Financial statement for the period 1 January 2008 to 30 June 2008
Novo Nordisk increased first half-year sales by 13% in local
currencies and improved underlying operating profit by around 25%
* Novo Nordisk increased sales by 13% in local currencies
and by 7% in Danish kroner due to a significant negative currency
development.
o Sales of modern insulins increased by 30% (21% in Danish
kroner).
o Sales of NovoSeven® increased by 14% (6% in Danish kroner).
o Sales of Norditropin® increased by 15% (9% in Danish
kroner).
o Sales in North America increased by 19% (4% in Danish
kroner).
o Sales in International Operations increased by 23% (14% in
Danish kroner).
* Gross margin improved by 1.3 percentage points in local
currencies and by 0.1 percentage point in Danish kroner to 77.1% in
the first six months of 2008, reflecting continued productivity
improvements and a negative currency impact of around 1.2
percentage points.
* Operating profit increased by 11% to DKK 5,675 million.
Adjusted for the approximately 14% impact from currencies,
underlying operating profit increased by around 25%.
* Net profit decreased by 13% to DKK 4,651 million due to
the non-recurring income of DKK 1.4 billion booked in the second
quarter of 2007 from Novo Nordisk's divestment of Dako's business
activities. Excluding the effect from the non-recurring income of
DKK 1.4 billion, net profit increased by 15%.
* Liraglutide, the once-daily human GLP-1 analogue, has been
filed for regulatory approval in the US, Europe and Japan. The
competitive profile of liraglutide was reinforced with headline
results from a phase 3b clinical study communicated in June in
which liraglutide provided statistically significantly better blood
glucose control for people with type 2 diabetes compared to the
currently marketed GLP-1 product, exenatide.
* For 2008, the expectation for reported operating profit
growth is increased to 22-25%, and the expectations for growth in
underlying operating profit, ie adjusted for the impact from
currencies and non-recurring items, is likewise increased to around
25%.
Lars Rebien Sørensen, president and CEO, said: "We are very pleased
with the performance in the first half of 2008 with robust sales
growth for modern insulins, NovoSeven® and Norditropin®. The
submissions for regulatory approval of liraglutide in the US, Europe
and Japan are major achievements and we are enthusiastic about the
prospect of bringing liraglutide to market in all three regions."
Financial statement for the first six months of 2008
This interim report has been prepared in accordance with
International Financial Reporting Standards (IFRS). The accounting
policies used in the interim report are consistent with those used in
the Annual Report 2007. The interim report has not been audited.
Amounts in DKK million, except average number of shares outstanding,
earnings per share and full-time employees.
% change 6M
2007 to 6M
Income statement 6M 2008 6M 2007 2008
Sales 21,724 20,381 7%
Gross profit 16,757 15,703 7%
Gross margin 77.1% 77.0%
Sales and distribution costs 6,153 6,158 0%
Percent of sales 28.3% 30.2%
Research and development 3,838 3,401 13%
costs
- hereof costs related to
discontinuation of pulmonary
diabetes projects 375 - -
Percent of sales 17.7% 16.7%
Administrative expenses 1,253 1,208 4%
Percent of sales 5.8% 5.9%
Licence fees and other 162 198 (18%)
operating income
Operating profit 5,675 5,134 11%
Operating margin 26.1% 25.2%
Net financials 444 1,634 (73%)
Profit before tax 6,119 6,768 (10%)
Net profit 4,651 5,361 (13%)
Net profit margin 21.4% 26.3%
Other key numbers
Depreciation, amortisation 1,130 1,025 10%
and impairment losses
Capital expenditure 542 952 (43%)
Cash flow from operating 5,986 3,989 50%
activities
Free cash flow 5,384 2,926 84%
Total assets 48,478 48,300 0%
Equity 33,046 33,475 (1%)
Equity ratio 68.2% 69.3%
Average number of shares
outstanding (million) -
diluted 624.9 639.8 (2%)
Diluted earnings per share 7.44 8.38 (11%)
(in DKK)
Full-time employees at the 26,060 24,729 5%
end of the period
Sales development by segments
Sales increased by 13% measured in local currencies and by 7% in
Danish kroner. While growth was realised within both diabetes care
and biopharmaceuticals, the primary growth contribution originated
from the modern insulins.
Sales Growth Growth Share of
6M 2008 as in local growth
DKK reported currencies in local
million currencies
The diabetes care segment
Modern insulins 7,924 21% 30% 71%
Human insulins 5,905 (7%) (3%) (6%)
Insulin-related products 903 5% 10% 3%
Oral antidiabetic products 1,118 6% 14% 6%
Diabetes care - total 15,850 7% 14% 74%
The biopharmaceuticals segment
NovoSeven® 3,088 6% 14% 16%
Growth hormone therapy 1,864 9% 15% 9%
Other products 922 (4%) 3% 1%
Biopharmaceuticals - total 5,874 5% 13% 26%
Total sales 21,724 7% 13% 100%
Sales development by regions
In the first six months of 2008, sales growth was realised in all
regions. The main contributors to growth were North America and
International Operations providing 46% and 31% respectively of the
total sales growth measured in local currencies. Europe contributed
21% and Japan & Oceania 2% of the sales growth. Sales in
International Operations in the first six months of 2008 were
positively impacted by the timing of tender sales compared to the
first six months of 2007.
