Financial statement for the period 1 January 2007 to 30 September
2007
Novo Nordisk increased operating profit by 11% in the first nine
months of 2007 based on a 9% sales increase and an improved gross
margin
* Novo Nordisk increased sales by 14% in local currencies and by 9%
in Danish kroner due to a significant negative currency
development.
o Sales of modern insulins increased by 37% (31% in Danish
kroner).
o Sales of NovoSeven® increased by 10% (4% in Danish kroner).
o Sales of Norditropin® increased by 12% (7% in Danish
kroner).
o Sales in North America increased by 25% (15% in Danish
kroner).
* Gross margin increased to 76.7% in the first nine months of 2007
up from 75.2% in the same period last year, primarily reflecting
continued productivity improvements.
* Operating profit increased by 11% to DKK 7,815 million. Adjusted
for the impact from currencies, underlying operating profit
increased by more than 20%.
* Net profit increased by 60% to DKK 7,545 million, primarily
reflecting the divestment of Dako's business activities in the
second quarter of 2007. Earnings per share (diluted) increased by
62% to DKK 23.63.
* The expectation for full-year sales growth is still 11-14%
measured in local currencies and now 6-9% as reported due to the
depreciation of key invoicing currencies. Full-year operating
profit growth remains unchanged around 20% measured in local
currencies and is now expected to be close to 10% as reported.
* In October, Novo Nordisk received marketing authorisation for
Levemir® in Japan for both type 1 and type 2 diabetes including
combination treatment with oral antidiabetics.
Lars Rebien Sørensen, president and CEO, said: "Our portfolio of
modern insulins continues to show strong sales growth in all key
markets. Within the next few months we will be launching Levemir® in
FlexPen® in Japan, which will further support growth in the coming
years."
Financial statement for the first nine months of 2007
This interim report has been prepared in accordance with
International Financial Reporting Standards (IAS 34). The accounting
policies used in the interim report are consistent with those used in
the Annual Report 2006. 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 9M
2006 to 9M
Income statement 9M 2007 9M 2006 2007
Sales 30,885 28,256 9%
Gross profit 23,693 21,252 11%
Gross margin 76.7% 75.2%
Sales and distribution costs 9,151 8,277 11%
Percent of sales 29.6% 29.3%
Research and development 5,125 4,406 16%
costs
Percent of sales 16.6% 15.6%
Administrative expenses 1,831 1,742 5%
Percent of sales 5.9% 6.2%
Licence fees and other 229 184 24%
operating income
Operating profit 7,815 7,011 11%
Operating margin 25.3% 24.8%
Net financials 1,809 (257) -
Profit before tax 9,624 6,754 42%
Net profit 7,545 4,728 60%
Net profit margin 24.4% 16.7%
Other key numbers
Depreciation, amortisation 1,611 1,568 3%
and impairment losses
Capital expenditure 1,549 1,888 (18%)
Cash flow from operating 7,489 7,379 1%
activities
Free cash flow 5,814 5,146 13%
Total assets 48,423 43,744 11%
Equity 33,161 28,288 17%
Equity ratio 68.5% 64.7%
Average number of shares
outstanding (million) -
diluted 319.3 323.8 (1%)
Diluted earnings per share 23.63 14.60 62%
(in DKK)
Full-time employees at the 25,206 23,071 9%
end of the period
Sales development by segments
Sales increased by 14% in local currencies and by 9% measured in
Danish kroner in the first nine months of 2007. Growth was realised
both within diabetes care and biopharmaceuticals - primarily driven
by modern insulins (insulin analogues), NovoSeven® and Norditropin®.
Sales Growth Growth Share of
9M 2007 as in local growth
DKK reported currencies in local
million currencies
The diabetes care segment
Modern insulins 10,097 31% 37% 71%
Human insulins 9,456 (5%) (1%) (2%)
Insulin-related sales 1,301 11% 15% 4%
Oral antidiabetic products 1,637 11% 16% 6%
Diabetes care - total 22,491 11% 16% 79%
The biopharmaceuticals segment
NovoSeven® 4,346 4% 10% 10%
Growth hormone therapy 2,586 7% 12% 7%
Other products 1,462 5% 11% 4%
Biopharmaceuticals - total 8,394 5% 11% 21%
Total sales 30,885 9% 14% 100%
Sales development by regions
In the first nine months of 2007, sales growth measured in local
currencies was realised in all regions. The main contributors to
growth were North America and International Operations providing 54%
and 25%, respectively, of the total sales growth. Europe contributed
17% and Japan & Oceania 4% of the sales growth in the first nine
months of 2007.
Sales in North America in the first nine months of 2007 were
positively impacted by the continued implementation of the Medicare
Part D scheme, a public scheme introduced in 2006 which offers
improved medical treatment for elderly patients. As previously
communicated, the greater part of the full-year 2006 positive impact
of the implementation was booked in the fourth quarter of 2006 as
data became available, whereas in 2007 the positive impact is
expected to be more evenly distributed between quarters.
