Novo Nordisk increased net profit by 32% in 2007
Underlying operating profit increased by close to 25% primarily
driven by a 13% sales growth in local currencies
* Sales in local currencies increased by 13% in 2007 and by
8% in Danish kroner.
o Sales of modern insulins increased by 35% (29% in Danish
kroner).
o Sales of NovoSeven® increased by 10% (4% in Danish kroner).
o Sales of Norditropin® increased by 11% (6% in Danish
kroner).
o Sales in North America increased by 22% (12% in Danish
kroner).
o Sales in International Operations increased by 18% (12% in
Danish kroner).
* Gross margin increased to 76.6% in 2007, up from 75.3% in
2006, primarily reflecting continued productivity improvements.
* Reported operating profit of DKK 8,942 million (2% lower
than in 2006) was impacted by the non-recurring costs of DKK 1.3
billion related to the discontinuation of the inhaled insulin
project AERx®. Adjusted for these non-recurring costs and the
impact from currencies, underlying operating profit increased by
close to 25%.
* Net profit increased by 32% to DKK 8,522 million. Adjusted
for both the non-recurring income from the divestment of Dako's
business activities and the non-recurring costs related to the
discontinuation of AERx®, net profit increased by 25%. Earnings per
share (diluted) increased by 34% to DKK 13.39.
* At the Annual General Meeting on 12 March 2008, the Board
of Directors will propose a 29% increase in dividend to DKK 4.50
per share of DKK 1. The ongoing share repurchase programme has been
increased to DKK 16.5 billion and is now expected to be finalised
before the end of 2009.
* For 2008, reported operating profit is expected to grow by
at least 25%. Adjusted for currency impact and the non-recurring
costs related to the discontinuation of AERx®, the expectation for
underlying operating profit growth is at least 20%.
Lars Rebien Sørensen, president and CEO, said: "We are very pleased
with the 2007 results. They are driven by robust sales growth in all
major markets of our portfolio of modern insulins and strong gross
margin improvement. This makes us confident that we will also be able
to deliver solid underlying growth in 2008."
Contents
Page
Consolidated financial statement 2007 3
Long-term financial targets 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
Outlook 2008 9
Research and development update 9
Equity 12
Corporate governance 13
Sustainability issues update 15
Legal issues update 15
Financial calendar 16
Conference call details 16
Forward-looking statement 17
Contacts for further information 18
Appendices:
Appendices 1-2: Quarterly numbers in DKK and EUR 19
Appendices 3-4: Income statement and balance sheet 21
Appendix 5: Cash flow statement 23
Appendix 6: Statement of changes in equity 24
Consolidated financial statement 2007
These financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS). The accounting
policies used in this report are in all materiality consistent with
those used in the Annual Report 2006.
% change
2007 vs
Profit and loss 2007 2006 2005 2004 2003 2006
(Amounts below in DKK
million)
Sales 41,831 38,743 33,760 29,031 26,158 8%
Gross profit 32,038 29,158 24,583 20,981 18,749 10%
Gross margin 76.6% 75.3% 72.8% 72.3% 71.7%
Sales and distribution 12,371 11,608 9,691 8,280 7,451 7%
costs
Percent of sales 29.6% 30.0% 28.7% 28.5% 28.5%
Research and development 8,538 6,316 5,085 4,352 4,055 35%
costs
-hereof costs related to (1,325) - - - -
discontinuation of AERx®
Percent of sales 20.4% 16.3% 15.1% 15.0% 15.5%
Percent of sales (excl 17.2% - - - -
AERx®)1)
Administrative expenses 2,508 2,387 2,122 1,944 1,857 5%
Percent of sales 6.0% 6.2% 6.3% 6.7% 7.1%
Licence fees and other 321 272 403 575 1,036 18%
operating income
Operating profit 8,942 9,119 8,088 6,980 6,422 (2%)
Operating margin 21.4% 23.5% 24.0% 24.0% 24.6%
Operating profit (excl 10,267 - - - - 13%
AERx®)1)
Operating margin (excl 24.5% - - - -
AERx®)1)
Net financials 2,029 45 146 477 954 -
Profit before income 10,971 9,164 8,234 7,457 7,376 20%
taxes
Income taxes 2,449 2,712 2,370 2,444 2,543 (10%)
Income tax rate 22.3% 29.6% 28.8% 32.8% 34.5%
Net profit 8,522 6,452 5,864 5,013 4,833 32%
Net profit margin 20.4% 16.7% 17.4% 17.3% 18.5%
1) Excluding costs related to the discontinuation of AERx®.
Consolidated financial statement 2007- continued
These financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS). The accounting
policies used in this report are in all materiality consistent with
those used in the Annual Report 2006.
Other key numbers
(Amounts below in DKK
million except earnings
per share, dividend per
share and number of % change
employees) 2007 vs
2007 2006 2005 2004 2003 2006
Depreciation, 3,007 2,142 1,930 1,892 1,581 40%
amortisation, etc
Depreciation, 2,137 - - - -
amortisation, etc (excl
AERx®)1)
Capital expenditure 2,268 2,787 3,665 2,999 2,273 (19%)
Free cash flow 9,012 4,707 4,833 4,278 3,846 91%
Equity 32,182 30,122 27,634 26,504 24,776 7%
Total assets 47,731 44,692 41,960 37,433 34,564 7%
Equity ratio 67.4% 67.4% 65.9% 70.8% 71.7%
Diluted earnings per 13.39 10.00 8.92 7.42 7.08 34%
share (in DKK)
Dividend per share (in 4.50 3.50 3.00 2.40 2.20 29%
DKK)2)
Payout ratio3) 32.8% 34.4% 33.2% 31.8% 30.8%
Payout ratio (adjusted)4) 34.9% - - - -
Average number of 24,344 22,590 21,146 19,520 18,381 8%
full-time employees
1) Excluding costs related to the discontinuation of AERx®.
2) Proposed dividend for the financial year 2007.
3) Total dividends for the year as a percentage of net profit.
4) Total dividends for the year as a percentage of net profit
adjusted for impact of Dako and AERx® discontinuation.
Long-term financial targets
2007 2006 2005 2004 2003
Performance against Long-term
long-term financial target ratio
targets
Operating profit growth (1.9%) 12.7% 15.9% 8.7% 8.4% 15%
Operating profit growth 12.6% - - - -
(excl AERx®)1)
Operating margin 21.4% 23.5% 24.0% 24.0% 24.6% 25%
Operating margin (excl 24.5% - - - -
AERx®)1)
Return on invested 27.2% 25.8% 24.7% 21.5% 20.4% 30%
capital
Cash to earnings 105.7% 73.0% 82.4% 85.3% 79.6% 70%2)
Cash to earnings (excl 94.2% - - - -
AERx®)3)
1) Excluding costs related to the discontinuation of AERx®.
2) Long-term target ratio measured as three years' average.
3) Earnings adjusted for net profit impact of AERx® discontinuation.