Diabetes care
Sales of diabetes care products increased by 14% measured in local
currencies and by 7% in Danish kroner to DKK 15,850 million compared
to the first six months of 2007.
Modern insulins, human insulins and insulin-related products
Sales of modern insulins, human insulins and insulin-related products
in the first six months of 2008 increased by 14% measured in local
currencies and by 7% in Danish kroner to DKK 14,732 million compared
to the same period last year. All regions contributed to growth
measured in local currencies, 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 now 44%
of the modern insulin market, both measured by volume.
Sales of modern insulins increased by 30% in local currencies and by
21% in Danish kroner to DKK 7,924 million with Levemir® contributing
the highest share of growth and increasing by 72% in local currencies
compared to the first six months of 2007. All regions realised solid
growth rates for the modern insulins with North America and Europe as
the primary contributors to growth. Sales of modern insulins now
constitute 57% of Novo Nordisk's sales of insulin.
In June, NovoMix® reached more than USD 1 billion in sales during the
past 12 months making NovoMix® the second Novo Nordisk modern insulin
to reach blockbuster sales level.
North America
Sales in North America increased by 21% in local currencies in the
first six months of 2008 and by 7% in Danish kroner, reflecting a
solid penetration of the modern insulins Levemir®, NovoLog® and
NovoLog® Mix 70/30. Novo Nordisk maintains its leadership position in
the US insulin market with 42% of the total insulin market and 31% of
the modern insulin market, both measured by volume.
Europe
Sales in Europe increased by 8% in local currencies and by 6%
measured in Danish kroner, reflecting continued progress for the
portfolio of modern insulins. Novo Nordisk holds 56% of the total
insulin market and 51% of the modern insulin market, both measured by
volume, and continues to capture the main share of growth in the
modern insulin market.
International Operations
Sales within International Operations increased by 20% in local
currencies and by 12% in Danish kroner. In the first six months of
2008, sales of modern insulins continued to be a significant
contributor to growth in the region, led by China, Turkey and
Algeria. 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 4% in local currencies and by
3% measured in Danish kroner. The sales development reflects sales
growth for the modern insulins NovoRapid® and NovoRapid Mix® 30 as
well as for Levemir® which was launched in Japan in December 2007.
Levemir® has already reached solid penetration with a current volume
market share of above 15% of the long-acting insulin market in Japan.
Novo Nordisk holds 73% of the total insulin market in Japan and 64%
of the modern insulin market, both measured by volume.
Oral antidiabetic products (NovoNorm®/Prandin®)
In the first six months of 2008, sales of oral antidiabetic products
increased by 14% in local currencies and by 6% in Danish kroner to
DKK 1,118 million compared to the first six months of 2007. This
primarily reflects increased sales in Europe followed by North
America and International Operations.
Biopharmaceuticals
In the first six months of 2008, sales of biopharmaceutical products
increased by 13% measured in local currencies and by 5% measured in
Danish kroner to DKK 5,874 million compared to the first six months
of 2007.
NovoSeven®
Sales of NovoSeven® increased by 14% in local currencies and by 6% in
Danish kroner to DKK 3,088 million compared to the first six months
of 2007. Sales growth for NovoSeven® was primarily realised in
International Operations and in North America. The sales growth for
NovoSeven® 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. Sales of NovoSeven® in International
Operations in the first six months of 2008 were positively impacted
by the timing of tender sales compared to the first six months of
2007.
Growth hormone therapy (Norditropin®)
Sales of Norditropin® (ie growth hormone in a liquid, ready-to-use
formulation) increased by 15% measured in local currencies and by 9%
measured in Danish kroner to DKK 1,864 million. Growth was realised
in all regions with North America as the primary contributor. Novo
Nordisk continues to gain market share in the growth hormone market
and has the second-largest global market share of now 24% measured by
volume.
Other products
Sales of other products within biopharmaceuticals, which
predominantly consist of hormone replacement therapy (HRT)-related
products, increased by 3% in local currencies and decreased by 4% in
Danish kroner to DKK 922 million. This development reflects sales
growth for Vagifem®, a locally administered HRT product, but also
generic competition to Activella®, a continuous combined HRT product,
in the US.
Costs, licence fees and other operating income
The cost of goods sold was DKK 4,967 million in the first six months
of 2008, representing a gross margin of 77.1% compared to 77.0% in
the same period last year. Excluding the impact from currency
developments, primarily reflecting the lower value of the US dollar
and the British pound versus the Danish krone compared to the first
six months of 2007, the gross margin in the first six months of 2008
was 78.3%. This improvement reflects improved production efficiency
and higher average prices in the US.
In the first six months of 2008, total non-production-related costs
increased by 4% to DKK 11,244 million compared to the same period
last year. Sales and distribution costs were largely unchanged,
reflecting the combined effect of a provision related to an
antidumping case in Brazil recorded in the first quarter of 2007, and
increased US costs in the first half of 2008 related to the expanded
sales force. Research and development costs increased by 13%
reflecting an increased level of activity in late-stage clinical
development as well as the non-recurring costs related to the
discontinuation of AERx® and other pulmonary diabetes projects.
Licence fees and other operating income of DKK 162 million in the
first six months of 2008 represent a decrease of 18% compared to the
same period last year, which was positively impacted by a
non-recurring income from the out-licensing of an oral antidiabetic
compound.