Diabetes care
Sales of diabetes care products increased by 16% in local currencies
and by 11% in Danish kroner to DKK 22,491 million compared to the
first nine months of 2006.
Modern insulins, human insulins and insulin-related products
Sales of modern insulins, human insulins and insulin-related products
increased by 15% measured in local currencies and by 11% in Danish
kroner to DKK 20,854 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 42% of
the modern insulin market, both measured by volume.
Sales of modern insulins increased by 37% in local currencies in the
first nine months of 2007 and by 31% in Danish kroner to DKK 10,097
million. All regions realised solid growth rates, with North America
and Europe as the primary contributors to growth. Sales of modern
insulins contributed 71% of the overall growth in local currencies
and now constitute 52% of Novo Nordisk's sales of insulins.
North America
Sales in North America increased by 30% in local currencies in the
first nine months of 2007 and by 20% 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 29% of the modern insulin market, both measured by
volume. The expansion of the US diabetes sales force from 1,200 to
1,900 people was completed by the end of June, and all sales
representatives are now trained and in the field promoting the
portfolio of modern insulins.
Europe
Sales in Europe increased by 6% 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 predominant share of growth in the modern insulin
market.
International Operations
Sales within International Operations increased by 22% in local
currencies and by 17% in Danish kroner. The main growth driver in the
first nine months of 2007 was sales of modern insulins, primarily in
Turkey, China and Russia. Furthermore, sales of human insulins
continue to add to overall growth in the region, driven by China. The
key contributor to growth in the region is China, accounting for more
than 40% of the total sales growth in the first nine months of 2007.
Sales growth in the first nine months of 2007 was negatively impacted
by the loss of a federal human insulin tender in Brazil in the second
half of 2006.
Japan & Oceania
Sales in Japan & Oceania increased by 5% in local currencies and
decreased by 4% measured in Danish kroner. The sales development
reflects sales growth for modern insulins, NovoRapid® and NovoRapid®
30 Mix, both of which are increasingly being sold in the leading
prefilled delivery device, FlexPen®. Novo Nordisk holds 74% of the
total insulin market in Japan and 63% of the modern insulin market,
both measured by volume, and is capturing the predominant share of
growth in the modern insulin market.
Oral antidiabetic products (NovoNorm®/Prandin®)
Sales of oral antidiabetic products increased by 16% in local
currencies and by 11% in Danish kroner to DKK 1,637 million compared
to the same period in 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 11% in local
currencies and by 5% measured in Danish kroner to DKK 8,394 million
compared to the first nine months of 2006.
NovoSeven®
Sales of NovoSeven® increased by 10% in local currencies and by 4% in
Danish kroner to DKK 4,346 million compared to the same period last
year. Sales growth for NovoSeven® was primarily realised in North
America. The sales growth for NovoSeven® during the first nine months
of 2007 primarily reflected increased sales within the congenital
bleeding disorder segments. 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 12% measured in local currencies and by 7%
measured in Danish kroner to DKK 2,586 million. All regions, and
especially North America and Europe, contributed to growth measured
in local currencies.
Other products
Sales of other products within biopharmaceuticals, which
predominantly consist of hormone replacement therapy (HRT) related
products, increased by 11% in local currencies and by 5% in Danish
kroner to DKK 1,462 million. This development primarily reflects
continued sales progress in the US market for Vagifem®, Novo
Nordisk's topical oestrogen product, and is furthermore supported by
the recent launch of Activella® low-dose in the US. Novo Nordisk
continues to be the second largest company within the global HRT
market.
Costs, licence fees and other operating income
The cost of goods sold was DKK 7,192 million compared to DKK 7,004
million in the same period last year, representing a gross margin of
76.7% compared to 75.2% in the first nine months of 2006. This
improvement reflects improved production efficiency, an improved
product mix and higher average prices in the US, but also a negative
impact of around 0.9 percentage points due to currency developments,
primarily the lower value of US dollars and Japanese yen versus
Danish kroner compared to the same period last year.
Total non-production-related costs increased by 12% to DKK 16,107
million. The increase primarily reflects costs related to sales and
distribution as well as research and development. Sales and
distribution costs increased slightly more than sales, primarily
reflecting the increase in the US diabetes care sales force, as well
as a provision relating to an antidumping court case in Brazil which
was recorded in the first quarter of 2007. Research and development
costs also increased more than sales, primarily reflecting the high
number of late-stage clinical development projects currently being
conducted.
Licence fees and other operating income in the first nine months of
2007 were DKK 229 million, positively impacted by a non-recurring
income in the first quarter of 2007 related to the out-licensing of
an oral antidiabetic compound.
Net financials
Net financials showed a net income of DKK 1,809 million in the first
nine months of 2007 compared to a net expense of DKK 257 million in
the same period 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 DKK 1.4 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,
compared to an expense of DKK 148 million in the same period in 2006.
The foreign exchange result was an income of DKK 664 million compared
to a loss of DKK 103 million in the same period last year. 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 the first nine months of 2007 compared to the
exchange rate level prevailing in 2006.
