% 23.5% 24.0% 24.0%
Operating profit (excl 12,698 10,267 - - - 24%
AERx®)1)
Operating margin (excl 27.9% 24.5% - - -
AERx®) 1)
Net financials 322 2,029 45 146 477 -84%
Profit before income 12,695 10,971 9,164 8,234 7,457 16%
taxes
Income taxes 3,050 2,449 2,712 2,370 2,444 25%
Income tax rate 24.0% 22.3% 29.6% 28.8% 32.8%
Net profit 9,645 8,522 6,452 5,864 5,013 13%
Net profit margin 21.2% 20.4% 16.7% 17.4% 17.3%
1) Costs related to discontinuation of all pulmonary diabetes
projects.
Consolidated financial statement 2008- continued
These financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS). The accounting
policies used in this report are consistent with those used in the
Annual Report 2007.
Other key numbers
(Amounts below in DKK
million except earnings
per share, dividend per % change
share and number of 2008 vs
employees) 2008 2007 2006 2005 2004 2007
Depreciation, 2,442 3,007 2,142 1,930 1,892 -19%
amortisation, etc
Capital expenditure 1,754 2,268 2,787 3,665 2,999 -23%
Free cash flow 11,015 9,012 4,707 4,833 4,278 22%
Equity 32,979 32,182 30,122 27,634 26,504 2%
Total assets 50,603 47,731 44,692 41,960 37,433 6%
Equity ratio 65.2% 67.4% 67.4% 65.9% 70.8%
Diluted earnings per 15.54 13.39 10.00 8.92 7.42 16%
share (in DKK)
Dividend per share (in 6.00 4.50 3.50 3.00 2.40 33%
DKK)1)
Payout ratio 2) 37.8% 32.8% 34.4% 33.2% 31.8%
Payout ratio (adjusted) - 34.9% - - -
3)
Average number of 26,069 24,344 22,590 21,146 19,520 7%
full-time employees
1) Proposed dividend for the financial year 2008.
2) Total dividends for the year as a percentage of net profit.
3) Total dividends for the year as a percentage of net profit
adjusted for impact of Dako and AERx® discontinuation.
Long-term financial targets 2008
Performance against 2008 2007 2006 2005 2004 Long-term
long-term financial target ratio
targets
Operating profit growth 38.4% (1.9%) 12.7% 15.9% 8.7% 15%
Operating profit growth 23.7% 12.6% - - -
(excl AERx®) 1)
Operating margin 27.2% 21.4% 23.5% 24.0% 24.0% 25%
Operating margin (excl 27.9% 24.5% - - -
AERx®) 1)
Return on invested 37.4% 27.2% 25.8% 24.7% 21.5% 30%
capital
Cash to earnings 114.2% 105.7% 73.0% 82.4% 85.3%
Cash to earnings (three 97.6% 87.0% 80.2% 82.4% 59.0% 70%
years' average)
1) Costs related to the discontinuation of all pulmonary diabetes
projects.
Sales development by segments
Sales increased by 12% measured in local currencies and by 9% in
Danish kroner. Modern insulins continue to be the main contributor to
growth and NovoSeven® and Norditropin® also continue to contribute to
growth. The sales growth realised in 2008 was in line with the
previously communicated guidance of sales growth of '11-13% measured
in local currencies, whereas reported sales growth is expected to be
around 3 percentage points lower'.
Sales Growth Growth Share of
2008 as in local growth
DKK reported currencies in local
million currencies
The diabetes care segment
Modern insulins 17,317 24% 28% 77%
- Levemir® 3,850 49% 55% 28%
- NovoMix® 5,637 19% 23% 21%
- NovoRapid® 7,830 17% 22% 28%
Human insulins 11,804 -6% -5% -11%
Insulin-related sales 1,844 5% 8% 3%
Oral antidiabetic products 2,391 11% 16% 6%
Diabetes care - total 33,356 9% 13% 75%
The biopharmaceuticals segment
NovoSeven® 6,396 9% 14% 16%
Growth hormone therapy 3,865 10% 12% 8%
Other products 1,936 -2% 1% 1%
Biopharmaceuticals - total 12,197 7% 11% 25%
Total sales 45,553 9% 12% 100%
Sales development by regions
In 2008, sales growth was realised in all regions measured in local
currencies. The main contributors to growth were North America and
International Operations providing 48% and 29%, respectively, of the
total sales growth. Europe contributed 21% and Japan & Oceania 2% of
the sales growth in 2008 measured in local currencies.
Diabetes care
Sales of diabetes care products increased by 13% measured in local
currencies and by 9% in Danish kroner to DKK 33,356 million compared
to last year.
Modern insulins, human insulins and insulin-related products
Sales of modern insulins, human insulins and insulin-related products
increased by 12% measured in local currencies and by 9% in Danish
kroner to DKK 30,965 million. All regions contributed to growth, with
North America and International Operations having the highest growth
rates. Novo Nordisk continues to be the global leader with 52% of the
total insulin market and 44% of the modern insulin market, both
measured by volume.
Sales of modern insulins increased by 28% in local currencies in 2008
and by 24% in Danish kroner to DKK 17,317 million. Sales of Levemir®
increased by 55%, sales of NovoRapid® (NovoLog® in the US) increased
by 22% and sales of NovoMix® (NovoLog® Mix 70/30 in the US) increased
by 23%, all measured in local currencies. All regions realised solid
growth rates, with North America and Europe as the primary
contributors to growth. Sales of modern insulins contributed 77% of
the overall growth in local currencies and now constitute 59% of Novo
Nordisk's sales of insulins.
North America
Sales in North America increased by 21% in local currencies in 2008
and by 14% in Danish kroner, reflecting a solid penetration of the
modern insulins Levemir®, NovoLog® and NovoLog® Mix 70/30. In the
fourth quarter of 2008, US sales were positively impacted by a rebate
reversal related to a federal healthcare programme. Novo Nordisk
maintains its leadership position in the US insulin market with 41%
of the total insulin market and 32% of the modern insulin market,
both measured by volume. Currently, more than 37% of Novo Nordisk's
modern insulin volume is being sold in FlexPen®.
Europe
Sales in Europe increased by 6% in local currencies and 5% measured
in Danish kroner, reflecting continued progress for the portfolio of
modern insulins. Novo Nordisk holds 55% of the total insulin market
and 51% of the modern insulin market, both measured by volume, and is
capturing the main share of growth in the modern insulin market.
International Operations
Sales within International Operations increased by 18% in local
currencies and by 14% in Danish kroner. The main contributor to
growth in 2008 was sales of modern insulins, primarily in Turkey and
China. Furthermore, sales of human insulins continue to add to
overall growth in the region, driven by China.
Japan & Oceania
Sales in Japan & Oceania increased by 1% in local currencies and by
6% measured in Danish kroner. The sales development reflects sales
growth for the modern insulins NovoRapid®, NovoRapid Mix® 30 and
Levemir®. Novo Nordisk holds 72% of the total insulin market in Japan
and 64% of the modern insulin market, both measured by volume.
Oral antidiabetic products (NovoNorm®/Prandin®)
Sales of oral antidiabetic products increased by 16% in local
currencies and by 11% in Danish kroner to DKK 2,391 million compared
to 2007. This primarily reflects increased sales in International
Operations and North America, mainly due to an increased market share
in China and a higher average sales price in the US market.