Sales development by segments
Sales increased by 13% measured in local currencies and by 8% in
Danish kroner. While growth was realised within both diabetes care
and biopharmaceuticals, the primary growth contribution originated
from modern insulins. The reported sales growth realised in 2007 was
in line with the previously communicated guidance of '6-9%' reported
sales growth.
Sales Growth Growth Share of
2007 as in local Growth
DKK reported currencies in local
million currencies
The diabetes care segment
Modern insulins 14,008 29% 35% 76%
Human insulins 12,572 (7%) (3%) (8%)
Insulin-related sales 1,749 9% 13% 4%
Oral antidiabetic products 2,149 8% 14% 6%
Diabetes care - total 30,478 9% 14% 78%
The biopharmaceuticals segment
NovoSeven® 5,865 4% 10% 11%
Growth hormone therapy 3,511 6% 11% 7%
Other products 1,977 2% 8% 4%
Biopharmaceuticals - total 11,353 4% 10% 22%
Total sales 41,831 8% 13% 100%
Sales development by regions
In 2007, sales growth was realised in all regions measured in local
currencies. The main contributors to growth were North America and
International Operations providing 53% and 23%, respectively, of the
total sales growth. Europe contributed 21% and Japan & Oceania 3% of
the sales growth in 2007 measured in local currencies.
Diabetes care
Sales of diabetes care products increased by 14% measured in local
currencies and by 9% in Danish kroner to DKK 30,478 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 14% measured in local currencies and by 9% in Danish
kroner to DKK 28,329 million. 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 53% of the total insulin market and 43% of
the modern insulin market, both measured by volume.
Sales of modern insulins increased by 35% in local currencies in 2007
and by 29% in Danish kroner to DKK 14,008 million. All regions
realised solid growth rates, with North America and Europe as the
primary contributors to growth. Sales of modern insulins contributed
76% of the overall growth in local currencies and now constitute 53%
of Novo Nordisk's sales of insulins.
North America
Sales in North America increased by 26% in local currencies in 2007
and by 16% in Danish kroner, reflecting a solid penetration of the
modern insulins Levemir®, NovoLog® and NovoLog® Mix 70/30. Novo
Nordisk continues to consolidate its leadership position in the US
insulin market with 42% of the total insulin market and 30% of the
modern insulin market, both measured by volume. Currently, more than
35% of Novo Nordisk's modern insulin volume is being sold in
FlexPen®.
Europe
Sales in Europe increased by 7% in local currencies and 7% measured
in Danish kroner, reflecting continued progress for the portfolio of
modern insulins. Novo Nordisk holds 57% of the total insulin market
and 50% 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 20% in local
currencies and by 14% in Danish kroner. The main contributor to
growth in 2007 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. The key contributor to
growth in International Operations continues to be China, accounting
for around 50% of the region's sales growth in 2007.
Japan & Oceania
Sales in Japan & Oceania increased by 4% in local currencies and
decreased by 4% measured in Danish kroner. The sales development
reflects sales growth for the modern insulins NovoRapid® and
NovoRapid Mix® 30. In December 2007, Novo Nordisk launched Levemir®
in Japan and is now also in Japan the only company with a full
portfolio of modern insulins. Modern insulins are increasingly being
sold in the leading prefilled delivery device, FlexPen®. Novo Nordisk
holds 73% of the total insulin market in Japan and 63% of the modern
insulin market, both measured by volume.
Oral antidiabetic products (NovoNorm®/Prandin®)
Sales of oral antidiabetic products increased by 14% in local
currencies and by 8% in Danish kroner to DKK 2,149 million compared
to 2006. 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 10% measured in
local currencies and by 4% measured in Danish kroner to DKK 11,353
million compared to last year.
NovoSeven®
Sales of NovoSeven® increased by 10% in local currencies and by 4% in
Danish kroner to DKK 5,865 million compared to last year. Sales
growth for NovoSeven® was primarily realised in North America. The
sales growth for NovoSeven® during 2007 primarily reflected increased
sales within the congenital bleeding disorder segments, where Novo
Nordisk is the global leader. Treatment of spontaneous bleeds for
congenital inhibitor patients remains the largest area of use.
Growth hormone therapy (Norditropin®)
Sales of Norditropin® (ie growth hormone in a liquid, ready-to-use
formulation) increased by 11% measured in local currencies and by 6%
measured in Danish kroner to DKK 3,511 million. All regions, and
especially North America and Europe, contributed to growth measured
in local currencies. Novo Nordisk continues to gain market share in
the growth hormone market and is the second-largest company in this
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 8% in local currencies and by 2% in Danish
kroner to DKK 1,977 million. This development primarily reflects
continued sales progress in the US market for Vagifem®, Novo
Nordisk's topical oestrogen product. Novo Nordisk continues to be the
second-largest participant within the global HRT market.
Costs, licence fees and other operating income
The cost of goods sold was DKK 9,793 million in 2007 representing a
gross margin of 76.6% compared to 75.3% in 2006. This improvement
reflects improved production efficiency, a lower level of write-downs
and impairment in 2007 compared to 2006 and higher average prices in
the US. The gross margin was negatively impacted by around 0.8
percentage points due to currency developments, primarily the lower
value of US dollars and Japanese yen versus Danish kroner compared to
last year.
Total non-production-related costs increased by 15% to DKK 23,417
million. The increase primarily reflects costs related to research
and development as well as sales and distribution. Research and
development costs increased more than sales, primarily reflecting the
non-recurring costs related to the discontinuation of AERx® of DKK
1,325 million, of which DKK 870 million relates to write-down and
impairment of tangible and intangible assets, DKK 326 million relates
to the discontinuation of clinical trials and, finally, DKK 129
million relates to other exit costs such as leasing and investment
commitments. Sales and distribution costs increased slightly more
than sales, primarily reflecting the increase in the US diabetes care
sales force.
In 2007, Novo Nordisk expensed costs in relation to share-based
long-term incentive programmes for senior management and other senior
employees (around 525 participants in total) amounting to DKK 130
million. The comparable expense for 2006 was DKK 113 million (around
425 participants in total).
Licence fees and other operating income were DKK 321 million in 2007,
positively impacted by an income in the first quarter of 2007 related
to the out-licensing of an oral antidiabetic compound.
As a consequence of the non-recurring costs related to the
discontinuation of AERx®, operating profit in 2007 decreased by 2% to
DKK 8,942 million compared to 2006 and is thereby significantly below
the previously communicated expectations of growth in operating
profit of 'close to 10% as reported'. Adjusted for the non-recurring
costs related to the discontinuation of AERx®, operating profit
growth was 13%.
Net financials and tax
Net financials showed a net income of DKK 2,029 million in 2007
compared to a net income of DKK 45 million in 2006.
Included in net financials is the result from associated companies
with 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 as well as Novo Nordisk's share of losses in ZymoGenetics,
Inc of approximately DKK 0.3 billion. In 2006, the result from
associated companies was an expense of DKK 260 million.