Outlook 2007
Novo Nordisk still expects 11-14% growth in sales for 2007, measured
in local currencies. Given the current level of exchange rates versus
Danish kroner, the reported sales growth for 2007 is now expected to
be 6-9%.
For 2007, the expectation for operating profit growth measured in
local currencies remains unchanged around 20% and is reflecting a
sustainable improvement in gross margin. The expectation for
operating profit growth as reported is now close to 10%, reflecting
the gross margin improvement but also a continued depreciation of key
invoicing currencies versus Danish kroner, compared to the exchange
rate levels prevailing at the time of the release of the results for
the first six months of 2007 on 3 August 2007.
Novo Nordisk now expects a net financial income of around DKK 1,950
million for 2007, including a positive impact from Novo Nordisk's
divestment of the ownership of Dako's business activities, which was
announced on 28 February 2007 and completed on 31 May 2007. A
tax-exempt non-recurring income of DKK 1.4 billion from the
divestment was recorded in the second quarter of 2007.
For 2007, Novo Nordisk expects an effective tax rate of around 22%.
The tax rate in 2007 includes two non-recurring effects. Firstly, the
tax rate includes a non-recurring effect of around 3 percentage
points from Novo Nordisk's divestment of the ownership of Dako's
business activities and, secondly, the tax rate includes a
non-recurring effect of around 1 percentage point from the
re-evaluation of the company's deferred tax liabilities as a
consequence of the reduced Danish corporation tax rate of 25%.
Capital expenditure is now expected to be around DKK 2.5 billion in
2007. Expectations for depreciation, amortisation and impairment
losses are still around DKK 2.3 billion, and free cash flow is now
expected to be around DKK 7.5 billion, which includes an expected
positive cash flow impact in the fourth quarter of 2007 from the
divestment of the ownership of Dako's business activities.
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 2007.
Novo Nordisk has hedged expected net cash flows in relation to US
dollars, Japanese yen and British pounds for 17, 15 and 9 months,
respectively. The financial impact from foreign exchange hedging is
included in 'Net financials'.
With regard to the financial outlook for 2008 it is Novo Nordisk's
intention to provide detailed guidance on expectations in connection
with the full-year release of financial results for 2007, scheduled
for 31 January 2008. At present, the preliminary plans for 2008
indicate a growth measured in Danish kroner in sales and operating
profit, respectively, at the level of 10%, despite the present
currency exchange rate environment for especially the US dollar.
These preliminary plans reflect expectations of a continued solid
penetration of the portfolio of modern insulins as well as progress
for key products within biopharmaceuticals, but also an expectation
of continued intense competition within the diabetes care area. The
preliminary plans for growth in operating profit in 2008 also reflect
a continued improvement of the gross margin as well as increased R&D
spending relative to sales due to a high level of clinical
development activities.
Research and development update
Diabetes care
As communicated on 22 October 2007, Novo Nordisk has received
marketing authorisation for the use of Levemir® for the treatment of
diabetes from the Japanese Ministry of Health, Labour and Welfare.
Novo Nordisk expects to launch Levemir® in Japan before the end of
2007, thus becoming the first company in Japan to offer a complete
portfolio of modern rapid-acting, pre-mixed and basal insulins.
In August and September, Novo Nordisk announced the clinical results
from three of the five phase 3 studies to be used for the regulatory
filing of the once-daily human GLP-1 analogue liraglutide (the LEAD®
1, LEAD® 2 and LEAD® 4 studies).
In the LEAD® 1 study all patients were treated with glimepiride and
randomised to add-on treatment with placebo, rosiglitazone or
liraglutide for 26 weeks. In the LEAD® 2 study all patients were
given metformin and randomised to treatment with placebo, glimepiride
or liraglutide for 26 weeks. In both studies an HbA1c reduction of
approximately 1 to 1.5 percentage points was observed for
liraglutide-treated patients, bringing around 40% of patients within
the American Diabetes Association (ADA) goal of HbA1c < 7% at study
completion. This was achieved from an HbA1c baseline level of just
below 8.5%. Furthermore, a weight difference of between 2 and 4 kg in
favour of liraglutide was found when compared to rosiglitazone and
glimepiride treatment, respectively. The average body weight was 80
to 90 kg at the beginning of the studies. As would be expected from a
study in which all patients received glimepiride treatment,
hypoglycaemia related to the degree of blood glucose control was
observed in all study arms of the LEAD® 1 study. In the LEAD® 2
study, liraglutide-treated patients achieved blood glucose control in
the presence of hypoglycaemia rates similar to placebo, contrasting
with the glimepiride-treated group where hypoglycaemia occurred in a
larger number of patients, related to the degree of blood glucose
control.