Biopharmaceuticals
Sales of biopharmaceutical products increased by 11% measured in
local currencies and by 7% measured in Danish kroner to DKK 12,197
million compared to last year.
NovoSeven®
Sales of NovoSeven® increased by 14% in local currencies and by 9% in
Danish kroner to DKK 6,396 million compared to last year. Sales
growth for NovoSeven® was primarily realised in North America and
International Operations. The sales growth for NovoSeven® during 2008
primarily reflected increased sales within the congenital bleeding
disorder segments, where Novo Nordisk is the global leader and was
supported by the launch of room temperature-stable NovoSeven® in the
US as well as key markets in Europe. Treatment of spontaneous bleeds
for congenital inhibitor patients remains the largest area of use. In
the fourth quarter of 2008, sales of NovoSeven® in the US were
positively impacted by wholesaler stock building. Sales of NovoSeven®
in International Operations in 2008 were positively impacted by the
timing of tender sales compared to 2007.
Growth hormone therapy (Norditropin®)
Sales of Norditropin® (ie growth hormone in a liquid, ready-to-use
formulation) increased by 12% measured in local currencies and by 10%
measured in Danish kroner to DKK 3,865 million. North America and
Europe were the main contributors to growth measured in local
currencies. Novo Nordisk is the second-largest company in the growth
hormone market with 23% market share measured in volume.
Other products
Sales of other products within biopharmaceuticals, which
predominantly consist of hormone replacement therapy (HRT)-related
products, increased by 1% in local currencies and decreased by 2% in
Danish kroner to DKK 1,936 million. This development primarily
reflects generic competition in the US to Activella®, a
continuous-combined HRT product, but also continued sales progress
for Vagifem®, Novo Nordisk's topical oestrogen product.
Costs, licence fees and other operating income
The cost of goods sold was DKK 10,109 million in 2008 representing a
gross margin of 77.8% compared to 76.6% in 2007. This improvement
reflects improved production efficiency and higher average selling
prices in the US. The gross margin was negatively impacted by around
0.5 percentage points due to a negative currency development.
In 2008, total non-production-related costs amounted to DKK 23,357
million and were largely at the same level as in 2007. This
development reflects lower costs related to research and development,
primarily reflecting the non-recurring costs related to the
discontinuation of AERx® in 2007 of DKK 1,325 million and
non-recurring costs of DKK 325 million in 2008 related to the
discontinuation of AERx® and other pulmonary diabetes projects. Sales
and distribution costs increased at a lower level than sales,
primarily explained by a return of a deposit related to an
antidumping case in Brazil countered by higher costs related to the
expanded sales force in the US.
In 2008, costs amounting to DKK 171 million in connection with
general employee share programmes were expensed. In 2008, Novo
Nordisk expensed costs in relation to share-based long-term incentive
programmes for senior management and other senior employees (around
580 participants in total) amounting to DKK 160 million. The
comparable expense for 2007 was DKK 121 million (around 525
participants in total).
Licence fees and other operating income were DKK 286 million in 2008
compared to DKK 321 million in 2007.
Operating profit in 2008 increased by 38% to DKK 12,373 million
compared to 2007 and is above the previously communicated
expectations of growth in operating profit of '32-35% as reported'.
Adjusting for the impact from the return of a deposit related to an
antidumping case in Brazil, operating profit was realised slightly
above the previously communicated expectations of growth in operating
profit.
Net financials and tax
Net financials showed a net income of DKK 322 million in 2008
compared to a net income of DKK 2,029 million in 2007.
Included in net financials is the result from associated companies
with an expense of DKK 124 million, primarily related to Novo
Nordisk's share of losses in ZymoGenetics, Inc of approximately DKK
192 million. In 2007, the result from associated companies was an
income of DKK 1,233 million primarily related to the non-recurring
tax-exempt income of approximately DKK 1.5 billion from Novo
Nordisk's divestment of the ownership of Dako's business activities.
The foreign exchange result was an income of DKK 159 million compared
to an income of DKK 910 million in 2007. This development reflects
gains on foreign exchange hedging activities especially in US dollar
partly offset by losses on commercial balances in non-hedged
currencies. Foreign exchange hedging losses of DKK 864 million have
been deferred for future income recognition, primarily in 2009.
The realised results for net financials in 2008 were slightly lower
than the previously communicated expectation of a total net financial
income of around 'DKK 350 million' despite a non-recurring interest
income related to the return of a deposit related to an antidumping
case in Brazil. The lower result for net financials is primarily
explained by losses on commercial balances in non-hedged currencies.
The effective tax rate for 2008 was 24.0%, an increase from 22.3% in
2007, when the effective tax rate was positively impacted by the
non-recurring tax-exempt income from the divestment of Novo Nordisk's
ownership of Dako's business activities as well as from the
non-recurring effect from the re-evaluation of the company's deferred
tax liabilities as a consequence of the reduction in the Danish
corporation tax rate to 25%, introduced in 2007.
The realised effective tax rate for 2008 was in line with the
previously communicated expectation of a tax rate of 'around 24%' for
the full year of 2008.
Capital expenditure and free cash flow
Net capital expenditure for property, plant and equipment for 2008
was realised at DKK 1.8 billion compared to DKK 2.3 billion for 2007.
The main investment projects in 2008 were manufacturing expansion of
FlexPen® assembly capacity as well as expansion of the purification
and filling capacity for insulin products. The realised capital
expenditure was slightly higher than the previously communicated
expectation of 'around DKK 1.5 billion'.
Free cash flow for 2008 was realised at DKK 11.0 billion compared to
DKK 9.0 billion for 2007. Novo Nordisk's financial resources at the
end of 2008 were DKK 17.2 billion and higher than the level at the
end of 2007. Included in the financial resources are unutilised
committed credit facilities of approximately DKK 7.5 billion. The
realised cash flow was significantly above the previously
communicated expectation of 'around DKK 9.5 billion' and is primarily
reflecting a stronger operating performance, working capital
improvements and a return of a deposit related to the antidumping
case in Brazil.
Long-term financial targets
Focusing on growth, profitability, financial return and generation of
cash, Novo Nordisk introduced four long-term financial targets in
1996 to balance short- and long-term considerations, thereby ensuring
a focus on shareholder value creation. The targets were subsequently
revised and updated in 2001 and in 2006. By 2008, and despite a
challenging currency exchange rate environment since the last update
of the targets, Novo Nordisk has now reached the performance level
stipulated in the four long-term financial targets and has
consequently revised the target levels. The revision is based on an
assumption of a continuation of the current business environment and
given the current scope of business activities and has been prepared
assuming that currency exchange rates remain at the current level as
outlined in appendix 7.
Ratio Previous targets Result 2008 New targets
Growth in operating profit 15% 38.4% 15%
Operating margin 25% 27.2% 30%
Return on invested capital 30% 37.4% 50%(ROIC)
Cash to earnings (three 70% 97.6% 80%
years' average)
The target level for operating profit growth remains at 15% on
average. The target still allows for deviations in individual years
if necessitated by business opportunities, market conditions or
exchange rate movements.
The target level for operating margin is increased from 25% to 30%.