Net financials
Net financials showed a net income of DKK 444 million in the first
six months of 2008 compared to a net income of DKK 1,634 million in
the same period last year, where a non-recurring and tax-exempt
income of DKK 1.4 billion from the divestment of the ownership of
Dako's business activities was recorded.
Included in net financials is the result from associated companies
with an expense of DKK 70 million, primarily related to Novo
Nordisk's share of losses in ZymoGenetics, Inc., partly countered by
an additional income of around DKK 50 million related to the
divestment of the business activities in Dako in the second quarter
of 2007.
The foreign exchange result was an income of DKK 474 million compared
to an income of DKK 458 million in the same period of 2007. This
development reflects gains on foreign exchange hedging activities due
to the lower value of especially US dollars versus Danish kroner.
Foreign exchange hedging gains of around DKK 900 million have been
deferred for future income recognition, hereof approximately DKK 500
million for income recognition in the second half of 2008.
Free cash flow
The free cash flow for the first half of 2008 was realised at DKK
5,384 million compared to DKK 2,926 million in the first half of
2007. Part of the increase in free cash flow is related to timing in
accounts receivable payments in the US due to a change in Novo
Nordisk's distribution set-up effective 1 July 2008, but also
reflects the lower than expected investment level in the first half
of 2008. The timing in accounts receivable payments in the US
impacted the first half 2008 free cash flow positively by around DKK
300 million.
Outlook 2008
The current expectations for 2008 are summarised and compared to the
previous expectations in the table below (changes highlighted in bold
and italic):
+-------------------------------------------------------------------+
| Expectations are as | Current | Previous |
| reported, if not | expectations | expectations |
| otherwise stated | 7 August 2008 | 30 April 2008 |
|-----------------------+---------------------+---------------------|
| Sales growth | | |
| - in local | 11-13% | 10-13% |
| currencies | Around 6 percentage | Around 6 percentage |
| - as reported | points lower | points lower |
|-----------------------+---------------------+---------------------|
| Operating profit | | |
| growth | Around 25% | Close to 25% |
| - underlying | 22-25% | Slightly more than |
| - as reported | | 20% |
|-----------------------+---------------------+---------------------|
| Net financial income | DKK 800 million | DKK 600 million |
|-----------------------+---------------------+---------------------|
| Effective tax rate | Approximately 24% | Approximately 24% |
|-----------------------+---------------------+---------------------|
| Capital expenditure | Lower than DKK 2 | Around DKK 2 |
| | billion | billion |
|-----------------------+---------------------+---------------------|
| Depreciation, | Around DKK 2.5 | Around DKK 2.5 |
| amortisation and | billion | billion |
| impairment losses | | |
|-----------------------+---------------------+---------------------|
| Free cash flow | Around DKK 8.5 | Around DKK 8 |
| | billion | billion |
+-------------------------------------------------------------------+
Novo Nordisk now expects a sales growth for 2008 of 11-13% measured
in local currencies and around 6 percentage points lower as reported,
given the current level of exchange rates. 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 intensified competition during 2008.
The expectation for growth in reported operating profit for 2008 is
increased to 22-25%. This primarily reflects the lowered expectations
for the non-recurring costs in relation to the discontinuation of all
pulmonary diabetes projects, which are reduced from DKK 500 million
to DKK 400 million, but also reflects the revised outlook for sales
growth.
Adjusted for the impact from currency and the non-recurring costs
related to the discontinuation of all pulmonary diabetes projects in
2007 and 2008, underlying operating profit is now expected to grow by
around 25%.
For 2008, Novo Nordisk now expects a net financial income of DKK 800
million, reflecting significant foreign exchange hedging gains,
primarily related to the US dollar.
The expectation for the effective tax rate for 2008 is still 24%.
Capital expenditure is now expected to be lower than DKK 2 billion in
2008. Expectations for depreciations, amortisation and impairment
losses are still around DKK 2.5 billion, whereas free cash flow is
now expected to be around DKK 8.5 billion.
All of the above expectations are provided that currency exchange
rates, especially the US dollar and related currencies, remain at the
current level versus the Danish krone for the rest of 2008.
Novo Nordisk has hedged expected net cash flows in relation to US
dollars, Japanese yen and British pounds for 16, 14 and 12 months,
respectively. The financial impact from foreign exchange hedging is
included in 'Net financials'.
Research and development update
Diabetes care
Novo Nordisk filed for regulatory approval of liraglutide, a
once-daily human GLP-1 analogue, in the US and EU in May 2008 and in
Japan in July 2008. In addition, liraglutide has now been filed for
regulatory approval in Turkey, Canada, New Zealand and Australia. The
applications contain documentation from an extensive clinical
development programme designed to obtain the indication for use of
liraglutide to treat type 2 diabetes as an adjunct to diet and
exercise, both as monotherapy and in combination with commonly used
antidiabetic medications.