The foreign exchange result was an income of DKK 910 million compared
to an income of DKK 141 million in 2006. This development reflects
gains on foreign exchange hedging activities due to the lower value
of especially US dollars and Japanese yen versus Danish kroner in
2007 compared to the exchange rate level prevailing in 2006. Foreign
exchange hedging gains of DKK 691 million have been deferred for
future income recognition, primarily in 2008.
The realised results for net financials in 2007 were slightly higher
than the previously communicated expectation of a total net financial
income of around 'DKK 1,950 million'.
The effective tax rate for 2007 was 22.3%, a decrease from 29.6% in
2006. The significantly lower effective tax rate for 2007 primarily
reflects a non-recurring reduction of around 3 percentage points from
Novo Nordisk's divestment of the ownership of Dako's business
activities as well as a non-recurring effect of close to 2 percentage
points 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 2007 was in line with the
previously communicated expectation of a tax rate of 'around 22%' for
the full year of 2007.
Capital expenditure and free cash flow
Net capital expenditure for property, plant and equipment for 2007
was realised at DKK 2.3 billion compared to DKK 2.8 billion for 2006.
The main investment projects in 2007 were capacity for AERx® insulin
strip 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 lower than
the previously communicated expectation of 'around DKK 2.5 billion'.
Free cash flow for 2007 was realised at DKK 9.0 billion compared to
DKK 4.7 billion for 2006. Novo Nordisk's financial resources at the
end of 2007 were DKK 13.6 billion and higher than the level at the
end of 2006. 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 7.5 billion' and is
reflecting a stronger operating performance, improvements in working
capital requirements as well as a lower level of investments in the
fourth quarter of 2007.
Outlook 2008
Novo Nordisk expects slightly more than 10% growth in sales measured
in local currencies for 2008. This is based on expectations of
continued market penetration for Novo Nordisk's key strategic
products within diabetes care and biopharmaceuticals as well as
expectations of increased competition during 2008. Given the current
level of exchange rates versus Danish kroner, the reported sales
growth in 2008 is expected to be around 3.5 percentage points lower
than the growth rate measured in local currencies.
For 2008, reported operating profit is expected to increase by at
least 25% despite the negative currency environment. The guidance for
reported operating profit for 2008 includes an estimate of
non-recurring costs of DKK 300 million in relation to the
discontinuation of AERx® to cover severance payments and other costs.
Adjusting for the impact from currency and the non-recurring costs in
2007 and 2008 related to the discontinuation of AERx®, underlying
operating profit is expected to grow by at least 20%.
For 2008, Novo Nordisk expects a net financial income of DKK 450
million, reflecting significant foreign exchange hedging gains,
primarily related to the US dollar.
The effective tax rate for 2008 is expected to be approximately 24%.
Capital expenditure is expected to be around DKK 2.5 billion in 2008.
Expectations for depreciations, amortisation and impairment losses
are around DKK 2.5 billion, and free cash flow is expected to be
around DKK 7.5 billion.
All of the above expectations are provided that currency exchange
rates, especially the US dollar and related currencies, remain at the
current level versus the Danish krone for the rest of 2008. All other
things being equal, movements in key invoicing currencies will impact
Novo Nordisk's operating profit as illustrated below:
+-------------------------------------------------------------------+
| Invoicing currency | Annual impact on Novo Nordisk's operating |
| | profit |
| | of a 5% movement in currency |
|--------------------+----------------------------------------------|
| USD | DKK 470 million |
|--------------------+----------------------------------------------|
| JPY | DKK 140 million |
|--------------------+----------------------------------------------|
| GBP | DKK 85 million |
|--------------------+----------------------------------------------|
| USD-related | DKK 100 million |
+-------------------------------------------------------------------+
Note: For 2008 onwards the currency sensitivity for 'USD-related'
currencies has been
focused to solely reflect the impact from CNY and CAD.
Novo Nordisk has hedged expected net cash flows in relation to US
dollars, Japanese yen and British pounds for 17, 15 and 10 months,
respectively. The financial impact from foreign exchange hedging is
included in 'Net financials'.
Research and development update
Diabetes care
Novo Nordisk has finalised the two planned phase 3 studies in Japan
assessing the effect of the once-daily human GLP-1 analogue,
liraglutide, for the treatment of type 2 diabetes in monotherapy and
in combination with sulfonylurea, a widely used oral antidiabetic
treatment.
The 24-week monotherapy study included 411 Japanese subjects with
type 2 diabetes previously treated with diet and exercise or a single
oral antidiabetic medication. After a four-week wash-out period
subjects were randomised to either liraglutide or sulfonylurea
(glibenclamide) therapy. From an average baseline HbA1c of close to
9%, Hba1c levels decreased by close to 2 percentage points in the
liraglutide-treated group. The change in HbA1c was statistically
significantly better than that observed for the glibenclamide group.
At the end of the study approximately 50% of patients in the
liraglutide group were below the American Diabetes Association (ADA)
target of HbA1c < 7%. The improvements in HbA1c levels in
liraglutide-treated subjects were obtained through lowering of both
fasting and postprandial blood glucose levels. At the beginning of
the study, average BMI was close to 25 and average body weight was
around 65 kg. A body weight difference of approximately 2 kg in
favour of liraglutide treatment was observed when compared to
treatment with glibenclamide. Treatment with liraglutide was
generally well tolerated. Subjects treated with liraglutide
experienced a low rate of hypoglycaemic events, and this was
statistically significantly lower than the rate observed in subjects
treated with glibenclamide. Nausea was reported in less than 10% of
the subjects.
The 24-week sulfonylurea add-on study included 267 Japanese subjects
with type 2 diabetes where either placebo or two different doses of
liraglutide were added to existing sulfonylurea therapy. From an
average baseline HbA1c of around 8.5%, a statistically significant
improvement in HbA1c was observed following liraglutide treatment.
The average HbA1c at the highest dose tested was reduced to below
7.0%, thereby bringing around 70% of the subjects to a target HbA1c
level below 7.0%. From an average starting weight of around 65 kg and
an average BMI of around 25 there was no weight change from baseline
in the liraglutide-treated subjects, in spite of the improvements in
glycaemic control. Similarly, there were no subjects reporting major
hypoglycaemic events. Subjects randomised to liraglutide treatment
experienced the highest completion rate in the study (around 95%).
Overall, reporting of side effects occurred at a low level and the
most frequently reported side effects in liraglutide-treated subjects
were constipation and diarrhoea (in around 10% of subjects). Nausea
was reported in less than 5% of the subjects.
Based on the results from the two Japanese phase 3 studies Novo
Nordisk expects to file for regulatory approval in Japan before the
end of the third quarter of 2008.
In December 2007, and as previously communicated, Novo Nordisk
announced clinical results from the last of five phase 3 studies (the
LEAD(TM) 3 study) to be used for the regulatory filing in Europe and
the US of the once-daily human GLP-1 analogue liraglutide. Patients
in the one-year study were randomised to treatment with one of two
doses of liraglutide or 8 mg of glimepiride, a widely used oral
antidiabetic medication. At both doses tested, liraglutide provided
statistically significantly better glucose control than glimepiride.