The key enabling factors are expected to be further productivity
improvements in the manufacturing and administrative areas while at
the same time ensuring investments in both research and development
as well as sales and marketing. It should be noted that the
achievement of the operating margin target may be influenced by
significant changes in market conditions including regulatory
developments, changes in pricing environment, healthcare reforms as
well as exchange rate movements.
The target level for return on invested capital (ROIC) measured post
tax is increased from 30% to 50%. The raised target reflects the
expectation of continued lower growth in invested capital relative to
operating profit as well as a stable effective tax rate.
The target level for the cash-to-earnings ratio is increased from 70%
to 80%, reflecting improved cash conversion ability. As previously,
this target will be pursued looking at the average over a three-year
period. Performance on this ratio may be impacted in individual years
by significant acquisitions, investments or licensing activities.
Outlook 2009
The current expectations for 2009 are summarised in the table below:
Expectations are as reported, if not Current expectations
otherwise stated 29 January 2009
Sales growth
- in local currencies At the level of 10%
- as reported Around 5 percentage points
higher
Operating profit growth At the level of 10%
- in local currencies Around 9 percentage points
- as reported higher
Net financial expense Around DKK 1.6 billion
Effective tax rate Around 24%
Capital expenditure Around DKK 3 billion
Depreciation, amortisation and impairment Around DKK 2.6 billion
losses
Free cash flow At least DKK 9 billion
Novo Nordisk expects sales growth in 2009 at the level of 10%
measured in local currencies. This is based on expectations of
continued market penetration for Novo Nordisk's key strategic
products within diabetes care and biopharmaceuticals as well as
expectations of continued intense competition during 2009. Given the
current level of exchange rates versus Danish kroner, the reported
sales growth is expected to be around 5 percentage points higher than
the growth rate measured in local currencies.
For 2009, operating profit growth measured in local currencies is
expected to be at the level of 10%. The forecast reflects a continued
improvement of the gross margin and increased spending for sales and
distribution relative to sales due to an expected high level of sales
and marketing activities primarily related to the expected approval
and launch of liraglutide and continued global market penetration for
the portfolio of modern insulins. Given the current level of currency
exchange rates versus Danish kroner, the reported operating profit
growth is expected to be around 9 percentage points higher than the
growth rate measured in local currencies.
For 2009, Novo Nordisk expects a net financial expense of around DKK
1.6 billion, reflecting significant foreign exchange hedging losses,
primarily related to the US dollar and the Japanese yen as well as
expected losses related to non-hedged currencies.
The effective tax rate for 2009 is expected to be around 24%.
Capital expenditure is expected to be around DKK 3 billion in 2009.
Expectations for depreciations, amortisation and impairment losses
are around DKK 2.6 billion, and free cash flow is expected to be at
least DKK 9 billion.
All of the above expectations are based on the assumption that the
global economic downturn will not significantly deteriorate the
business environment for Novo Nordisk during 2009. In addition, all
of the above expectations are provided that currency exchange rates,
especially the US dollar, remain at the current level versus the
Danish krone for the rest of 2009 (see appendix 7). Novo Nordisk has
hedged expected net cash flows in relation to US dollars, Japanese
yen, British pounds, Chinese yuan and Canadian dollars and, all other
things being equal, movements in key invoicing currencies will impact
Novo Nordisk's operating profit as outlined in the table below.
Invoicing currency Annual impact on Novo Nordisk's Hedging period
operating profit of a 5% movement (months)
in currency
USD DKK 530 million 15
JPY DKK 150 million 14
GBP DKK 80 million 13
CNY DKK 80 million 15*
CAD DKK 40 million 5
*USD used as proxy for hedging of Novo Nordisk's CNY exposure
The financial impact from foreign exchange hedging is included in
'Net financials'.
Research and development update
Diabetes care
Novo Nordisk has obtained headline data from a one-year extension of
the LEAD(TM) 3 study. The LEAD(TM) 3 study evaluated the efficacy and
safety of two different daily doses of liraglutide compared to the
sulfonylurea glimepiride in the treatment of type 2 diabetes for one
year. The results from the initial year of the study were published
in The Lancet in September 2008. A total of 321 patients out of the
440 patients completing the LEAD(TM) 3 study entered into an
open-label extension in which they were to continue their treatment
for four more years. The one-year extension data showed that two
years of liraglutide monotherapy treatment led to significant and
sustained improvements in glycaemic control and weight loss compared
to once-daily glimepiride monotherapy. At the 1.8 mg dose,
liraglutide lowered HbA1c by 1.1 percentage points versus 0.6
percentage points for glimepiride, a difference which was
statistically significant and in line with the results from the
initial 52 weeks of the study. From an HbA1c baseline of between 8
and 8.5%, around 60% of the patients treated with the 1.8 mg dose of
liraglutide achieved the ADA target of HbA1c level below 7% following
two years of treatment. With regard to weight reduction, the two-year
data showed a difference between patients treated with liraglutide
and glimepiride, respectively, of more than 3 kg after 24 months in
favour of liraglutide. The safety profile of liraglutide was
confirmed in the study.
As announced in November 2008, the US Food and Drug Administration
(FDA) informed Novo Nordisk that the planned Advisory Committee
meeting for liraglutide on 2 March 2009 was rescheduled to 2 April
2009. FDA advisory committees are panels of independent experts who
advise the FDA as they consider regulatory decisions. The advisory
committee meetings are open to the public and are common for major
pharmaceutical drugs under review. Novo Nordisk submitted the New
Drug Application (NDA) to the FDA on 23 May 2008, meaning that an
action letter from the agency to the NDA could be expected on 23
March 2009 following a standard 10-month review period. In September
2008, the agency indicated that it would most likely have to extend
the date of completing its assessment by a couple of months. The FDA
has informed Novo Nordisk that this is still the timeline it is
targeting.
In Europe, the regulatory process for liraglutide is progressing as
planned. Novo Nordisk has submitted answers to questions from The
European Medicines Agency (EMEA) and is heading towards a regulatory
decision from the European Commission by mid-2009.
In October, Novo Nordisk initiated the first of the three trials
constituting the phase 3 programme for liraglutide in obesity and all
patients have now been recruited. The trial investigates the ability
liraglutide to support patients in maintaining weight loss achieved
by a a low calorie diet. One-year data from all three studies in the
phase 3 programme for obesity is now expected to be available before
the end of 2011.
In January 2009, PrandiMet® was launched on the US market. PrandiMet®
is a fixed-dose combination of the fast-acting insulin secretagogue
repaglinide and metformin for the treatment of type 2 diabetes.
PrandiMet® has been approved as an adjunct to diet and exercise to
improve glycaemic control in adults with type 2 diabetes who are
already treated with a meglitinide (such as Prandin®) and metformin
or who have inadequate glycaemic control on a meglitinide alone or
metformin alone.
Biopharmaceuticals
In November 2008, the FDA approved Norditropin® for the treatment of
children with short stature born small for gestational age (SGA) with
no catch-up growth by the age 2-4 years. The approval is part of Novo
Nordisk's strategy to pursue label expansions for Novo Nordisk's
growth hormone product.
In the fourth quarter of 2008, Novo Nordisk filed for marketing
authorisation in Europe of Vagifem® low dose, a topical oestrogen
product for the treatment of postmenopausal symptoms.