The competitive profile of liraglutide was reinforced in a phase 3b
clinical study (LEAD(TM) 6) in which liraglutide provided
statistically significantly better blood glucose control than
exenatide, a twice-daily GLP-1 analogue. The 26-week study included
464 people with type 2 diabetes who were randomised to treatment with
either liraglutide once daily or exenatide twice daily, as add-on to
their existing treatment consisting of metformin, sulphonylurea or a
combination of both. The average HbA1c level at the beginning of the
study was slightly above 8%. Patients treated with liraglutide
achieved a reduction in HbA1c of more than 1.1 percentage point,
compared to a reduction in HbA1c of less than 0.8 percentage point in
the exenatide group, a difference which was statistically
significant. Both patients treated with liraglutide and patients
treated with exenatide lost on average around 3 kg during the course
of the study, with a trend towards more weight loss in the
liraglutide group. In the liraglutide group, the percentage of
patients reporting nausea in each week fell to low single-digit
numbers after 8-10 weeks, similar to the level observed in a
background population. In the exenatide group, the level after 8-10
weeks of treatment remained at the level of 10%. As expected, the
overall rate of hypoglycaemia in the study was low.
Novo Nordisk has initiated a 26-week phase 3b study comparing the
effect of liraglutide with sitagliptin, a DPP-IV inhibitor, in people
with type 2 diabetes inadequately controlled with metformin alone.
Two doses of liraglutide (1.2 and 1.8 mg once daily) in combination
with metformin will be compared to sitagliptin (100 mg) in
combination with metformin. The planned recruitment is 650 people
with type 2 diabetes, and the study is expected to be completed in
the second quarter of 2009.
Significant sustained weight loss was reported after 52 weeks in a
32-week open-label extension of a 20-week phase 2 obesity study, in
which treatment with liraglutide was tested in obese people without
diabetes. 398 participants continued into the 32-week extension.
After 52 weeks, liraglutide given once daily at the highest dose led
to a mean weight loss from baseline of around 7.5-8.0 kg and a
placebo-adjusted weight loss of around 5.5-6.0 kg. Around 75% of the
people treated with the highest dose of liraglutide achieved a weight
loss larger than 5% compared to only around 25% of the people in the
placebo group. Of all patients participating in the extension study,
around 30% showed signs of prediabetes at randomisation. After one
year of being treated, around 80% of this prediabetes subgroup of
patients treated with the highest dose of liraglutide no longer
showed any signs of prediabetes. Liraglutide was generally well
tolerated and the proportion of people that withdrew due to side
effects was below 15%.
Novo Nordisk has initiated a phase 2 clinical study with the
longer-acting human GLP-1 analogue, NN9535, designed for once-weekly
treatment. The phase 2 clinical study is expected to enrol 360
patients and will evaluate the efficacy and safety of NN9535. The
phase 2 trial is expected to be completed in the first half of 2009.
As communicated in June, Novo Nordisk has received approval by the US
Food and Drug Administration (FDA) of PrandiMet(TM), a fixed-dose
combination of the fast-acting insulin secretagogue repaglinide and
metformin for the treatment of type 2 diabetes. PrandiMet(TM) was
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
As communicated in June, Novo Nordisk has decided to discontinue the
phase 3 clinical study with NovoSeven® for the treatment of bleeding
in patients with severe trauma. The decision was made based on the
results of an analysis for futility conducted by the independent Data
Monitoring Committee. The primary efficacy endpoint of the study was
mortality and morbidity. Due to an observed lower mortality than
anticipated in the overall study group (around 10% in the phase 3
study in total compared to more than 25% in the phase 2 trial), a
futility analysis was conducted to assess the likelihood of reaching
a successful outcome on the primary endpoint. The analysis predicted
a low likelihood of obtaining a positive trial outcome with the
planned study population, and as a consequence Novo Nordisk decided
to discontinue the study. The decision was not due to safety
concerns.
Going forward, Novo Nordisk's haemostasis research will focus on new
treatments for haemophilia. Research activities outside the
haemophilia area, which involve 25 employees at the company's
research site in New Brunswick, New Jersey, will be terminated and,
as a consequence, the site will be closed down.
As previously communicated, Novo Nordisk will increase and focus its
activities on inflammatory diseases. An integral part of this new
focus will be the establishment of a US research site in Seattle,
Washington, with focus on research within inflammatory diseases. Novo
Nordisk expects to employ approximately 80 people at the research
site by 2010.
Novo Nordisk has initiated a phase 2 clinical study with a
long-acting human growth hormone analogue designed for once-weekly
treatment. The phase 2 clinical study will evaluate safety and
tolerability in 32 patients and is expected to report in the first
half of 2009.
Equity
Total equity was DKK 33,046 million at the end of the first six
months of 2008, equal to 68.2% 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 the first six months of 2008.
Treasury shares and share repurchase programme
As per 6 August 2008, Novo Nordisk A/S and its wholly-owned
affiliates owned 18,015,430 of its own B shares, corresponding to 3%
of the total share capital. The reduction in the ownership of own
shares reflects the cancellation of 12,960,000 B shares, which took
place on 13 June 2008 following a decision at the annual general
meeting earlier this year.
In 2008, under the Safe Harbour rules Novo Nordisk repurchased
6,311,907 B shares equal to a cash value of DKK 2.0 billion. The
Board of Directors has approved an increase by DKK 1 billion in the
ongoing DKK 16.5 billion share repurchase programme, bringing the
total value of the share repurchase programme to DKK 17.5 billion.
The programme is still expected to be finalised before the end of
2009. As a consequence of the increase in the share repurchase
programme, Novo Nordisk now expects to repurchase B shares equal to a
cash value of around DKK 4.7 billion in 2008 and around DKK 5 billion
in 2009. In 2006 and 2007, Novo Nordisk repurchased B shares equal to
a total cash value of DKK 7.8 billion.