The LEAD® 4 study investigated the effect of liraglutide in
combination with metformin and rosiglitazone. From an average HbA1c
level at the beginning of the study of around 8.5% and an average
body weight of just above 95 kg, more than 50% of the patients in the
liraglutide-treated group reached the ADA goal of HbA1c < 7%. The
HbA1c reduction achieved in the liraglutide-treated group was close
to 1.5 percentage points compared to baseline. In addition, a weight
difference of around 2.5 kg compared to placebo in favour of
liraglutide was observed. As expected, a low rate of hypoglycaemic
events was reported, and these were related to the degree of blood
glucose control.
The three LEAD® studies showed that liraglutide in combination with
either glimepiride or metformin or metformin and rosiglitazone is
well tolerated. The most frequently reported adverse event during
liraglutide treatment was nausea, reported by between 5-20% of the
subjects in the LEAD® 1 and 2 studies, and between 30-40% in the
LEAD® 4 study with a frequency decreasing over time.
As part of the longer term life-cycle management initiatives
supporting the GLP-1 franchise, Novo Nordisk has initiated a phase 1
study with a longer-acting human GLP-1 analogue. Based on Novo
Nordisk's protein-acylation technology, the compound is designed for
once-weekly treatment with expected administration in a convenient
injection device.
In August, Novo Nordisk submitted a New Drug Application to the US
Food and Drug Administration for the NovoNorm®/metformin combination
tablet PrandiMet(TM). This tablet formulation combines the
short-acting insulin secretagogue repaglinide with the insulin
sensitising agent metformin in a single tablet and thereby offers an
effective and simplified mealtime regimen for type 2 diabetes.
Biopharmaceuticals
In September, Novo Nordisk received approval from the US Food and
Drug Administration (FDA) for treatment with Norditropin® of children
with short stature associated with Turner's syndrome. With this
indication approved physicians can treat patients with Norditropin®
at higher dosing levels than previously. Results from a clinical
trial have illustrated that treatment with Norditropin® at a higher
dose level resulted in a higher share of the Turner's syndrome
patients reaching a normal adult height compared to the previously
used dosing level.
In September, the FDA approved Nordiflex PenMate(TM), which is an
accessory to the Norditropin Nordiflex® prefilled pen that conceals
the needle and enables easy auto-insertion. This represents an
advance for patients who suffer from needle anxiety by making the
injection more discreet and convenient.
Within HRT, a national-level approval of Activelle® low-dose was
obtained in Sweden in August 2007. Based on the Swedish approval, the
European Mutual Recognition Procedure has now been initiated in the
rest of Europe to obtain national marketing approvals.
Finally, as part of the joint IL-21 programme with ZymoGenetics
within oncology, Novo Nordisk has initiated a phase 1/2 study with
IL-21 in combination with doxorubicin for the use in ovarian cancer
comprising up to 80 patients.
Equity
Total equity was DKK 33,161 million at the end of the first nine
months of 2007, equal to 68.5% 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.
Holding of treasury shares and share repurchase programme
As per 30 October 2007, Novo Nordisk A/S and its wholly-owned
affiliates owned 10,467,449 of its own B shares, corresponding to
3.24% of the total share capital. During the period from 1 January to
30 October 2007, Novo Nordisk repurchased a total of 5,198,750 B
shares equal to a cash value of DKK 3.2 billion. In 2006, Novo
Nordisk repurchased shares equal to a cash value of DKK 3 billion out
of the total DKK 10 billion share repurchase programme for 2006-2008.
In 2007, Novo Nordisk now expects to repurchase B shares equal to a
cash value of around DKK 4.5 billion.
Sustainability issues update
Diabetes Youth Charter addresses burden of juvenile diabetes
In September, Novo Nordisk and the International Diabetes Federation
(IDF) launched the Diabetes Youth Charter, an expert review into
existing data and global trends in the area of childhood diabetes. It
is now recognised that diabetes in children is on the rise and
affects children in both developed and developing countries. The
Charter looks at epidemiology, organisation and delivery of care, as
well as the psychosocial and the socio-economic impact of diabetes,
and provides a solid platform for strategies to improve prevention
and diabetes care. Actions to promote better outcomes include
lifestyle changes, early detection, intensive treatment and improved
care strategies, and diabetes self-management education.
Novo Nordisk is rated healthcare leader in the Dow Jones
Sustainability Indexes
Novo Nordisk ranks as best-in-class in healthcare - one of 18 global
supersectors - in Dow Jones Sustainability Indexes, the world's
leading indexes for sustainability-driven investment portfolios. This
ranking is a result of the latest global analysis of corporate
sustainability leadership, based on a thorough analysis of companies'
economic, environmental and social performance. The analysis
concludes that "Novo Nordisk is the leading company in terms of
sustainability in the pharmaceutical industry. Sustainability is an
integral part of its corporate strategy and business organisation."
Novo Nordisk's performance is found to be particularly strong in the
social dimension - human capital development, corporate citizenship/
philanthropy, social reporting, animal testing and bioethics. Also
the company's responsible sourcing, environmental management and
climate strategy achieve high scores.