Novo Nordisk has recently strengthened its efforts within the area of
inflammation with the establishment of a research site in Seattle,
US. In addition, and as announced in December 2008, Novo Nordisk has
entered into a collaboration agreement with VLST Corporation, a
Seattle-based biotechnology company, to develop therapeutic targets
utilising VLST's technology platform in the fields of autoimmune and
inflammatory disorders. Under this agreement, Novo Nordisk and VLST
will jointly undertake a research programme to identify collaboration
targets and develop product candidates.
Equity
Total equity was DKK 32,979 million at the end of 2008, equal to
65.2% of total assets, compared to 67.4% at the end of 2007. Please
refer to appendix 6 for further elaboration of changes in equity
during 2008. During the fourth quarter of 2008, a total of 1,454,365
B shares were disposed of to employees under the general employee
share programme and to employees who exercised stock options granted
by Novo Nordisk.
Proposed dividend and share repurchase programme
At the Annual General Meeting on 18 March 2009, the Board of
Directors will propose a 33% increase in dividend to DKK 6.00 per
share of DKK 1, corresponding to a pay-out ratio of 37.8%, compared
to 34.9% for the financial year 2007, when adjusted for the impact
from the divestment of Dako's business activities and the AERx®
discontinuation in 2007. No dividend will be paid on the company's
holding of treasury B shares.
During 2008, Novo Nordisk repurchased 15,579,207 B shares at an
average price of DKK 303 per share, equal to a cash value of DKK 4.7
billion. The Board of Directors has approved an increase of DKK 1.0
billion in the ongoing DKK 17.5 billion share repurchase programme,
bringing the total share repurchase programme to DKK 18.5 billion.
Novo Nordisk still expects to finalise the share repurchase programme
before the end of 2009. As a consequence Novo Nordisk expects to
repurchase shares equal to a cash value of DKK 6 billion in 2009. In
2006 and 2007, Novo Nordisk repurchased B shares equal to a cash
value of DKK 7.8 billion in total.
Novo Nordisk will initiate its share repurchase programme in
accordance with the provisions of the European Commission's
regulation no 2273/2003 of 22 December 2003 (The Safe Harbour
Regulation). For that purpose Novo Nordisk has appointed J. P. Morgan
Securities Ltd. as lead manager to execute a part of its share
repurchase programme independently and without influence from Novo
Nordisk. The purpose of the programme is to reduce the company's
share capital. Under the agreement, J. P. Morgan Securities Ltd. will
repurchase shares on behalf of Novo Nordisk for an amount of up to
DKK 3.0 billion during the trading period starting today and ending
on 5 August 2009. A maximum of 159,541 shares can be bought during
one single trading day, equal to 15% of the average daily trading
volume of Novo Nordisk B shares on NASDAQ OMX Copenhagen during the
month of December 2008, and a maximum of 20,580,773 shares in total
can be bought during the trading period. At least once every seven
trading days, Novo Nordisk will issue an announcement in respect of
the transactions made under the repurchase programme.
Employee shares
As communicated in connection with the release of financial results
for the first nine months of 2008, a general employee share program
was implemented in November 2008. In Denmark, approximately 12,000
employees have purchased 1.2 million shares at a price of DKK 150 per
share. Outside Denmark the program is structured as restricted stock
awards with the same level of initial benefit per employee as in
Denmark. Approximately 14,000 employees outside Denmark have been
granted the equivalent of 694,500 shares.
Holding of treasury shares and reduction of share capital
As per 28 January 2009, Novo Nordisk A/S and its wholly-owned
affiliates owned 25,721,095 of its own B shares, corresponding to
4.06% of the total share capital.
In order to maintain capital structure flexibility, the Board of
Directors at the Annual General Meeting in 2009 will also propose a
reduction in the B share capital from DKK 526,512,800 to DKK
512,512,800 by cancelling 14,000,000 B shares of DKK 1 from the
Company's own holdings of B shares at a nominal value of DKK
14,000,000, equal to 2.2% of the total share capital. After
implementation of the share capital reduction, the Company's share
capital will amount to DKK 620,000,000 divided into an A share
capital of DKK 107,487,200 and a B share capital of DKK 512,512,800.
Corporate governance
Remuneration policy for executives
Novo Nordisk's existing remuneration policy, as approved at the
Annual General Meeting in 2008, aims to attract, retain and motivate
members of the Board of Directors and Executive Management of Novo
Nordisk. Remuneration levels are designed to be competitive and to
align the interest of the executives with those of the shareholders.
Long-term share-based incentive programme for senior management
As from 2004, members of Novo Nordisk's Executive Management
(currently five) and the other members of the Senior Management Board
(currently 24) have participated in a performance-based incentive
programme where a proportion of the calculated shareholder value
creation has been allocated to a joint pool for the participants. For
members of Executive Management and the other members of the Senior
Management Board the joint pool operates with a yearly maximum
allocation per participant equal to eight months' fixed base salary
plus pension contribution. Once the joint pool has been approved by
the Board of Directors the total cash amount is converted into Novo
Nordisk A/S B shares at market price. The shares in the joint pool
are locked up for a three-year period before they potentially may be
transferred to the participants.
For 2005, 232,026 shares were allocated to the joint pool and the
market value of the scheme, corresponding to DKK 35.5 million, was
expensed in 2005. The number of shares in the 2005 joint pool has not
been reduced as the financial performance in the subsequent years
(2006-2008) reached specified threshold levels. Hence, the original
number of shares allocated to the joint pool will, according to the
principles of the scheme, be transferred to 23 current and former
members of senior management immediately after the announcement of
the full-year 2008 financial results on 29 January 2009.
For 2008 and based on an assessment of the economic value generated
in 2008, as well as the performance of the R&D portfolio and key
sustainability projects, the Board of Directors on 28 January 2009
approved the establishment of a joint pool for the financial year of
2008 by allocating a total of 171,492 Novo Nordisk B shares,
corresponding to a cash value of DKK 55 million. This allocation
amounts to eight months of fixed base salary and pension on average
per participant. This amount was expensed in 2008.
As the long-term share-based incentive programme is evaluated by the
Board of Directors to have worked successfully in 2008, it is planned
to continue in 2009 with an unchanged structure.
Long-term share-based incentive programme for corporate vice
presidents and vice presidents
As from 2007, a number of key employees below top-level management
also participate in a share-based programme with similar performance
criteria as the programme for the members of Executive Management and
the other members of the Senior Management Board. The share-based
incentive programme for key employees will, as is the case for the
programme for Executive Management and the other members of the
Senior Management Board, be based on an annual calculation of
shareholder value creation compared to the planned performance for
the year. 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.
Based on an assessment of the economic value generated in 2008 as
well as the performance of the R&D portfolio and key sustainability
projects, the Board of Directors on 28 January 2009 approved the
establishment of a pool for 2008 by allocating a total of 570,390
Novo Nordisk B shares, corresponding to a cash value of DKK 181
million. This allocation amounts to four months of fixed base salary
on average per participant. The number of participants for 2008 is
approximately 550. The cash value of the allocation will be amortised
over four years.