On average, the patients treated with liraglutide experienced a
lowering of HbA1c of more than 1 percentage point. Patients treated
with liraglutide who had previously only been treated with diet and
exercise saw HbA1c drop by more than 1.5 percentage points. The ADA
treatment goal of HbA1c < 7% was reached by more than 50% of the
patients receiving the highest dose of liraglutide. As has been seen
in previous studies where liraglutide has been given as monotherapy,
patients receiving liraglutide in this study experienced a very low
level of hypoglycaemia, contrasting with the glimepiride-treated
group where hypoglycaemia occurred in a larger number of patients.
Furthermore, a statistically significant improvement in systolic
blood pressure and a reduction of body weight of between 3 and 4 kg
were seen in patients treated with liraglutide when compared to
patients treated with glimepiride. Novo Nordisk expects to
file for regulatory approval of liraglutide for the treatment of type
2 diabetes in Europe and the US before the end of the second quarter
of 2008.
In November 2007 and as previously communicated, Novo Nordisk
announced clinical results of a phase 2 study comparing liraglutide
with orlistat, a lipase inhibitor, for treatment of obesity in people
who do not have diabetes. The study demonstrated that liraglutide
given once daily over 20 weeks at the highest dose led to a weight
loss of just above 7 kg in comparison to a weight loss of just below
3 kg in the placebo group and a weight loss of just above 4 kg in the
orlistat-treated group. All doses of liraglutide reduced body weight.
More than 75% of the people treated with the highest dose experienced
a weight loss larger than 5%, and more than 25% experienced a weight
loss larger than 10% relative to their body weight at randomisation.
Finally, the study revealed a beneficial effect on systolic blood
pressure after treatment with liraglutide. Approximately 30% of the
564 participants in the study showed signs of prediabetes at
randomisation. Following 20 weeks of treatment with any dose of
liraglutide, between 80% and 90% of these participants no longer
showed any sign of prediabetes, as opposed to around 40% in the
placebo- and orlistat-treated groups. Liraglutide was generally well
tolerated. Novo Nordisk expects to initiate a phase 3 obesity
programme with liraglutide before the end of 2008.
For two of the expected next-generation modern insulin candidates,
Novo Nordisk has initiated clinical phase 2 studies. The studies
involve NN1250, a neutral, soluble, long-acting modern insulin with a
flat and predictable profile providing more than 24-hour coverage by
once-daily injection, and NN5401, a neutral, soluble, modern insulin
fixed combination with improved properties. Novo Nordisk expects to
finalise both these phase 2 studies in the first quarter of 2009.
In December 2007, Novo Nordisk submitted NovoMix® 70 for regulatory
approval in Japan. NovoMix® 70 is intended to expand the treatment
options for the approximately 50% of the Japanese patients who are
currently on a premixed treatment regimen.
Finally, and as communicated on 14 January 2008, Novo Nordisk has
decided to refocus its activities within inhaled insulin and to
discontinue clinical development of AERx® inhaled insulin (AERx®
iDMS). The decision was based on a detailed analysis of the future
prospects for inhaled insulin and a review of the medical and
commercial potential of the AERx® inhaled insulin system. The
decision to discontinue the development of AERx® was not due to
safety concerns. Novo Nordisk intends to increase research and
development activities targeted at inhalation systems for long-acting
analogues of insulin and GLP-1. The activities will take place at two
centres of excellence in Hayward, California, and Hillerød, Denmark.
Biopharmaceuticals
Novo Nordisk has finalised the phase 2 safety study for the use of
NovoSeven® in cardiac surgery. A total of 172 cardiac surgery
patients were included in the study. Preliminary results from the
study confirm the safety profile known from the cardiac surgery
setting and from previous studies of NovoSeven® outside of
haemophilia with inhibitors. While the primary endpoint of this trial
was safety, the trial also demonstrated the biologic haemostatic
effect of NovoSeven®. Novo Nordisk expects to communicate next steps
for NovoSeven® in cardiac surgery during the first half of 2008,
following consultations with regulatory authorities and external
experts.
A subcutaneously administered formulation of rFVIIa has entered phase
1 clinical development. The possibility of administering rFVIIa by
means of subcutaneous injection is expected to significantly improve
convenience for haemophilia patients with inhibitors.
The heat-stable version of NovoSeven® was submitted in December 2007
for regulatory approval in Japan. Regulatory submissions of the
heat-stable version of NovoSeven® in Europe and the US took place in
mid-2007.
Driven by a higher aspiration level within the haemophilia portfolio
of Novo Nordisk, the company is now actively pursuing the development
of new molecules for the treatment of haemophilia with and without
inhibitors. The portfolio includes clotting factors targeting
different parts of the coagulation pathway and aim at on-demand as
well as prophylactic therapy. Among the preclinical projects, the
most advanced of these are expected to enter clinical development
within the next couple of years.
The R&D strategy for the emerging biopharmaceuticals area has been
updated. Based on an evaluation of the general competence level
required, the level of investments needed and the likelihood of
success, Novo Nordisk has decided to increase and focus activities on
inflammatory diseases. As a consequence, research and development
activities within oncology will be terminated and resources applied
to the growing inflammation portfolio. Existing oncology projects,
including the IL-21 programme and the anti-KIR project, are expected
to be out-licensed. The ongoing development activities for these two
projects will continue while discussions with potential new partners
are taking place. The first two compounds targeting inflammatory
diseases are expected to enter clinical development in 2008.
As a strategic life-cycle management initiative supporting the growth
hormone franchise, Novo Nordisk has initiated a phase 1 study with a
longer-acting human growth hormone. Based on Novo Nordisk's
PEGylation technology, the compound is designed for once-weekly
treatment with expected administration in a convenient injection
device.
In December 2007, Novo Nordisk filed Vagifem® low dose (10 micrograms
oestradiol) for marketing approval with the FDA.
Equity
Total equity was DKK 32,182 million at the end of 2007, equal to
67.4% of total assets, compared to 67.4% at the end of 2006. Please
refer to appendix 6 for further elaboration of changes in equity
during 2007.
Proposed dividend and share repurchase programme
At the Annual General Meeting on 12 March 2008, the Board of
Directors will propose a 29% increase in dividend to DKK 4.50 per
share of DKK 1, corresponding to a pay-out ratio of 34.9%, when
adjusted for the non-recurring costs related to the discontinuation
of AERx® and the non-recurring income from the divestment of Dako's
business activities, compared to 34.4% for the financial year 2006.
No dividend will be paid on the company's holding of treasury B
shares.
During 2007, Novo Nordisk repurchased 15,537,012 B shares at an
average price of DKK 311 per share, equal to a cash value of DKK 4.8
billion. During 2006, Novo Nordisk repurchased B shares equal to a
cash value of DKK 3 billion. The Board of Directors has approved an
increase by DKK 6.5 billion in the ongoing DKK 10 billion share
repurchase programme, bringing the total value of the share
repurchase programme to DKK 16.5 billion. The programme is now
expected to be finalised before the end of 2009 as compared to the
previously communicated completion time 'before the end of 2008'.