Legal issues update
US hormone therapy litigation
As of 30 October 2007, 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, an
additional 28 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 2007 and does not presently expect to have a trial
scheduled before 2008. One of the 28 individuals who filed suit
against Pfizer alleging use of Activella® has a trial tentatively
scheduled for April 2008. Novo Nordisk does not expect the pending
claims to impact Novo Nordisk's financial outlook.
SoloStar® litigation
On 10 July 2007, Novo Nordisk filed a lawsuit against Sanofi-Aventis
for patent infringement. The lawsuit was filed in the US District
Court for the District of New Jersey and alleges that
Sanofi-Aventis's SoloStar® pen system infringes a Novo Nordisk US
patent. In addition, Novo Nordisk filed two patent infringement
lawsuits against Sanofi-Aventis in Germany: one in Dusseldorf,
alleging that SoloStar® infringes a European patent owned by Novo
Nordisk, and one in Mannheim, alleging that SoloStar® infringes a
German utility model patent owned by Novo Nordisk. All of the patents
relate to mechanisms for injecting and dose-setting and all of the
lawsuits seek both injunctive relief and monetary damages.
Conference call details
At 13.00 CET today, corresponding to 8.00 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
The above contains forward-looking statements as the term is defined
in the US Private Securities Litigation Reform Act of 1995. This in
particular relates to information included under the headings
'Outlook 2007', 'Research and development update' and 'Legal issues
update' with reference to plans, forecasts, expectations, strategies,
projections and assessment of risks. Words such as 'believe',
'expect', 'may', 'will', 'plan', 'strategy', 'prospect', 'foresee',
'estimate', 'project', 'anticipate', 'can', 'intend' and similar
words 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 co-operations 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 and (iv)
statements of the assumptions underlying or relating to such
statements.
These statements are based on current plans, estimates and
projections, and therefore undue reliance should not be placed on
them. Moreover, such statements are not guarantees of future results.
By their very nature, forward-looking statements involve inherent
risks and uncertainties, both general and specific, and risks exist
that the predictions, forecasts, projections and other
forward-looking statements will not be achieved. Novo Nordisk
cautions that a number of important factors could cause actual
results to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such
forward-looking statements.
Factors that may affect future results include, but are not limited
to, interest rate and currency exchange rate fluctuations, delay or
failure of development projects, interruptions of supplies and
production, product recall, pressure on insulin prices, unexpected
contract breaches or terminations, government-mandated or
market-driven price decreases for Novo Nordisk's products,
introduction of competing products, Novo Nordisk's ability to
successfully market current and new products, exposure to product
liability and other legal proceedings and investigations, changes in
reimbursement rules and governmental laws and related interpretation
thereof, perceived or actual failure to adhere to ethical marketing
practices, developments in international activities, which also
involve certain political risks, investments in and divestitures of
domestic and foreign companies and unexpected growth in costs and
expenses.
Risks and uncertainties are further described in reports filed by
Novo Nordisk with the US Securities and Exchange Commission (SEC),
including the company's Form 20-F for 2006 filed with the US SEC in
February 2007, and to the section 'Risk management' of the Annual
Report 2006 available on our website (novonordisk.com).
Forward-looking statements speak only as of the date they were made,
and unless required by law Novo Nordisk is under no duty and
undertakes no obligation to update or revise any of them, after the
distribution of this Stock Exchange Announcement, 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 nine months of 2007.