Compliance with Sarbanes-Oxley requirements
In 2008, Novo Nordisk was, as was the case in 2007, compliant with
the US Sarbanes-Oxley Act section 404 that requires detailed
documentation of how financial reporting processes, systems and
controls are designed and operating. Management's conclusion and the
external auditor's certification of the 2008 compliance are included
in the Form 20-F, which Novo Nordisk as a listed company on the New
York Stock Exchange is required to file with the US Securities and
Exchange Commission (SEC). The Form 20-F for 2008 is expected to be
filed in mid-February 2009.
Sustainability issues update
'Unite to Change Diabetes' Leadership Forum in Moscow
The international Forum 'Unite to Change Diabetes' in Moscow, hosted
by the Russian Diabetes Federation and in partnership with Novo
Nordisk, brought together over 300 participants, including medical
professionals, policymakers, patient groups and media from all
regions of the Russian Federation and CIS countries. Its aim was to
examine the current condition of diabetes in Russia and how well the
healthcare system is meeting the growing challenge of diabetes. Key
points for discussion were primary prevention of type 2 diabetes,
improving the effectiveness of diagnosis and effective treatment to
minimise or delay the onset of complications.
In the spring of 2009, Novo Nordisk will publish a briefing book,
presenting the situation of diabetes care in Russia today,
achievements and challenges, along with conclusions and
recommendations generated by the Forum. Former Secretary-General of
the United Nations Kofi Annan addressed the Forum, which was the
second in a series of international diabetes leadership forums,
initiated by Novo Nordisk.
Free insulin and access to diabetes care for children in the world's
poorest countries
In December, Novo Nordisk announced a five-year plan to provide
diabetes care, including free insulin, to 10,000 children in some of
the world's poorest countries. The programme, 'Changing the Future
for Children with Diabetes', begins in 2009 with an initial roll-out
in Uganda, Tanzania, Guinea-Conakry and the Democratic Republic of
Congo. It is estimated that some 38,000 African children aged 0-14
have type 1 diabetes.
A series of satellite centres will be set up around existing
hospitals and clinics to offer free insulin and treatment as well as
diagnosis, registration, patient education and healthcare training.
The programme builds on an approach begun in 2006, which referred
children with type 1 diabetes to a Novo Nordisk-funded diabetes
clinic in Dar es Salaam, Tanzania. At the clinic, mortality among
children has decreased dramatically. A diabetes nurse is assigned to
work with children and their families, which has also reduced
emergency admissions to the clinic. The programme builds on
partnerships with the World Diabetes Foundation and local partners
such as national diabetes associations and Ministries of Health.
Legal issues update
US hormone therapy litigation
As of 28 January 2009, Novo Nordisk Inc., as well as the majority of
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 50 individuals who allege use
of a Novo Nordisk hormone therapy product. These products (Activella®
and Vagifem®) have been sold and marketed in the US since 2000. Until
July 2003, the products were sold and marketed exclusively in the US
by Pharmacia & Upjohn Company (now Pfizer Inc.). A further 51
individuals currently allege, in relation to similar lawsuits against
Pfizer Inc., that they have also used a Novo Nordisk hormone therapy
product. Novo Nordisk does not currently have any court trials
scheduled for 2009. Novo Nordisk does not expect the pending claims
to impact Novo Nordisk's financial outlook.
Additional information on contingent liabilities is available in the
financial notes in the Annual Report 2008, which is expected to be
available on Novo Nordisk's website on 2 February 2009.
Financial calendar
2 February 2009 PDF version of the Annual Report 2008
available on novonordisk.com
16 February 2009 Printed version of the Annual Report 2008
18 March 2009 Annual General Meeting
18 March 2009 Shareholders' Meeting (Information
meeting in Danish)
30 April 2009 Financial statement for the first
quarter of 2009
6 August 2009 Financial statement for the first six
months of 2009
29 October 2009 Financial statement for the first nine
months of 2009
2 February 2010 Financial statement for 2009
Conference call details
At 13.00 CET today, corresponding to 7.00 am New York time, a
conference call will be held. Investors will be able to listen in via
a link on novonordisk.com, which can be found under 'Investors -
Download centre'. Presentation material for the conference call will
be made available approximately one hour before on the same page.
Forward-looking statement
Novo Nordisk's reports filed with or furnished to the US Securities
and Exchange Commission (SEC), including this document as well as the
company's Annual Report 2008 and Form 20-F, both expected to be filed
with the SEC in February 2009, and written information released, or
oral statements made, to the public in the future by or on behalf of
Novo Nordisk, may contain forward-looking statements.
Words such as 'believe', 'expect', 'may', 'will', 'plan', 'strategy',
'prospect', 'foresee', 'estimate', 'project', 'anticipate', 'can',
'intend', 'target' and other words and terms of similar meaning in
connection with any discussion of future operating or financial
performance identify forward-looking statements. Examples of such
forward-looking statements include, but are not limited to
* statements of plans, objectives or goals for future
operations, including those related to Novo Nordisk's products,
product research, product development, product introductions and
product approvals as well as cooperations in relation thereto,
* statements containing projections or targets for revenues,
income (or loss), earnings per share, capital expenditures,
dividends, capital structure or other financial ratios,
* 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 'Outlook 2009', 'Long-term financial targets'
'Research and development update' and 'Legal issues update'.
These statements are based on current plans, estimates and
projections. By their very nature, forward-looking statements involve
inherent risks and uncertainties, both general and specific. Novo
Nordisk cautions that a number of important factors, including those
described in this document, could cause actual results to differ
materially from those contemplated in any forward-looking statements.
Factors that may affect future results include, but are not limited
to, global as well as local political and economic conditions,
including interest rate and currency exchange rate fluctuations,
delay or failure of projects related to research and/or development,
unplanned loss of patents, interruptions of supplies and production,
product recall, unexpected contract breaches or terminations,
government-mandated or market-driven price decreases for Novo
Nordisk's products, introduction of competing products, reliance on
information technology, Novo Nordisk's ability to successfully market
current and new products, exposure to product liability and legal
proceedings and investigations, changes in governmental laws and
related interpretation thereof, including on reimbursement,
intellectual property protection and regulatory controls on testing,
approval, manufacturing and marketing, perceived or actual failure to
adhere to ethical marketing practices, investments in and
divestitures of domestic and foreign companies, unexpected growth in
costs and expenses, failure to recruit and retain the right employees
and failure to maintain a culture of compliance.
Please also refer to the overview of risk factors in 'Managing Risks'
on pp 24-25 of the Annual Report 2008 available on the company's
website (novonordisk.com), as of 2 February 2009.
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.
Management statement
The Board of Directors and Executive Management have reviewed and
approved the report and accounts of Novo Nordisk A/S for 2008.
The consolidated financial statements for 2008, which have also been
approved by the Board of Directors and Executive Management, have
been 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 additional Danish disclosure requirements applying to
listed companies' financial statements.
The enclosed report and accounts have been prepared in accordance
with the accounting policies as applied in the consolidated financial
statements for 2008 and Danish disclosure requirements applying to
listed companies' reports and accounts.
In our opinion the accounting policies used are appropriate and the
overall presentation of the report and accounts is adequate.
Furthermore, in our opinion the management review includes a fair
review of the development and performance of the business and the
financial position of the group, together with a description of the
material risks and uncertainties the group faces.