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 (Safe Harbour
Regulation). For that purpose Novo Nordisk has appointed J. P. Morgan
Securities Ltd. as lead manager to independently and without
influence from Novo Nordisk execute the first part of its share
repurchase programme. The purpose of the programme is reduction of
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 2 billion during the trading period starting
today and ending on 6 August 2008. A maximum of 172,967 shares can be
bought during one single trading day, equal to 15% of the average
daily trading volume of Novo Nordisk B shares on the OMX Nordic
Exchange Copenhagen during the month of December 2007, and a maximum
of 22,312,788 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.
Holding of treasury shares and reduction of share capital
As per 30 January 2008, Novo Nordisk A/S and its wholly-owned
affiliates owned 25,815,130 of its own B shares, corresponding to 4%
of the total share capital.
In order to maintain capital structure flexibility, the Board of
Directors will at the Annual General Meeting in 2008 also propose a
reduction in the B share capital from DKK 539,472,800 to DKK
526,512,800 by cancelling 12,960,000 B shares of DKK 1 from the
Company's own holdings of B shares at a nominal value of DKK
12,960,000, equal to 2% of the total share capital. After
implementation of the share capital reduction, the Company's share
capital will amount to DKK 634,000,000 divided into an A share
capital of DKK 107,487,200 and a B share capital of DKK 526,512,800.
Corporate governance
Election of new member of the Board of Directors
At the Annual General Meeting on 12 March 2008, the Board of
Directors will propose that Pamela J Kirby is elected to the Board.
Dr Kirby, a British national, is chairman of the Board of Scynexis
Inc, US, and is also a board member of Smith & Nephew plc, UK, among
other board positions. Dr Kirby has extensive executive experience
from the international pharmaceutical and biotech industry and holds
a PhD in clinical pharmacology from the University of London, UK.
Remuneration policy
Novo Nordisk's existing remuneration policy 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. In light of recent changes in Danish legislation,
Novo Nordisk will present for approval at the Annual General Meeting
in 2008 its guidelines for incentive-based remuneration for the Board
of Directors and Executive Management of Novo Nordisk.
Long-term share-based incentive programme for senior management
As from 2004, members of Novo Nordisk's Executive Management
(currently five) and the other members of the Senior Management Board
(currently 22) 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 2004, 252,688 shares were allocated to the joint pool and the
market value of the scheme was expensed in 2004. The number of shares
in the 2004 joint pool has not been reduced as the financial
performance in the subsequent years (2005-2007) reached specified
threshold levels. Accordingly, the original number of shares
allocated to the joint pool will, according to the principles of the
scheme, be transferred to 22 current and former members of senior
management immediately after the announcement of the full-year 2007
financial results on 31 January 2008.
For 2007 and based on an assessment of the economic value generated
in 2007, as well as the performance of the R&D portfolio and key
sustainability projects, the Board of Directors on 30 January 2008
approved the establishment of a joint pool for the financial year of
2007 by allocating a total of 166,445 Novo Nordisk B shares,
corresponding to a cash value of DKK 43 million. This allocation
amounts to 6.5 months of fixed base salary on average per
participant. This amount was expensed in 2007.
As the long-term share-based incentive programme is evaluated by the
Board of Directors to have worked successfully in 2007, it is planned
to continue in 2008 with an unchanged structure. Novo Nordisk has,
however, decided to make this decision subject to the formal approval
by the Annual General Meeting in March 2008 of the guidelines for
incentive-based remuneration for the Board of Directors and Executive
Management of Novo Nordisk.
Long-term share-based incentive programme for vice presidents
As from 2007, around 500 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 2007 as
well as the performance of the R&D portfolio and key sustainability
projects, the Board of Directors on 30 January 2008 approved the
establishment of a pool for 2007 by allocating a total of 527,665
Novo Nordisk B shares, corresponding to a cash value of DKK 135
million. This allocation amounts to 3.25 months of fixed base salary
on average per participant. This amount will be amortised over four
years.
Compliance with Sarbanes-Oxley requirements
In 2007, Novo Nordisk was, as was also the case in 2006, 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 2007 compliance are included
in the Form 20-F, which Novo Nordisk as a listed company on the New
York Stock Exchange is required to prepare. The Form 20-F is expected
to be filed mid-February 2008.
Sustainability issues update
Extension of funding to the World Diabetes Foundation
The World Diabetes Foundation (WDF) is dedicated to supporting the
prevention and treatment of diabetes in the developing world through
the funding of sustainable projects. At its core lies the promise of
equal access to diabetes care. The WDF was established by Novo
Nordisk A/S in 2002 through a commitment to donate an amount not
exceeding DKK 65 million per year until 2010. The WDF is an
independent trust and is governed by a board of six experts in the
field of diabetes, access to health and development assistance. Since
2002, the WDF has successfully funded 138 projects in more than 70
developing countries, and it is estimated that these projects will
potentially influence the diabetes treatment of 55 million people
directly.
The Board of Directors of Novo Nordisk wishes to secure that the WDF
is able to continue its activities after expiry in 2010 of the
original donation period, and will propose that the Annual General
Meeting approves a donation by Novo Nordisk to the WDF of an amount
up to a total of DKK 575 million to be granted as individual annual
contributions over a period of 10 years as from the financial year
2008 through to the financial year 2017.
Implementation of the UN Resolution on diabetes
On the first UN-observed World Diabetes Day, 14 November 2007, Novo
Nordisk organised events to mark the day across the world. Around
250,000 people in 50 countries took part. The company's global
advocacy effort to promote awareness of and action on diabetes is a
response to the UN Resolution on diabetes, adopted in December 2006,
in recognition of diabetes as a major global health challenge and in
respect of the human right to proper care. Novo Nordisk continues to
take an active leadership role in its implementation via its National
Changing Diabetes® programmes, which offer awareness, education and
guidelines on prevention, treatment and care of diabetes.
Changing Diabetes® Barometer
The Changing Diabetes® Barometer, launched in November 2007, will
measure and share the worldwide progress in the fight against
diabetes on an annual basis. The Barometer is a tool that will
provide healthcare professionals, patient organisations, politicians,
institutions and news media with valuable information on how to
improve the quality of diabetes care, bring down diabetes-related
complications, extend patients' life expectancy and reduce costs. An
annual report will include key findings from the Barometer. The first
report covers 21 countries and highlights that significant savings,
potentially as much as a 20% reduction of lifelong healthcare costs,
can be achieved if people with diabetes are diagnosed earlier and
before any complications arise.
Legal issues update
US hormone therapy litigation
As of 30 January 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 45 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.). Further, 27
individuals currently allege, in relation to similar lawsuits against
Pfizer Inc., that they also have used a Novo Nordisk hormone therapy
product. Novo Nordisk does not have any court trials scheduled for
2008 and does not presently expect to have a trial before late 2008.
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 2007, which is expected to be
available on Novo Nordisk's website on 4 February 2008.