Sustainability issues update
Novo Nordisk ranks second in Access to Medicine Index
In June, the Access to Medicine Foundation launched a new global
Access to Medicine Index in which Novo Nordisk ranks as the second
best performing pharmaceutical company. The Index has been
established as a tool for investors to select pharmaceutical
companies on the basis of their ability to provide improved access to
medicines and healthcare to underprivileged people - mostly with a
focus on developing countries. The rationale is that companies'
ability to address this key issue may affect their licence to operate
as well as their prospects for growing the business in emerging
economies. The Index is based on a thorough assessment of management
strategies, programmes and implementation conducted by Innovest, a
global investment research firm specialising in sustainability
indicators, with inputs from stakeholders, publicly available
information and interviews with company representatives.
Legal issues update
United Nations Oil-for-Food Programme
On 27 June 2008, the Republic of Iraq filed a complaint in the US
District Court for the Southern District of New York against 93
defendants seeking relief in law or equity based on various charges
on corruption in connection with the United Nations Oil-for-Food
Programme. Novo Nordisk is one of the named defendants in this
action. Novo Nordisk is rejecting the corruption charges. Novo
Nordisk has previously conducted an internal investigation - assisted
by a US law firm - in relation to its participation in the
Oil-for-Food Programme, which has concluded that no wrongdoings have
been made.
US hormone therapy litigation
As of 6 August 2008, 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 49 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 27
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 have any court trials scheduled for
2008 and does not presently expect to have a trial before late 2008.
Novo Nordisk does not expect the pending claims to impact Novo
Nordisk's financial outlook.
Capital Markets Day
Novo Nordisk will invite analysts and institutional investors to a
Capital Markets Day on 26 September 2008 for an update on the
company's overall strategy as well as key operational and R&D value
drivers. All investors will be able to follow the Capital Markets Day
via a live webcast, which will be made available under the
'Investors' section of novonordisk.com.
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 2007 and Form 20-F both 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', 'guidance', '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
(i) statements of plans, objectives or goals for future operations,
including those related to Novo Nordisk's products, product research,
product introductions and product approvals as well as cooperations
in relation thereto, (ii) statements containing projections of
revenues, income (or loss), earnings per share, capital expenditures,
dividends, capital structure or other net financials, (iii)
statements of future economic performance , future actions and
outcome of contingencies such as legal proceedings, and (iv)
statements of the assumptions underlying or relating to such
statements. In this document, examples of forward-looking statements
can be found on the first page and under the headings 'Outlook 2008',
'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
in this document, could cause actual results to differ materially
from those contained 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 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 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
'business strategy, opportunities and key risks' on pp 8-9 of the
Annual Report 2007 available on our website (novonordisk.com).
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
Today, the Board of Directors and Executive Management reviewed and
approved the interim report and accounts of Novo Nordisk A/S for the
first six months of 2008.
The interim report and accounts have been prepared in accordance with
International Financial Reporting Standards and the additional Danish
disclosure requirements applying to listed companies' interim reports
and accounts.
In our opinion the accounting policies used are appropriate and the
overall presentation of the interim report and accounts is adequate.
Furthermore, in our opinion the interim report and accounts give a
true and fair view of the Group's assets, liabilities, financial
position and of the results of the operations and consolidated cash
flows for the period under review.
Bagsværd 7 August 2008
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 (direct): (+45) 4442 3573 Tel (direct): (+45) 4443 7919
E-mail: mike@novonordisk.com E-mail: mlau@novonordisk.com
Hans Rommer
Tel (direct): (+45) 4442 4765
In North America: E-mail: hrmm@novonordisk.com
Sean Clements
Tel (direct): (+1) 609 514 8316
E-mail: secl@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 outstanding.)