Bagsværd 29 January 2009
Executive Management:
Lars Rebien Sørensen Jesper Brandgaard
President and CEO CFO
Lise Kingo Kåre Schultz Mads Krogsgaard Thomsen
Board of Directors:
Sten Scheibye Göran A Ando
Chairman Vice chairman
Kurt Briner Henrik Gürtler Johnny Henriksen
Pamela Kirby Anne Marie Kverneland Kurt Anker Nielsen
Søren Thuesen
Pedersen Stig Strøbæk Jørgen Wedel
Contacts for further information
Media: Investors:
Mike Rulis Mads Veggerby Lausten
Tel: (+45) 4442 3573 Tel: (+45) 4443 7919
E-mail: mike@novonordisk.com E-mail: mlau@novonordisk.com
Hans Rommer
Tel: (+45) 4442 4765
In North America: E-mail: hrmm@novonordisk.com
Sean Clements
Tel: (+1) 609 514 8316 Kasper Roseeuw Poulsen
E-mail: secl@novonordisk.com Tel: (+45) 4442 4471
E-mail: krop@novonordisk.com
Further information on Novo Nordisk is available on the company's
internet homepage at the address: novonordisk.com
Appendix 1: Quarterly numbers in DKK
(Amounts
in
DKK
million,
except
number of
employees,
earnings
per
share
and
number of
shares
outstan-
ding).
%
change
Q4
2008
2008 2007 vs
Q4
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2007
Sales 12,583 11,246 11,110 10,614 10,946 10,504 10,563 9,818 15%
Gross
profit 10,047 8,640 8,556 8,201 8,345 7,990 8,205 7,498 20%
Gross 79.8% 76.8% 77.0% 77.3% 76.2% 76.1% 77.7% 76.4%
margin
Sales and
Distri-
bution
costs 3,558 3,155 3,178 2,975 3,220 2,993 3,110 3,048 10%
Percent 28.3% 28.1% 28.6% 28.0% 29.4% 28.5% 29.4% 31.0%
of sales
Research
and
devel-
opment
costs 2,439 1,579 1,980 1,858 3,413 1,724 1,754 1,647 -29%
- Hereof
costs
related
to AERx
®* - 50 (155) (220) (1,325) - - -
Percent 19.4% 14.0% 17.8% 17.5% 31.2% 16.4% 16.6% 16.8%
of sales
Percent
of sales
(excl
AERx®)
** 19.4% 14.5% 16.4% 15.4% 19.1% 16.4% 16.6% 16.8%
Admini-
strative
expen-
ses 749 633 626 627 677 623 594 614 11%
Percent 6.0% 5.6% 5.6% 5.9% 6.2% 5.9% 5.6% 6.3%
of sales
Licence
fees and
other
operating
income
(net) 73 51 74 88 92 31 60 138 -21%
Opera-
ting
Profit 3,374 3,324 2,846 2,829 1,127 2,681 2,807 2,327 199%
Opera- 26.8% 29.6% 25.6% 26.7% 10.3% 25.5% 26.6% 23.7%
ting
Margin
Opera-
ting
profit
(excl
AERx®)
** 3,374 3,274 3,001 3,049 2,452 2,681 2,807 2,327 38%
Opera-
ting
margin
(excl
AERx)
®** 26.8% 29.1% 27.0% 28.7% 22.4% 25.5% 26.6% 23.7%
Share of
profit/
(loss) in
asso-
ciated
compa-
nies 4 (58) (3) (67) - (57) 1,350 (60) -
Finan-
cial
income (82) 306 429 474 375 322 297 309 -122%
Finan-
cial
expen-
ses 226 66 21 368 155 90 60 202 46%
Profit
before
income
taxes 3,070 3,506 3,251 2,868 1,347 2,856 4,394 2,374 128%
Net
Profit 2,330 2,664 2,471 2,180 977 2,184 3,652 1,709 138%
Depre-
ciation,
amor-
tisation
and
impair-
ment
losses 752 560 567 563 1,396 586 516 509 -46%
Depre-
ciation,
amor-
tisation,
etc
(excl
AERx®)
** 699 560 567 563 526 586 516 509 33%
Capital
Expen-
diture 764 448 328 214 719 597 508 444 6%
Cash flow
from
ope-
rating
activi-
ties 3,204 3,673 2,916 3,070 2,498 3,500 1,438 2,551 28%
Free
cash
flow 2,421 3,210 2,589 2,795 3,198 2,888 826 2,100 -24%
Equi-
ty 32,979 32,173 33,046 31,251 32,182 33,161 33,475 29,676 2%
Total
as-
sets 50,603 48,990 48,478 47,534 47,731 48,423 48,300 44,742 6%
Equity 65.2% 65.7% 68.2% 65.7% 67.4% 68.5% 69.3% 66.3%
ratio
Full-time
employ-
ees
at the end
of the
pe-
riod 26,575 26,360 26,060 25,765 25,516 25,206 24,729 24,045 4%
Basic
ear-
nings
per share
(in DKK) 3.82 4.34 3.99 3.51 1.56 3.46 5.75 2.69 145%
Diluted
ear-
nings
per share
(in DKK) 3.80 4.30 3.96 3.48 1.55 3.43 5.71 2.68 145%
Average
number
of shares
outstand-
ing
(million)- 609.3 614.2 618.6 620.9 624.4 632.0 635.8 635.0 -2%
Average
number
of shares
outstand-
ing
incl
dilutive
effect of
options
'in the
money'
(mil-
lion) 614.4 618.6 623.5 626.3 629.6 636.4 640.2 639.4 -2%
Sales by
business
segments:
Mo-
dern
insulins
(insulin
analo-
gues) 5,028 4,365 4,103 3,821 3,911 3,568 3,464 3,065 29%
Hu-
man
insu-
lins 3,093 2,806 2,966 2,939 3,116 3,098 3,222 3,136 -1%
Insulin-
related
sales 477 464 460 443 448 445 437 419 6%
Oral
anti-
diabetic
products
(OAD) 602 671 478 640 512 585 529 523 18%
Dia-
betes
care
total 9,200 8,306 8,007 7,843 7,987 7,696 7,652 7,143 15%
Novo-
Seven® 1,774 1,534 1,648 1,440 1,519 1,427 1,508 1,411 17%
Growth
Hor-
mone
the-
rapy 1,060 941 986 878 925 878 924 784 15%
Hor-
mone
replace-
ment
the-
rapy 442 394 391 385 437 414 411 406 1%
Ot-
her
pro-
ducts 107 71 78 68 78 89 68 74 37%
Bio-
pharma-
ceuti-
cals
total 3,383 2,940 3,103 2,771 2,959 2,808 2,911 2,675 14%
Sales
by
geo-
graphic
seg-
ments:
Eu-
rope 4,453 4,305 4,400 4,061 4,348 4,036 4,035 3,931 2%
North
Ame-
rica 4,478 3,759 3,467 3,450 3,608 3,500 3,424 3,214 24%
Interna-
tional
Opera-
tions 2,186 2,074 2,069 2,096 1,776 1,870 1,953 1,696 23%
Japan& Oce-
ania 1,466 1,108 1,174 1,007 1,214 1,098 1,151 977 21%
Segment
ope-
rating
pro-
fit:
Dia- -
betes
care 2,424 1,963 1,510 1,672 (75) 1,487 1,600 1,247
Dia-
betes
care
(excl
AERx®)
** 2,424 1,913 1,665 1,892 1,250 1,487 1,600 1,247 94%
Bio- -21%
pharma-
ceuti-
cals 950 1,361 1,336 1,157 1,202 1,194 1,207 1,080
*) Including costs related to the discontinuation of
all pulmonary diabetes projects.