Financial calendar
4 February 2008 - PDF version of the Annual Report available on
novonordisk.com, online Annual Report launched
15 February 2008 - Printed version of the Annual Report
12 March 2008 - Annual General Meeting
13 March 2008 - Shareholders' meeting (in Danish only)
30 April 2008 - Financial statement for the first
quarter of 2008
7 August 2008 - Financial statement for the first half
of 2008
30 October 2008 - Financial statement for the first nine
months of 2008
29 January 2009 - Financial statement for 2008
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 expected to be filed
with the SEC in February 2008, and written information released, or
oral statements made, to the public in the future by or on behalf of
Novo Nordisk, may contain forward-looking statements.
Words such as 'believe', 'expect', 'may', 'will', 'plan', 'strategy',
'prospect', 'foresee', 'estimate', 'project', 'anticipate', 'can',
'intend' and other words and terms of similar meaning in connection
with any discussion of future operating or financial performance
identify forward-looking statements. Examples of such forward-looking
statements include, but are not limited to (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 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 expected to be available on our website
(novonordisk.com) from 4 February 2008.
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.
Bagsværd 31 January 2008
Board of Directors
Contacts for further information
Media: Investors:
Outside North America: Outside North America:
Mike Rulis Mads Veggerby Lausten
Tel (direct): (+45) 4442 3573 Tel (direct): (+45) 4443 7919
mike@novonordisk.com mlau@novonordisk.com
Hans Rommer
Tel (direct): (+45) 4442 4765
hrmm@novonordisk.com
In North America: In North America:
Sean Clements Christian Qvist Frandsen
Tel (direct): (+1) 609 514 8316 Tel (direct): (+1) 609 919 7937
secl@novonordisk.com cqfr@novonordisk.com
Further information on Novo Nordisk is available on the company's
internet homepage at the address: novonordisk.com
Encl 1: Quarterly numbers in DKK
(Amounts in DKK million, except number of employees,
earnings per share and number of shares outstanding.)
%
change
Q4
2007
2007 2006 vs
Q4
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2006
Sales 10,946 10,504 10,563 9,818 10,487 9,583 9,727 8,946 4%
Gross profit 8,345 7,990 8,205 7,498 7,906 7,246 7,475 6,531 6%
Gross margin 76.2% 76.1% 77.7% 76.4% 75.4% 75.6% 76.8% 73.0%
Sales and
distribution
costs 3,220 2,993 3,110 3,048 3,331 2,699 2,850 2,728 -3%
Percent of 29.4% 28.5% 29.4% 31.0% 31.8% 28.2% 29.3% 30.5%
sales
Research and
development
costs 3,413 1,724 1,754 1,647 1,910 1,489 1,498 1,419 79%
Hereof costs
related to
discontinua-
tion of
AERx®* 1,325
Percent of 31.2% 16.4% 16.6% 16.8% 18.2% 15.5% 15.4% 15.9%
sales
Percent of 19.1%
sale (excl.
AERx®)*
Administra-
tive expenses 677 623 594 614 645 605 557 580 5%
Percent of 6.2% 5.9% 5.6% 6.3% 6.2% 6.3% 5.7% 6.5%
sales
Licence fees
and other
operating
income (net) 92 31 60 138 88 49 59 76 5%
Operating
profit 1,127 2,681 2,807 2,327 2,108 2,502 2,629 1,880 -47%
Operating 10.3% 25.5% 26.6% 23.7% 20.1% 26.1% 27.0% 21.0%
margin
Operating 16%
profit (excl.
AERx®)* 2,452
Operating 22.4%
margin (excl.
AERx®)*
Share of
profit/(loss)
in associated
companies 0 (57) 1,350 (60) (112) (30) (58) (60) -
Financial
income 375 322 297 309 579 139 102 111 -35%
Financial
expenses 155 90 60 202 165 77 182 202 -6%
Profit before
income taxes 1,347 2,856 4,394 2,374 2,410 2,534 2,491 1,729 -44%
Net profit 977 2,184 3,652 1,709 1,724 1,774 1,743 1,211 -43%
Depreciation,
amortisation
and
impairment
losses 1,396 586 516 509 574 600 508 460 143%
Depreciation,
amortisation,
etc (excl.
AERx®)* 526 -8%
Capital
expenditure 719 597 508 444 899 671 622 595 -20%
Cash flow
from
operating
activities 2,498 3,500 1,438 2,551 359 3,520 1,768 2,091 596%
Free cash
flow 3,198 2,888 826 2,100 (439) 2,684 996 1,466 -
Equity 32,182 33,161 33,475 29,676 30,122 28,288 28,908 27,042 7%
Total assets 47,731 48,423 48,300 44,742 44,692 43,744 43,145 41,299 7%
Equity ratio 67.4% 68.5% 69.3% 66.3% 67.4% 64.7% 67.0% 65.5%
Full-time
employees at
the end of
the period 25,516 25,206 24,729 24,045 23,172 23,071 22,792 22,556 10%
Basic
earnings per
share (in
DKK) 1.56 3.46 5.75 2.69 2.72 2.77 2.70 1.87 -43%
Diluted
earnings per
share (in
DKK) 1.55 3.43 5.71 2.68 2.70 2.76 2.69 1.86 -43%
Average
number of
shares
outstanding
(million)** 624.4 632.0 635.8 635.0 634.2 640.2 645.8 647.2 -2%
Average
number of
shares
outstanding
incl
dilutive
effect
of options
'in
the money'
(million)** 629.6 636.4 640.2 639.4 638.4 643.6 649.0 650.4 -1%
Sales by
business
segments:
Modern
insulins
(insulin
analogues) 3,911 3,568 3,464 3,065 3,122 2,701 2,678 2,324 25%
Human
insulins *** 3,116 3,098 3,222 3,136 3,519 3,306 3,301 3,325 -11%
Insulin-
related sales
*** 448 445 437 419 431 391 406 378 4%
Oral
antidiabetic
products
(OAD) 512 585 529 523 508 516 483 477 1%
Diabetes
care total 7,987 7,696 7,652 7,143 7,580 6,914 6,868 6,504 5%
NovoSeven® 1,519 1,427 1,508 1,411 1,470 1,393 1,507 1,265 3%
Growth
hormone
therapy 925 878 924 784 897 821 882 709 3%
Hormone
replacement
therapy 437 414 411 406 455 383 396 373 -4%
Other
products 78 89 68 74 85 72 74 95 -8%
Biopharma-
ceuticals
total 2,959 2,808 2,911 2,675 2,907 2,669 2,859 2,442 2%
Sales by
geographic
segments:
Europe
**** 4,348 4,036 4,035 3,931 4,013 3,843 3,903 3,541 8%
North
America 3,608 3,500 3,424 3,214 3,486 3,062 2,968 2,764 3%
International
Operations
**** 1,776 1,870 1,953 1,696 1,690 1,539 1,648 1,617 5%
Japan &
Oceania 1,214 1,098 1,151 977 1,298 1,139 1,208 1,024 -6%
Segment
operating
profit:
Diabetes
care (75) 1,487 1,600 1,247 1,198 1,296 1,490 998 -
Diabetes
care (excl.