%
change
Q2
2008
2008 2007 vs
Q2 Q2 Q1 Q4 Q3 Q2 Q1 2007
Sales 11,110 10,614 10,946 10,504 10,563 9,818 5%
Gross profit 8,556 8,201 8,345 7,990 8,205 7,498 4%
Gross margin 77.0% 77.3% 76.2% 76.1% 77.7% 76.4%
Sales and
distribution
costs 3,178 2,975 3,220 2,993 3,110 3,048 2%
Percent of 28.6% 28.0% 29.4% 28.5% 29.4% 31.0%
sales
Research
and
development
costs 1,980 1,858 3,413 1,724 1,754 1,647 13%
- Hereof cost - - -
related to
discontinuation
of all
pulmonary
projects* (155) (220) (1,325) -
Percent of 17.8% 17.5% 31.2% 16.4% 16.6% 16.8%
sales
Percent of 16.4% 15.4% 19.1% 16.4% 16.6% 16.8%
sales
(excl. AERx®)
**
Administrative
expenses 626 627 677 623 594 614 5%
Percent of 5.6% 5.9% 6.2% 5.9% 5.6% 6.3%
sales
Licence fees
and other
operating
income (net) 74 88 92 31 60 138 23%
Operating
profit 2,846 2,829 1,127 2,681 2,807 2,327 1%
Operating 25.6% 26.7% 10.3% 25.5% 26.6% 23.7%
margin
Operating
profit
(excl. AERx®)
** 3,001 3,049 2,452 2,681 2,807 2,327 7%
Operating 27.0% 28.7% 22.4% 25.5% 26.6% 23.7%
margin
(excl. AERx®)
**
Share of
profit/
(loss) in
associated
companies (3) (67) 0 (57) 1,350 (60) -
Financial
income 429 474 375 322 297 309 44%
Financial
expenses 21 368 155 90 60 202 -65%
Profit before
income taxes 3,251 2,868 1,347 2,856 4,394 2,374 -26%
Net profit 2,471 2,180 977 2,184 3,652 1,709 -32%
Depreciation,
amortisation
and
impairment
losses 567 563 1,396 586 516 509 10%
Depreciation,
amortisation,
etc
(excl. AERx®)
** 567 563 526 586 516 509 10%
Capital
expenditure 328 214 719 597 508 444 -35%
Cash flow
from operating
activities 2,916 3,070 2,498 3,500 1,438 2,551 103%
Free cash
flow 2,589 2,795 3,198 2,888 826 2,100 213%
Equity 33,046 31,251 32,182 33,161 33,475 29,676 -1%
Total assets 48,478 47,534 47,731 48,423 48,300 44,742 0%
Equity ratio 68.2% 65.7% 67.4% 68.5% 69.3% 66.3%
Full-time
employees at
the end of the
period 26,060 25,765 25,516 25,206 24,729 24,045 5%
Basic
earnings
per share
(in DKK) 3.99 3.51 1.56 3.46 5.75 2.69 -31%
Diluted
earnings
per share
(in DKK) 3.96 3.48 1.55 3.43 5.71 2.68 -31%
Average
number of
shares
outstanding
(million)*** 618.6 620.9 624.4 632.0 635.8 635.0 -3%
Average
number of
shares
outstanding
incl
dilutive effect
of options
'in the money'
(million)*** 623.5 626.3 629.6 636.4 640.2 639.4 -3%
Sales by
business
segments:
Modern
insulins
(insulin
analogues) 4,103 3,821 3,911 3,568 3,464 3,065 18%
Human
insulins 2,966 2,939 3,116 3,098 3,222 3,136 -8%
Insulin-
related
sales 460 443 448 445 437 419 5%
Oral
antidiabetic
products
(OAD) 478 640 512 585 529 523 -10%
Diabetes
care total 8,007 7,843 7,987 7,696 7,652 7,143 5%
NovoSeven® 1,648 1,440 1,519 1,427 1,508 1,411 9%
Growth
hormone
therapy 986 878 925 878 924 784 7%
Hormone
replacement
therapy 391 385 437 414 411 406 -5%
Other
products 78 68 78 89 68 74 15%
Biopharma-
ceuticals total 3,103 2,771 2,959 2,808 2,911 2,675 7%
Sales by
geographic
segments:
Europe 4,400 4,061 4,348 4,036 4,035 3,931 9%
North
America 3,467 3,450 3,608 3,500 3,424 3,214 1%
International
Operations 2,069 2,096 1,776 1,870 1,953 1,696 6%
Japan &
Oceania 1,174 1,007 1,214 1,098 1,151 977 2%
Segment
operating
profit:
Diabetes
care 1,510 1,672 (75) 1,487 1,600 1,247 -6%
Diabetes
care
(excl. AERx®)** 1,665 1,892 1,250 1,487 1,600 1,247 4%
Biopharma-
ceuticals 1,336 1,157 1,202 1,194 1,207 1,080 11%
*) Including costs related to the discontinuation of
AERx®
and all other pulmonary diabetes projects.
**) Excluding costs related to the discontinuation of AERx®
and all other pulmonary diabetes projects.
***) For Q2 2008 the exact numbers of 'Average number of
shares outstanding' and 'Average number of shares outstanding
incl dilutive effect of options 'in the money'' are
618,620,123
and 623,530,586 respectively.
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
Q2
2008
2008 2007 vs
Q2
Q2 Q1 Q4 Q3 Q2 Q1 2007
Sales 1,489 1,424 1,468 1,411 1,418 1,317 5%
Gross profit 1,147 1,100 1,119 1,074 1,101 1,006 4%
Gross margin 77.0% 77.3% 76.2% 76.1% 77.7% 76.4%
Sales and
distribution
costs 426 399 432 402 417 409 2%
Percent of 28.6% 28.0% 29.4% 28.5% 29.4% 31.0%
sales
Research and
development
costs 266 249 458 232 235 221 13%
- Hereof costs - - -
related to
discontinuation
of all
pulmonary
projects* (20) (30) (178) -
Percent of 17.8% 17.5% 31.2% 16.4% 16.6% 16.8%
sales
Percent of 16.4% 15.4% 19.1% 16.4% 16.6% 16.8%
sales
(excl. AERx®)
**
Administrative
expenses 84 84 91 84 80 82 5%
Percent of 5.6% 5.9% 6.2% 5.9% 5.6% 6.3%
sales
Licence fees
and other
operating
income (net) 10 12 12 4 8 19 23%
Operating
profit 381 380 151 360 377 312 1%
Operating 25.6% 26.7% 10.3% 25.5% 26.6% 23.7%
margin
Operating
profit (excl.