**) Excluding costs related to the
discontinuation of all pulmonary
diabetes projects.
Appendix 2: Quarterly numbers in EUR
(Amounts in EUR million, except number of employees,
earnings per share and number of shares outstanding).
Key figures are translated into EUR as supplementary information
- the translation is based on average exchange rate
for income statement and exchange rate at the balance sheet
date for balance sheet items.
%
change
Q4
2008
2008 2007 vs
Q4
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2007
Sales 1,688 1,508 1,489 1,424 1,468 1,411 1,418 1,317 15%
Gross
profit 1,348 1,159 1,147 1,100 1,119 1,074 1,101 1,006 20%
Gross 79.8% 76.8% 77.0% 77.3% 76.2% 76.1% 77.7% 76.4%
margin
Sales and
distribution
costs 478 423 426 399 432 402 417 409 10%
Percent 28.3% 28.1% 28.6% 28.0% 29.4% 28.5% 29.4% 31.0%
of sales
Research
and
development
costs 327 211 266 249 458 232 235 221 -29%
- Hereofcosts
related to
AERx®* - 7 (20) (30) (178) - - -
Percent 19.4% 14.0% 17.8% 17.5% 31.2% 16.4% 16.6% 16.8%
of sales
Percent
of sales
(excl. AERx®)
** 19.4% 14.4% 16.4% 15.4% 19.1% 16.4% 16.6% 16.8%
Admini-
strative
expenses 100 85 84 84 91 84 80 82 11%
Percent 6.0% 5.6% 5.6% 5.9% 6.2% 5.9% 5.6% 6.3%
of sales
Licence
fees and
other
operating
income (net) 10 7 10 12 12 4 8 19 -21%
Operating
profit 453 446 381 380 151 360 377 312 199%
Operating 26.8% 29.6% 25.6% 26.7% 10.3% 25.5% 26.6% 23.7%
margin
Operating
profit
(excl AERx®)
** 453 439 401 410 329 360 377 312 38%
Operating
margin
(excl AERx®)
** 26.8% 29.1% 27.0% 28.7% 22.4% 25.5% 26.6% 23.7%
Share of
profit/(loss)
in associated
companies 2 (8) - (9) - (7) 181 (8) -
Financial
income 8 41 57 64 49 44 40 41 -122%
Financial
expenses 50 9 3 49 21 12 8 27 46%
Profit before
income taxes 412 470 436 385 180 384 589 319 128%
Net profit 313 357 332 292 131 294 490 229 138%
Depreciation,
amortisation
and
impairment
losses 101 75 76 76 188 78 70 68 -46%
Depreciation,
amortisation,
etc (excl
AERx®)
** 102 75 76 76 71 78 70 68 33%
Capital
expen-
diture 102 60 44 29 96 80 68 60 6%
Cash flow
from
operating
activeties 429 492 391 412 335 470 193 342 28%Free cash
flow 325 430 347 375 430 387 111 282 -24%
Equity 4,426 4,312 4,431 4,191 4,316 4,449 4,498 3,983 2%
Total assets 6,792 6,566 6,500 6,375 6,401 6,496 6,490 6,005 6%
Equity ratio 65.2% 65.7% 68.2% 65.7% 67.4% 68.5% 69.3% 66.3%
Fulltime
employees
at the end
of the period 26,575 26,360 26,060 25,765 25,516 25,206 24,729 24,045 4%
Basic
earnings
per share (in
EUR) 0.51 0.58 0.54 0.47 0.21 0.47 0.77 0.36 145%
Diluted
earnings
per share
(in EUR) 0.51 0.57 0.53 0.47 0.21 0.47 0.76 0.36 145%
Average
number
of shares
outstanding
(million) 609.3 614.2 618.6 620.9 624.4 632.0 635.8 635.0 -2%
Average
number
of shares
outstanding
incl
dilutive
effect of
options 'in
the
money'
(million) 614.4 618.6 623.5 626.3 629.6 636.4 640.2 639.4 -2%
Sales by
business
segments:
Modern
insulins
(insulin
analogues) 675 585 550 513 525 479 465 411 29%
Human
insulins 415 376 398 394 418 416 432 421 -1%
Insulin-
related sales 64 62 62 59 60 60 59 56 6%
Oral anti-
diabetic
products
(OAD) 81 90 64 86 68 79 71 70 18%
Diabetes
Care Total 1,235 1,113 1,074 1,052 1,071 1,034 1,027 958 15%
NovoSeven® 238 206 221 193 204 191 203 189 17%
Growth
hormone
therapy 142 126 132 118 124 118 124 105 15%
Hormone
replacement
therapy 59 53 52 52 59 55 56 54 1%
Other
products 14 9 11 9 10 12 9 10 37%
Biopharma-
ceuticals
total 453 394 416 372 397 376 392 358 14%
Sales by
geographic
segments:
Europe 597 577 590 545 583 542 542 527 2%
North
America 601 504 465 463 484 470 460 431 24%
International
Operations 293 278 278 281 238 251 262 228 23%
Japan &
Oceania 197 149 157 135 163 147 155 131 21%
Segment
operating
profit:
Diabetes
care 325 263 203 224 (10) 200 215 167 -
Diabetes
care (excl.
AERx®)** 325 256 223 254 168 200 215 167 94%
Biopharma-
ceuticals 127 183 179 155 162 160 162 145 -21%
*) Including costs related to the discontinuation of all
pulmonary diabetes projects.
**) Excluding costs related to the discontinuation of all
pulmonary diabetes projects.