The interim report and accounts have been prepared in accordance with
International Financial Reporting Standards (IAS 34) 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 31 October 2007
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
Niels Jacobsen Anne Marie Kverneland Kurt Anker Nielsen
Søren Thuesen
Pedersen Stig Strøbæk Jørgen Wedel
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
E-mail: mike@novonordisk.com E-mail: mlau@novonordisk.com
Hans Rommer
Tel (direct): (+45) 4442 4765
E-mail: 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 E-mail: cqfr@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
Q3
2006
-
Q3
2007 2006 2007
Q3 Q2 Q1 Q4 Q3 Q2 Q1
Sales 10,504 10,563 9,818 10,487 9,583 9,727 8,946 10%
Gross profit 7,990 8,205 7,498 7,906 7,246 7,475 6,531 10%
Gross margin 76,1% 77,7% 76,4% 75,4% 75,6% 76,8% 73,0%
Sales and
distribution
costs 2,993 3,110 3,048 3,331 2,699 2,850 2,728 11%
Percent of sales 28,5% 29,4% 31,0% 31,8% 28,2% 29,3% 30,5%
Research and
development costs 1,724 1,754 1,647 1,910 1,489 1,498 1,419 16%
Percent of sales 16,4% 16,6% 16,8% 18,2% 15,5% 15,4% 15,9%
Administrative
expenses 623 594 614 645 605 557 580 3%
Percent of sales 5,9% 5,6% 6,3% 6,2% 6,3% 5,7% 6,5%
Licence fees and
other operating
income (net) 31 60 138 88 49 59 76 -37%
Operating profit 2,681 2,807 2,327 2,108 2,502 2,629 1,880 7%
Operating margin 25,5% 26,6% 23,7% 20,1% 26,1% 27,0% 21,0%
Share of
profit/(loss)
in associated
companies (57) 1,350 (60) (112) (30) (58) (60) 90%
Financial income 322 297 309 579 139 102 111 132%
Financial expenses 90 60 202 165 77 182 202 17%
Profit before
income
taxes 2,856 4,394 2,374 2,410 2,534 2,491 1,729 13%
Net profit 2,184 3,652 1,709 1,724 1,774 1,743 1,211 23%
Depreciation,
amortisation
and impairment
losses 586 516 509 574 600 508 460 -2%
Capital
expenditure 597 508 444 899 671 622 595 -11%
Cash flow from
operating
activities 3,500 1,438 2,551 359 3,520 1,768 2,091 -1%
Free cash flow 2,888 826 2,100 (439) 2,684 996 1,466 8%
Equity 33,161 33,475 29,676 30,122 28,288 28,908 27,042 17%
Total assets 48,423 48,300 44,742 44,692 43,744 43,145 41,299 11%
Equity ratio 68,5% 69,3% 66,3% 67,4% 64,7% 67,0% 65,5%
Full-time
employees
at the end of the
period 25,206 24,729 24,045 23,172 23,071 22,792 22,556 9%
Basic earnings
per share
(in DKK) 6,91 11,49 5,38 5,44 5,54 5,40 3,74 25%
Diluted earnings
per share
(in DKK) 6,86 11,41 5,35 5,40 5,51 5,37 3,72 25%
Average number of
shares
outstanding
(million)* 316,0 317,9 317,5 317,1 320,1 322,9 323,6 -1%
Average number of
shares
outstanding
incl dilutive
effect
of options
'in the money'
(million)* 318,2 320,1 319,7 319,2 321,8 324,5 325,2 -1%
Sales by business
segments:
Modern insulins
(insulin
analogues) 3,568 3,464 3,065 3,122 2,701 2,678 2,324 32%
Human insulins
*** 3,098 3,222 3,136 3,519 3,306 3,301 3,325 -6%
Insulin-related
sales
*** 445 437 419 431 391 406 378 14%
Oral antidiabetic
products (OAD) 585 529 523 508 516 483 477 13%
Diabetes care
total 7,696 7,652 7,143 7,580 6,914 6,868 6,504 11%
NovoSeven® 1,427 1,508 1,411 1,470 1,393 1,507 1,265 2%
Growth hormone
therapy 878 924 784 897 821 882 709 7%
Hormone
replacement
therapy 414 411 406 455 383 396 373 8%
Other products 89 68 74 85 72 74 95 24%
Biopharma-
ceuticals
total 2,808 2,911 2,675 2,907 2,669 2,859 2,442 5%
Sales by
geographic
segments:
Europe ** 4,036 4,035 3,931 4,013 3,843 3,903 3,541 5%
North America 3,500 3,424 3,214 3,486 3,062 2,968 2,764 14%
International
Operations ** 1,870 1,953 1,696 1,690 1,539 1,648 1,617 22%
Japan & Oceania 1,098 1,151 977 1,298 1,139 1,208 1,024 -4%
Segment operating
profit:
Diabetes care 1,487 1,600 1,247 1,198 1,296 1,490 998 15%
Biopharmaceuticals 1,194 1,207 1,080 910 1,206 1,139 882 -1%
*) For Q3 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
315,976,234 and 318,177,897
respectively.
**) Comparative figures from 2006 have been adjusted in order to reflect a
changed organisational
structure from 1 January 2007 which transfers eight countries, incl.
Bulgaria and Romania, from
International Operations to Europe.
***) As from Q2 2007 sales figures for Human insulins and Insulin-related
sales are presented
separately. Comparative figures are adjusted accordingly.
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.