AERx®)** 401 410 329 360 377 312 7%
Operating 27.0% 28.7% 22.4% 25.5% 26.6% 23.7%
margin
(excl. AERx®)
**
Share of profit/
(loss) in
associated
companies 0 (9) 0 (7) 181 (8) -
Financial
income 57 64 49 44 40 41 44%
Financial
expenses 3 49 21 12 8 27 -65%
Profit before
income taxes 436 385 180 384 589 319 -26%
Net profit 332 292 131 294 490 229 -32%
Depreciation,
amortisation
and impairment
losses 76 76 188 78 70 68 10%
Depreciation,
amortisation,
etc (excl AERx®)
** 76 76 71 78 70 68 10%
Capital
expenditure 44 29 96 80 68 60 -35%
Cash flow from
operating
activities 391 412 335 470 193 342 103%
Free cash
flow 347 375 430 387 111 282 213%
Equity 4,431 4,191 4,316 4,449 4,498 3,983 -1%
Total assets 6,500 6,375 6,401 6,496 6,490 6,005 0%
Equity ratio 68.2% 65.7% 67.4% 68.5% 69.3% 66.3%
Full-time
employees at
the end of the
period 26,060 25,765 25,516 25,206 24,729 24,045 5%
Basic earnings
per share
(in EUR) 0.54 0.47 0.21 0.47 0.77 0.36 -31%
Diluted earnings
per share
(in EUR) 0.53 0.47 0.21 0.47 0.76 0.36 -31%
Average number
of shares
outstanding
(million)*** 618.6 620.9 624.4 632.0 635.8 635.0 -3%
Average number
of shares
outstanding incl
dilutive effect
of
options 'in the
money' (million)
*** 623.5 626.3 629.6 636.4 640.2 639.4 -3%
Sales by
business
segments:
Modern
insulins
(insulin
analogues) 550 513 525 479 465 411 18%
Human
insulins 398 394 418 416 432 421 -8%
Insulin-related
sales 62 59 60 60 59 56 5%
Oral
antidiabetic
products (OAD) 64 86 68 79 71 70 -10%
Diabetes care
total 1,074 1,052 1,071 1,034 1,027 958 5%
NovoSeven® 221 193 204 191 203 189 9%
Growth
hormone
therapy 132 118 124 118 124 105 7%
Hormone
replacement
therapy 52 52 59 55 56 54 -5%
Other
products 11 9 10 12 9 10 15%
Biopharma-
ceuticals total 416 372 397 376 392 358 7%
Sales by
geographic
segments:
Europe 590 545 583 542 542 527 9%
North America 465 463 484 470 460 431 1%
International
Operations 278 281 238 251 262 228 6%
Japan &
Oceania 157 135 163 147 155 131 2%
Segment
operating
profit:
Diabetes care 203 224 (10) 200 215 167 -6%
Diabetes care
(excl. AERx®)** 223 254 168 200 215 167 4%
Biopharma-
ceuticals 179 155 162 160 162 145 11%
*) Including costs related to the discontinuation of
AERx®
and all other pulmonary diabetes projects.
**) Excluding costs related to the discontinuation of
AERx®
and all other pulmonary diabetes projects.
***) For Q2 2008 the exact numbers of 'Average number of
shares outstanding' and 'Average number of shares outstanding
incl dilutive effect of options 'in the money''
are 618,620,123 and 623,530,586 respectively.
Appendix 3 - Income statement
H1 H1 Q2 Q2
DKK million 2008 2007 2008 2007
Sales 21,724 20,381 11,110 10,563
Cost of goods
sold 4,967 4,678 2,554 2,358
Gross profit 16,757 15,703 8,556 8,205
Sales and
distribution costs 6,153 6,158 3,178 3,110
Research and
development costs 3,838 3,401 1,980 1,754
- hereof costs
related to
discontinuation of
all pulmonary
projects (375) - (155) -
Administrative
expenses 1,253 1,208 626 594
Licence fees and
other operating
income (net) 162 198 74 60
Operating profit 5,675 5,134 2,846 2,807
Share of
profit/(loss) in
associated
companies (70) 1,290 (3) 1,350
Financial income 903 606 429 297
Financial expenses 389 262 21 60
Profit before
income taxes 6,119 6,768 3,251 4,394
Income taxes 1,468 1,407 780 742
NET PROFIT 4,651 5,361 2,471 3,652
Basic earnings
per share (DKK) 7.50 8.44 3.99 5.75
Diluted earnings
per share (DKK) 7.44 8.38 3.96 5.71
Segment sales:
Diabetes care 15,850 14,795 8,007 7,652
Biopharmaceuticals 5,874 5,586 3,103 2,911
Segment
operating profit:
Diabetes care 3,182 2,847 1,510 1,600
Operating margin 20.1% 19.2% 18.9% 20.9%
Diabetes care
(excl. AERx®)* 3,557 2,847 1,665 1,600
Operating margin 22.4% 19.2% 20.8% 20.9%
(excl. AERx®)*
Biopharmaceuticals 2,493 2,287 1,336 1,207
Operating margin 42.4% 40.9% 43.1% 41.5%
*) Excluding costs related to the discontinuation of AERx® and
all other pulmonary diabetes projects.