Appendix 3: Income statement
12M 12M
DKK million 2008 2007
Sales 45,553 41,831
Cost of goods sold 10,109 9,793
Gross profit 35,444 32,038
Sales and
distribution costs 12,866 12,371
Research and
development
costs 7,856 8,538
- Hereof costs
related to AERx® (325) (1,325)
Administrative
expenses 2,635 2,508
Licence fees
and other
operating
income (net) 286 321
Operating
profit 12,373 8,942
Operating
profit
(excl AERx®)* 12,698 10,267
Share of
profit/(loss)
in associated
companies (124) 1,233
Financial
income 1,127 1,303
Financial
expenses 681 507
Profit before
income taxes 12,695 10,971
Income
taxes 3,050 2,449
NET PROFIT 9,645 8,522
Basic earnings
per share (DKK) 15.66 13.49
Diluted
earnings per
share (DKK) 15.54 13.39
Segment
sales:
Diabetes
care 33,356 30,478 Biopharma-
ceuticals 12,197 11,353
Segment
operating
profit:
Diabetes
care 7,569 4,259
Operating 22.7% 14.0%
margin
Diabetes
care
(excl AERx®)* 7,894 5,584
Operating margin 23.7% 18.3%
excl AERx®)*
Biopharma-
ceuticals 4,804 4,683
Operating margin 39.4% 41.2%
*) Excluding costs
related to
discontinuation of
all pulmonary
diabetes projects
Appendix 4: Balance sheet
DKK million 31 Dec 2008 31 Dec 2007
ASSETS
Intangible assets 788 671
Property, plant
and equipment 18,639 19,605
Investments in
associated companies 222 500
Deferred income
tax assets 1,696 2,522
Other financial
assets 194 131
TOTAL LONG-TERM
ASSETS 21,539 23,429
Inventories 9,611 9,020
Trade receivables 6,581 6,092
Tax receivables 1,010 319
Other receivables 1,704 1,493
Marketable securities
and financial
derivatives 1,377 2,555
Cash at bank
and in hand 8,781 4,823
TOTAL CURRENT
ASSETS 29,064 24,302
TOTAL ASSETS 50,603 47,731
EQUITY AND
LIABILITIES
Share capital 634 647
Treasury shares (26) (26)
Retained earnings 33,433 30,661
Other comprehensive
income (1,062) 900
TOTAL EQUITY 32,979 32,182
Long-term debt 980 961
Deferred income
tax liabilities 2,404 2,346
Provision for
pensions 419 362
Other provisions 863 1,239
Total long-term
liabilities 4,666 4,908
Short-term debt
and financial
derivatives 1,334 405
Trade payables 2,281 1,947
Tax payables 567 929
Other liabilities 5,853 4,959
Other provisions 2,923 2,401
Total current
liabilities 12,958 10,641
TOTAL LIABILITIES 17,624 15,549
TOTAL EQUITY
AND LIABILITIES 50,603 47,731
Appendix 5: Cash flow statement
DKK million 2008 2007
Net profit 9,645 8,522
Adjustment for
non-cash items:
Income taxes 3,050 2,449
Depreciation,
amortisation and
impairment losses 2,442 3,007
Interest income
and interest
expenses (385) (16)
Other
adjustment for
non-cash items 1,436 (309)
Income taxes
paid (3,172) (2,607)
Interest received
and interest paid
(net) 409 (29)
Cash flow
before change
in working
capital 13,425 11,017
Change in
working capital:
(Increase)/decrease
in trade
receivables and
other receivables (1,110) (702)
(Increase)/decrease
in inventories (651) (617)
Increase/(decrease)
in trade payables
and other liabilities 1,199 289
Cash flow from
operating
activities 12,863 9,987
Investments:
Acquisition of
subsidiaries and
business units - (59)
Purchase of
intangible assets
and long-term
financial assets (264) (118)
Sale of property,
plant and
equipment 18 40
Purchase of
property, plant
and equipment (1,772) (2,308)
Net change in
marketable
securities
(maturity exceeding
three months) 466 (541)
Dividend received 170 1,470
Net cash used in
investing
activities (1,382) (1,516)
Financing:
Repayment of
long-term debt (153) (18)
Purchase of
treasury shares (4,717) (4,835)
Sale of treasury
shares 295 241
Dividends paid (2,795) (2,221)
Cash flow from
financing
activities (7,370) (6,833)
NET CASH FLOW 4,111 1,638
Unrealised gain/
(loss) on exchange
rates and
marketable
securities
included in cash and
cash equivalents (2) (6)
Net change in
cash and cash
equivalents 4,109 1,632
Cash and cash
equivalents at
the beginning of
the year 4,617 2,985
Cash and cash
equivalents at
the end of the
year 8,726 4,617
Bonds with original
term to maturity
exceeding
three months 997 1,486
Undrawn committed
credit facilities 7,451 7,457
FINANCIAL
RESOURCES AT
THE END OF THE
YEAR 17,174 13,560
Cash flow from
operating activities 12,863 9,987
+ Net cash used
in investing
activities (1,382) (1,516)
- Net change in
marketable
securities
(maturity exceeding
three months) 466 (541)
FREE CASH FLOW 11,015 9,012
Appendix 6: Statement of changes in equity
Other
reserves
Deferred
gain/
Exchange loss on
Share rate cash Other
Share Treasury premium Retained adjust- flow adjust-
DKK million capital shares account earnings ments hedges ments Total
2008
Balance at
the
beginning
of the year 647 (26) - 30,661 209 678 13 32,182
Net profit
for the year 9,645 9,645
Deferred
(gain)/
loss on cash
flow hedges
at the
beginning
of the year
recognised
in the
Income
statement
for
the year (615) (615)
Fair value
adjustments
on financial
instruments (940) (940)
Exchange
rate
adjustment
of
investments
in
subsidiaries (473) (473)
Fair value
adjustments
on financial
assets
available
for sale (9) (9)
Novo Nordisk
share of
equity
recognised
by
associated
companies 39 39
Other
adjustments (45) (45)
Tax
adjustments 8 18 55 81
Net income
recognised
directly in
equity for
the year - - - - (465) (1,537) 40 (1,962)
Total
recognised
income and
expenses for
the
year - - 9,645 (465) (1,537) 40 7,683
Share-based
payment 331 331
Purchase of
treasury
shares (16) (4,701) (4,717)
Sale of
treasury
shares 3 292 295
Reduction of
the B
share
capital (13) 13 -
Dividends (2,795) (2,795)
Balance at
the end
of the year 634 (26) - 33,433 (256) (859) 53 32,979
At the end of the year proposed dividends (not yeat declared)
of DKK 3,650 million (6.00 DKK per share) are included in Retained earnings.
No dividend is declared on treasury shares.
Other
reserves
Deferred
gain/
Exchange loss on
Share rate cash Other
DKK Share Treasury premium Retained adjust- flow adjust-
million capital shares account earnings ments hedges ments Total
2007
Balance at
the be-
ginning
of the year 674 (39) - 28,810 156 419 102 30,122
Net profit
for the year 8,522 8,522
Deferred
(gain)/loss
on cash flow
hedges
at the
beginning
of the year
recognised
in the
Income
statement
for
the year (363) (363)
Fair value
adjustments
on financial
instruments 634 634
Exchange
rate
adjustment
of
investments
in
subsidiaries 53 53
Fair value
adjustments
on financial
assets
available
for sale 12 12
Novo Nordisk
share of
equity
recognised
by
associated
companies (41) (41)
Other
adjustments 21 21
Tax
adjustments - (12) (81) (93)
Net income
recognised
directly in
equity for
the year - - - - 53 259 (89) 223
Total
recognised
income and
expenses for
the
year - - 8,522 53 259 (89) 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) - 30,661 209 678 13 32,182
At the end of the year proposed dividends (declared in 2008)
of DKK 2,795 million (4.50 DKK per share) are included in Retained earnings.
No dividend is declared on treasury
shares.
Appendix 7: Exchange rates for key currencies
+-------------------------------------------------------------------+
| DKK per | 2008 average | YTD 2009 average | Current exchange |
| 100 | exchange rates | exchange rates as | rates as of 27 |
| | | of 27 January 2009 | January 2009 |
|---------+----------------+---------------------+------------------|
| USD | 509 | 562 | 566 |
|---------+----------------+---------------------+------------------|
| JPY | 4.96 | 6.21 | 6.34 |
|---------+----------------+---------------------+------------------|
| GBP | 938 | 811 | 797 |
|---------+----------------+---------------------+------------------|
| CNY | 73 | 82 | 83 |
|---------+----------------+---------------------+------------------|
| CAD | 479 | 458 | 460 |
+-------------------------------------------------------------------+
Company Announcement no 2 / 2009