2007 2006
%
Change
Q3
2006
-
Q3
Q3 Q2 Q1 Q4 Q3 Q2 Q1 2007
Sales 1,411 1,418 1,317 1,406 1,285 1,304 1,199 10%
Gross profit 1,074 1,101 1,006 1,060 972 1,002 875 10%
Gross margin 76.1% 77.7% 76.4% 75.4% 75.6% 76.8% 73.0%
Sales and
distribution
costs 402 417 409 447 361 382 366 11%
Percent of 28.5% 29.4% 31.0% 31.8% 28.2% 29.3% 30.5%
sales
Research and
development
costs 232 235 221 256 200 201 190 16%
Percent of 16.4% 16,6% 16,8% 18,2% 15,5% 15,4% 15,9%
sales
Administrative
expenses 84 80 82 86 82 74 78 3%
Percent of 5,9% 5.6% 6.3% 6.2% 6.3% 5.7% 6.5%
sales
Licence fees
and other
operating
income
(net) 4 8 19 11 7 8 10 -37%
Operating
profit 360 377 312 283 336 352 252 7%
Operating 25.5% 26.6% 23.7% 20.1% 26.1% 27.0% 21.%
margin
Share of
profit/(loss)
in associated
companies (7) 181 (8) (15) (4) (8) (8) 90%
Financial
income 44 40 41 78 18 14 15 132%
Financial
expenses 12 8 27 22 11 24 27 17%
Profit before
income
taxes 384 589 319 324 339 334 232 13%
Net profit 294 490 229 231 238 234 162 23%
Depreciation,
amortisation
and
impairment
losses 78 70 68 77 80 68 62 -2%
Capital
expenditure 80 68 60 121 90 83 80 -11%
Cash flow from
operating
activities 470 193 342 48 472 237 280 -1%
Free cash flow 387 111 282 (59) 360 134 196 8%
Equity 4,449 4,498 3,983 4,040 3,793 3,875 3,624 17%
Total assets 6,496 6,490 6,005 5,994 5,866 5,784 5,534 11%
Equity ratio 68.% 69.% 66.% 67.4% 64.7% 67.0% 65.5%
Full-time
employees
at the end of
the
period 25,206 24,729 24,045 23,172 23,071 22,792 22,556 9%
Basic earnings
per share (in
EUR) 0.93 1.54 0.72 0.72 0.75 0.72 0.50 25%
Diluted
earnings
per share (in
EUR) 0.92 1.53 0.72 0.72 0.74 0.72 0.50 25%
Average number
of
shares
outstanding
(million)* 316.0 317.9 317.5 317.1 320.1 322.9 323.6 -1%
Average number
of
shares
outstanding
incl dilutive
effect
of options 'in
the
money'
(million)* 318.2 320.1 319.7 319.2 321.8 324.5 325.2 -1%
Sales by
business
segments:
Modern insulins
(insulin
analogues) 479 465 411 418 363 359 311 32%
Human insulins
*** 416 432 421 472 443 442 446 -6%
Insulin-related
sales *** 60 59 56 57 53 54 51 14%
Oral
antidiabetic
products (OAD) 79 71 70 68 69 65 64 13%
Diabetes care
Total 1,034 1,027 958 1,015 928 920 872 11%
NovoSeven® 191 203 189 197 186 202 170 2%
Growth hormone
therapy 118 124 105 121 110 118 95 7%
Hormone
replacement
therapy 55 56 54 61 51 53 50 8%
Other products 12 9 10 12 9 10 13 24%
Biopharma-
ceuticals
total 376 392 358 391 356 383 328 5%
Sales by
geographic
segments:
Europe ** 542 542 527 538 515 523 475 5%
North America 470 460 431 467 411 398 370 14%
International
Operations ** 251 262 228 227 206 221 217 22%
Japan &
Oceania 147 155 131 174 153 162 137 -4%
Segment
operating
profit:
Diabetes care 200 215 167 161 173 200 134 15%
Biopharma-
ceuticals 160 162 145 122 162 153 118 -1%
*) For Q3 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 315,976,234 and
318,177,897 respectively.
**) Comparative figures from 2006 have been adjusted in order to
reflect a changed
organisational structure from 1 January 2007 which transfers eight
countries, incl Bulgaria and
Romania, from International Operations to Europe.
***) As from Q2 2007 sales figures for Human insulins and
Insulin-related sales are presented
Separately. Comparative figures are adjusted accordingly.
Appendix 3: Income Statement
9M 9M Q3 Q3
DKK million 2007 2006 2007 2006
Sales 30,885 28,256 10,504 9,583
Cost of goods sold 7,192 7,004 2,514 2,337
Gross profit 23,693 21,252 7,990 7,246
Sales and
distribution costs 9,151 8,277 2,993 2,699
Research and
development costs 5,125 4,406 1,724 1,489
Administrative
expenses 1,831 1,742 623 605
Licence fees and
other operating
income (net) 229 184 31 49
Operating profit 7,815 7,011 2,681 2,502
Share of profit/(loss)
in associated
companies 1,233 (148) (57) (30)
Financial income 928 352 322 139
Financial expenses 352 461 90 77
Profit before
income taxes 9,624 6,754 2,856 2,534
Income taxes 2,079 2,026 672 760
NET PROFIT 7,545 4,728 2,184 1,774
Basic earnings
per share (DKK) 23.79 14.67 6.91 5.54
Diluted earnings
per share (DKK) 23.63 14.60 6.86 5.51
Segment sales:
Diabetes care 22,491 20,286 7,696 6,914
Biopharmaceuticals 8,394 7,970 2,808 2,669
Segment
operating profit:
Diabetes care 4,334 3,784 1,487 1,296
Operating margin 19.3% 18.7% 19.3% 18.7%
Biopharmaceuticals 3,481 3,227 1,194 1,206
Operating margin 41.5% 40.5% 42.5% 45.2%
Appendix 4: Balance sheet
DKK million 30 Sep 2007 31 Dec 2006 30 Sep 2006
ASSETS