Appendix 4 - Balance sheet
DKK million 30 Jun 2008 31 Dec 2007
ASSETS
Intangible assets 802 671
Property, plant and equipment 19,001 19,605
Investments in associated
companies 239 500
Deferred income tax assets 2,008 2,522
Other financial assets 207 131
TOTAL LONG-TERM ASSETS 22,257 23,429
Inventories 9,240 9,020
Trade receivables 6,245 6,092
Tax receivables 200 319
Other receivables 1,769 1,493
Marketable securities and
financial derivatives 2,739 2,555
Cash at bank and in hand 6,028 4,823
TOTAL CURRENT ASSETS 26,221 24,302
TOTAL ASSETS 48,478 47,731
EQUITY AND LIABILITIES
Share capital 634 647
Treasury shares (17) (26)
Retained earnings 31,152 30,661
Other comprehensive income 1,277 900
TOTAL EQUITY 33,046 32,182
Long-term debt 930 961
Deferred income tax liabilities 2,215 2,346
Provision for pensions 398 362
Other provisions 864 1,239
Total long-term liabilities 4,407 4,908
Short-term debt and financial
derivatives 463 405
Trade payables 1,611 1,947
Tax payables 835 929
Other liabilities 5,632 4,959
Other provisions 2,484 2,401
Total current liabilities 11,025 10,641
TOTAL LIABILITIES 15,432 15,549
TOTAL EQUITY AND
LIABILITIES 48,478 47,731
Appendix 5 - Cash flow statement
DKK million H1 2008 H1 2007 *)
Net profit 4,651 5.361
Adjustment for non-cash items 3,121 1.841 *)
Income taxes paid and net (930) (1.202) *)
interest received
Cash flow before change 6,842 6.000
in working capital
Net change in working capital (856) (2.011)
Cash flow from operating 5,986 3.989
activities
Net investments in intangible (230) (111)
assets and long-term financial
assets
Capital expenditure for property, (542) (952)
plant and equipment
Net change in marketable securities 3 4
(maturity exceeding three months)
Dividend received 170 -
Net cash used in investing (599) (1.059)
activities
Cash flow from financing (4,233) (2.124)
activities
NET CASH FLOW 1,154 806
Unrealised gain/(loss) on exchange
rates and marketable securities
included in cash and cash equivalents 14 (19)
Net change in cash and cash 1,168 787
equivalents
Cash and cash equivalents at the 4,617 2.985
beginning of the year
Cash and cash equivalents at 5,785 3.772
the end of the period
Bonds with original term to maturity 1,471 994
exceeding three months
Undrawn committed credit facilities 7,458 7.442
FINANCIAL RESOURCES AT THE 14,714 12.208
END OF THE PERIOD
Cash flow from operating activities 5,986 3.989
+ Net cash used in investing activities (599) (1.059)
- Net change in marketable securities 3 4
(maturity exceeding three months)
FREE CASH FLOW 5,384 2.926
*) Subtotals for 'Adjustment for non-cash items'
and 'Income taxes paid and net interest received'
were allocated incorrectly in the financial statement
for the period 1 January 2007 to 30 June 2007 and
have now been changed from DKK 390 million to
DKK 1,841 million and from DKK 249 million to
minus DKK 1,202 million, respectively.
Appendix 6 - Statement of changes in equity
Other
compre-
hensive
income
Share Trea- Re- Ex- De- Other Total
capital sury tained change ferred adjust-
shares ear- rate gain/ ments
nings adjust- loss
ments on cash
flow
hedges
DKK million
H1 2008
Balance at
the
beginning
of the year 647 (26) 30,661 209 691 0 32,182
Exchange
rate
adjustment
of
investments
in
subsidiaries 124 124
Deferred
(gain)/loss
on cash
flow hedges
at the
beginning of
the year
recognised
in the
income
statement
for the
period (481) (481)
Changes of
fair value
on cash
flow hedges
during the
period 708 708
Fair value
adjustments
on financial
assets
available
for sale 30 30
Novo
Nordisk
share of
equity
recognised
by
associated
companies 14 14
Other
adjustments (18) (18)
Net income
recognised
directly
in equity - - - 124 227 26 377
Net profit
for the
period 4,651 4,651
Total
income
for the
period - - 4,651 124 227 26 5,028
Share-
based
payment 69 69
Purchase
of treasury
shares (5) (1,517) (1,522)
Sale of
treasury
shares 1 83 84
Reduction
of the
B share
capital (13) 13 -
Dividends (2,795) (2,795)
Balance
at the
end of the
period 634 (17) 31,152 333 918 26 33,046
H1 2007
Balance
at the
beginning
of the
year 674 (39) 28,810 156 420 101 30,122
Exchange
rate
adjustment
of
investments
in
subsidiaries 79 79
Deferred
(gain)/loss
on cash
flow hedges
at the
beginning
of the year
recognised
in the
income
statement
for the
period (287) (287)
Changes
of fair
value on
cash flow
hedges
during
the period 237 237
Fair value
adjustments
on financial
assets
available for
sale 5 5
Novo
Nordisk
share of
equity
recognised
by
associated
companies 19 19
Net income
recognised
directly
in equity - - - 79 (50) 24 53
Net profit
for the
period 5,361 5,361
Total
income for
the period - - 5,361 79 (50) 24 5,414
Share-
based
payment 54 54
Purchase of
treasury
shares (79) (79)
Sale of
treasury
shares 1 184 185
Reduction
of the
B share
capital (27) 27 -
Dividends (2,221) (2,221)
Balance
at the
end of
the period 647 (11) 32,109 235 370 125 33,475
Company Announcement no 49 / 2008