AERx®)* 1,250 4%
Biopharma-
ceuticals 1,202 1,194 1,207 1,080 910 1,206 1,139 882 32%
*) Excluding costs related to the
discontinuation of AERx®
**) For Q4 2007 the exact numbers of 'Average number
of shares outstanding' and 'Average number of shares
outstanding incl dilutive effect of options
in the money'' are 624,376,552 and 629,555,043 respectively.
***) As from Q2 2007 sales figures for Human insulins
and Insulin-related sales are presented separately.
Comparative figures are adjusted accordingly.
****) Comparative figures from 2006 have been adjusted
in order to reflect a changed organisational structure from
1 January 2007 which transfers 8 countries, incl. Bulgaria and
Romania, from International Operations to Europe.
Encl 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
2007
2007 2006 vs
Q4
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2006
Sales 1,468 1,411 1,418 1,317 1,406 1,285 1,304 1,199 4%
Gross profit 1,119 1,074 1,101 1,006 1,060 972 1,002 875 6%
Gross margin 76.2% 76.1% 77.7% 76.4% 75.4% 75.6% 76.8% 73.0%
Sales and
distribution
costs 432 402 417 409 447 361 382 366 -3%
Percent of 29.4% 28.5% 29.4% 31.0% 31.8% 28.2% 29.3% 30.5%
sales
Research
and
development
costs 458 232 235 221 256 200 201 190 79%
-Hereof costs
related to
discontinua-
tion of
AERx®* 178
Percent of 31.2% 16.4% 16.6% 16.8% 18.2% 15.5% 15.4% 15.9%
sales
Percent of 19.1%
sales (excl.
AERx®)*
Administra-
tive
expenses 91 84 80 82 86 82 74 78 5%
Percent of 6.2% 5.9% 5.6% 6.3% 6.2% 6.3% 5.7% 6.5%
sales
Licence fees
and other
operating
income (net) 12 4 8 19 11 7 8 10 5%
Operating
profit 151 360 377 312 283 336 352 252 -47%
Operating 10.3% 25.5% 26.6% 23.7% 20.1% 26.1% 27.0% 21.0%
margin
Operating 16%
profit (excl.
AERx®)* 329
Operating 22.4%
margin (excl.
AERx®)*
Share of
profit/(loss)
in
associated
companies 0 (7) 181 (8) (15) (4) (8) (8) -
Financial
income 49 44 40 41 78 18 14 15 -35%
Financial
expenses 21 12 8 27 22 11 24 27 -6%
Profit before
income
taxes 180 384 589 319 324 339 334 232 -44%
Net profit 131 294 490 229 231 238 234 162 -43%
Depreciation,
amortisation
and
impairment
losses 188 78 70 68 77 80 68 62 143%
Depreciation,
amortisation,
etc (excl
AERx®)* 71 -8%
Capital
expenditure 96 80 68 60 121 90 83 80 -20%
Cash flow
from
operating
activities 335 470 193 342 48 472 237 280 596%
Free cash
flow 430 387 111 282 (59) 360 134 196 -
Equity 4,316 4,449 4,498 3,983 4,040 3,793 3,875 3,624 7%
Total
assets 6,401 6,496 6,490 6,005 5,994 5,866 5,784 5,534 7%
Equity ratio 67.4% 68.5% 69.3% 66.3% 67.4% 64.7% 67.0% 65.5%
Full-time
employees
at the end
of the
period 25,516 25,206 24,729 24,045 23,172 23,071 22,792 22,556 10%
Basic
earnings
per share
(in EUR) 0.21 0.47 0.77 0.36 0.37 0.37 0.36 0.25 -43%
Diluted
earnings
per share
(in EUR) 0.21 0.47 0.76 0.36 0.36 0.37 0.36 0.25 -43%
Average
number of
shares
outstanding
(million)** 624.4 632.0 635.8 635.0 634.2 640.2 645.8 647.2 -2%
Average
number of
shares
outstanding
incl
Dilutive
effect
of options
'in the
money'
(million)** 629.6 636.4 640.2 639.4 638.4 643.6 649.0 650.4 -1%
Sales by
business
segments:
Modern
insulins
(insulin
analogues) 525 479 465 411 418 363 359 311 25%
Human
insulins
*** 418 416 432 421 472 443 442 446 -11%
Insulin-
related
sales
*** 60 60 59 56 57 53 54 51 4%
Oral
Antidiabetic
products
(OAD) 68 79 71 70 68 69 65 64 1%
Diabetes
care total 1,071 1,034 1,027 958 1,015 928 920 872 5%
NovoSeven® 204 191 203 189 197 186 202 170 3%
Growth
hormone
therapy 124 118 124 105 121 110 118 95 3%
Hormone
replacement
therapy 59 55 56 54 61 51 53 50 -4%
Other
products 10 12 9 10 12 9 10 13 -8%
Biopharma-
ceuticals
total 397 376 392 358 391 356 383 328 2%
Sales by
geographic
segments:
Europe
**** 583 542 542 527 538 515 523 475 8%
North
America 484 470 460 431 467 411 398 370 3%
International
operations
**** 238 251 262 228 227 206 221 217 5%
Japan &
Oceania 163 147 155 131 174 153 162 137 -6%
Segment
operating
profit:
Diabetes
care (10) 200 215 167 161 173 200 134 -
Diabetes
care
(excl.
AERx®)* 168 4%
Biopharma-
ceuticals 162 160 162 145 122 162 153 118 32%
*) Excluding costs related to the discontinuation
of AERx®
**) For Q4 2007 the exact numbers of 'Average number
of shares outstanding' and 'Average number of shares
outstanding incl dilutive effect of options
in the money'' are 624,376,552 and 629,555,043 respectively.
***) As from Q2 2007 sales figures for Human insulins
and Insulin-related sales are presented separately.
Comparative figures are adjusted accordingly.
****) Comparative figures from 2006 have been adjusted
in order to reflect a changed organisational structure from
1 January 2007 which transfers 8 countries,
incl. Bulgaria and Romania, from International Operations to Europe.