Intangible assets 750 639 665
Property, plant and
equipment 20,358 20,350 20,292
Investments in
associated companies 2,044 788 732
Deferred income
tax assets 1,849 1,911 1,285
Other financial assets 162 169 260
TOTAL LONG-TERM
ASSETS 25,163 23,857 23,234
Inventories 8,876 8,400 8,179
Trade receivables 6,176 5,163 5,029
Tax receivables 337 385 766
Other receivables 1,831 1,784 1,512
Marketable securities
and financial derivatives 1,864 1,833 1,483
Cash at bank and in hand 4,176 3,270 3,541
TOTAL CURRENT ASSETS 23,260 20,835 20,510
TOTAL ASSETS 48,423 44,692 43,744
EQUITY AND
LIABILITIES
Share capital 647 674 674
Treasury shares (20) (39) (40)
Retained earnings 31,738 28,810 26,995
Other comprehensive
income 796 677 659
TOTAL EQUITY 33,161 30,122 28,288
Long-term debt 1,132 1,174 1,184
Deferred income tax
liabilities 2,048 1,998 2,103
Provision for pensions 416 330 343
Other provisions 900 911 338
Total long-term
liabilities 4,496 4,413 3,968
Short-term debt and
financial derivatives 152 338 302
Trade payables 1,510 1,712 1,154
Tax payables 1,286 788 1,941
Other liabilities 5,286 4,863 5,293
Other provisions 2,532 2,456 2,798
Total current liabilities 10,766 10,157 11,488
TOTAL LIABILITIES 15,262 14,570 15,456
TOTAL EQUITY
AND LIABILITIES 48,423 44,692 43,744
Appendix 5: Condensed cash flow statement
DKK million 9M 2007 9M 2006
Net profit 7,545 4,728
Adjustment for
non-cash items 3,157 4,389
Income taxes paid
and net interest received (1,492) (1,117)
Cash flow before
change in working
capital 9,210 8,000
Net change in
working capital (1,721) (621)
Cash flow from
operating activities 7,489 7,379
Net investments in
intangible assets and
long-term financial assets (126) (345)
Capital expenditure for
property, plant and equipment (1,549) (1,888)
Net change in marketable
securities (maturity exceeding
three months) 3 511
Net cash used in
investing activities (1,672) (1,722)
Cash flow from
financing activities (4,746) (4,837)
NET CASH FLOW 1,071 820
Unrealised gain/(loss)
on exchange rates and
marketable securities
included in cash and
cash equivalents (1) (16)
Net change in cash
and cash equivalents 1,070 804
Cash and cash equivalents
at the beginning of the year 2,985 2,483
Cash and cash equivalents
at the end of the period 4,055 3,287
Bonds with original term to
maturity exceeding three
months 994 999
Undrawn committed
credit facilities 7,454 7,458
FINANCIAL RESOURCES
AT THE END OF THE PERIOD 12,503 11,744
Cash flow from operating
activities 7,489 7,379
+ Net cash used in
investing activities (1,672) (1,722)
-Net change in marketable
securities (maturity exceeding
three months) 3 511
FREE CASH FLOW 5,814 5,146
Appendix 6: Statement of changes in equity
Other comprehensive income
Ex- Deferred
Change gain/loss
rate on cash Other
Share- Treasury Retained adjust- flow adjust-
DKK million capital shares earnings ments hedges ments Total
9M 2007
Balance at
the
beginning of
the year 674 (39) 28,810 156 420 101 30,122
Exchange rate
adjustment
of
investments
in
subsidiaries 24 24
Deferred
(gain)/loss
on
cash flow
hedges
at the
beginning of
the year
recognised
in the
Income
statement
for the
period (420) (420)
Deferred
gain/(loss)
on
cash flow
hedges
at the end
of the
period 485 485
Other
adjustments 30 30
Net income
recognised
directly in
equity - - - 24 65 30 119
Net profit
for the
period 7,545 7,545
Total income
for
the period - - 7,545 24 65 30 7,664
Share-based
payment 104 104
Purchase of
treasury
shares (9) (2,708) (2,717)
Sale of
treasury
shares 1 208 209
Reduction of
the B
share
capital (27) 27 -
Dividends (2,221) (2,221)
Balance at
the
end of the
period 647 (20) 31,738 180 485 131 33,161
9M 2006
Balance at
the
beginning of
the
year 709 (61) 26,962 142 (345) 227 27,634
Exchange rate
adjustment
of
investments
in
subsidiaries 71 71
Deferred
(gain)/loss
on
cash flow
hedges
at the
beginning of
the year
recognised
in the
Income
statement
for the
period 345 345
Deferred
gain/(loss)
on
cash flow
hedges
at the end
of the
period 226 226
Other
adjustments (7) (7)
Net income
recognised
directly in
equity - - - 71 571 (7) 635
Net profit
for the
period 4,728 4,728
Total income
for
the period - - 4,728 71 571 (7) 5,363
Share-based
payment 76 76Purchase of
treasury
shares (15) (2,985) (3,000)
Sale of
treasury
shares 1 159 160
Reduction of
the
B share
capital (35) 35 -
Dividends (1,945) (1,945)
Balance at
the
end of the
period 674 (40) 26,995 213 226 220 28,288
Stock Exchange Announcement no 29 / 2007