Encl 3: Income Statement
12M 12M
DKK million 2007 2006
Sales 41,831 38,743
Cost of goods sold 9,793 9,585
Gross profit 32,038 29,158
Sales and distribution costs 12,371 11,608
Research and development costs 8,538 6,316
- Hereof costs related to discontinuation of AERx® 1,325 -
Administrative expenses 2,508 2,387
Licence fees and other operating income (net) 321 272
Operating profit 8,942 9,119
Operating profit
(excl. costs related to discontinuation of AERx®) 10,267 -
Share of profit/(loss) in associated companies 1,233 (260)
Financial income 1,303 931
Financial expenses 507 626
Profit before income taxes 10,971 9,164
Income taxes 2,449 2,712
NET PROFIT 8,522 6,452
Basic earnings per share (DKK) 13.49 10.05
Diluted earnings per share (DKK) 13.39 10.00
Segment sales:
Diabetes care 30,478 27,866
Biopharmaceuticals 11,353 10,877
Segment operating profit:
Diabetes care 4,259 4,982
Operating margin 14.0% 17.9%
Diabetes care (excl. AERx®)* 5,584 -
Operating margin (excl. AERx®)* 18.3% -
Biopharmaceuticals 4,683 4,137
Operating margin 41.2% 38.0%
*) Excluding costs related to the
discontinuation of AERx®
Encl 4: Balance sheet
DKK million 31Dec2007 31Dec2006
ASSETS
Intangible assets 671 639
Property, plant and
equipment 19,605 20,350
Investments in associated
companies 500 788
Deferred income tax assets 2,522 1,911
Other financial assets 131 169
TOTAL LONG-TERM
ASSETS 23,429 23,857
Inventories 9,020 8,400
Trade receivables 6,092 5,163
Tax receivables 319 385
Other receivables 1,493 1,784
Marketable securities and
financial derivatives 2,555 1,833
Cash at bank and in hand 4,823 3,270
TOTAL CURRENT ASSETS 24,302 20,835
TOTAL ASSETS 47,731 44,692
EQUITY AND
LIABILITIES
Share capital 647 674
Treasury shares (26) (39)
Retained earnings 30,661 28,810
Other comprehensive
income 900 677
TOTAL EQUITY 32,182 30,122
Long-term debt 961 1,174
Deferred income tax
liabilities 2,346 1,998
Provision for pensions 362 330
Other provisions 1,239 911
Total long-term liabilities 4,908 4,413
Short-term debt and financial
derivatives 405 338
Trade payables 1,947 1,712
Tax payables 929 788
Other liabilities 4,959 4,863
Other provisions 2,401 2,456
Total current liabilities 10,641 10,157
TOTAL LIABILITIES 15,549 14,570
TOTAL EQUITY AND
LIABILITIES 47,731 44,692
Encl 5: Cash flow statement
DKK million 2007 2006
Net profit 8,522 6,452
Adjustment for non-cash
items:
Income taxes 2,449 2,712
Depreciation, amortisation
and impairment losses 3,007 2,142
Interest income and interest
expenses (16) (73)
Other adjustment for
non-cash items (309) 959
Income taxes paid (2,607) (3,514)
Interest received and
interest paid (net) (29) 95
Cash flow before change
in working capital 11,017 8,773
Change in working capital:
(Increase)/decrease in trade
receivables and other receivables (702) (804)
(Increase)/decrease in inventories (617) (686)
Increase/(decrease) in trade
payables and other liabilities 289 455
Cash flow from operating
activities 9,987 7,738
Investments:
Acquisition of subsidiaries
and business units (59) -
Sale of intangible assets and
long-term financial assets - 175
Purchase of intangible assets
and long-term financial assets (118) (419)
Sale of property, plant and
equipment 40 111
Purchase of property, plant
and equipment (2,308) (2,898)
Net change in marketable
Securities
(maturity exceeding three months) (541) 514
Dividend received 1,470 -
Net cash used in investing
activities (1,516) (2,517)
Financing:
New long-term debt - -
Repayment of long-term debt (18) (23)
Purchase of treasury shares (4,835) (3,000)
Sale of treasury shares 241 210
Dividends paid (2,221) (1,945)
Cash flow from financing
activities (6,833) (4,758)
NET CASH FLOW 1,638 463
Unrealised gain/(loss) on
exchange rates and
marketable securities
included in cash and cash
equivalents (6) 39
Net change in cash and
cash equivalents 1,632 502
Cash and cash equivalents
at the beginning of the year 2,985 2,483
Cash and cash equivalents
at the end of the year 4,617 2,985
Bonds with original term to
maturity exceeding three
months 1,486 1,001
Undrawn committed
credit facilities 7,457 7,456
FINANCIAL RESOURCES
AT THE END OF THE YEAR 13,560 11,442
Cash flow from operating
activities 9,987 7,738
+ Net cash used in investing
activities (1,516) (2,517)
- Net change in marketable
securities (maturity exceeding
three months) (541) 514
FREE CASH FLOW 9,012 4,707
Encl 6: Statement of changes in equity
Other
comprehen-
sive
income
Deferred
Exchange gain/loss
Trea- rate on cash Other
Share sury Retained adjust- flow adjust-
DKK million capital shares earnings ments hedges ments Total
2007
Balance
at the
beginning
of the year 674 (39) 28,810 156 420 101 30,122
Exchange
rate
adjustment
of
investments
in
subsidiaries 53 53
Deferred
(gain)/loss
on cash flow
hedges at
the
beginning of
the year
recognised
in
the Income
statement
for
the year (420) (420)
Deferred
gain/(loss)
on
cash flow
hedges at
the
end of the
year 691 691
Fair value
Adjustments
on financial
assets
available
for sale 12 12
Novo Nordisk
share of
equity
recognised
by
associated
companies (41) (41)
Tax on
equity
adjustments (93) (93)
Other
adjustments 21 21
Net income
Recognised
directly in
equity for
the year - - - 53 271 (101) 223
Net profit
for the year 8,522 8,522
Total income
for the year - - 8,522 53 271 (101) 8,745
Share-based
payment 130 130
Purchase of
treasury
shares (16) (4,819) (4,835)
Sale of
treasury
shares 2 239 241
Reduction of
the B share
capital (27) 27 -
Dividends (2,221) (2,221)
Balance at
the end of
the year 647 (26) 30,661 209 691 - 32,182
At the end of the year proposed dividends
(not yet declared) of DKK 2,795 million are
included in Retained earnings. No dividend
is declared on treasury shares.
2006
Balance at
the
beginning of
the year 709 (61) 26,962 142 (345) 227 27,634
Exchange
rate
adjustment
of
investments
in
subsidiaries 14 14
Deferred
(gain)/loss
on
cash flow
hedges at
the
beginning of
the year
recognised
in
the Income
statement
for
the year 345 345
Deferred
gain/(loss)
on
cash flow
hedges at
the
end of the
year 420 420
Fair value
adjustments
on financial
assets
available
for sale (27) (27)
Novo Nordisk
share of
equity
recognised
by
associated
companies 36 36
Tax on
equity
adjustments (129) (129)
Other
adjustments 5 (6) (1)
Net income
recognised
directly in
equity for
the year - - 5 14 765 (126) 658
Net profit
for the year 6,452 6,452
Total income
for the year - - 6,457 14 765 (126) 7,110
Share-based
payment 113 113
Purchase of
treasury
shares (15) (2,985) (3,000)
Sale of
treasury
shares 2 208 210
Reduction of
the B share
capital (35) 35 -
Dividends (1,945) (1,945)
Balance at
the end of
the year 674 (39) 28,810 156 420 101 30,122
At the end of the year proposed dividends (declared in 2007)
of DKK 2,221 million are included in Retained earnings.
No dividend is declared on treasury shares.
Stock Exchange Announcement no 3 / 2008