Interim financial report for the period 1 January 2009 to 31 March
2009
Novo Nordisk increased sales by 18% in the first quarter of 2009
Operating profit increased by 35% supported by continued gross margin
improvement
* Sales in Danish kroner increased by 18% and by 11% in local
currencies.
o Sales of modern insulins increased by 31% (25% in local
currencies).
o Sales of NovoSeven® increased by 25% (18% in local
currencies).
o Sales of Norditropin® increased by 18% (9% in local
currencies).
o Sales in North America increased by 31% (16% in local
currencies).
o Sales in International Operations increased by 20% (16% in
local currencies).
* Gross margin improved by 2.6 percentage points to 79.9% in the
first three months of 2009, primarily reflecting continued
productivity improvements and a positive currency impact of
around 1.0 percentage points.
* Reported operating profit increased by 35% to DKK 3,810 million.
Adjusted for the impact from currencies and non-recurring costs
in 2008 related to the discontinuation of all pulmonary delivery
projects, underlying operating profit increased by around 15%.
* Net profit increased by 24% to DKK 2,699 million. Earnings per
share (diluted) increased by 27% to DKK 4.41.
* In Europe, the Committee for Medicinal Products for Human Use
(CHMP) under the European Medicines Agency (EMEA) adopted a
positive opinion for Victoza® (liraglutide) and Novo Nordisk
expects to receive the European Marketing Authorisation from the
European Commission within approximately two months.
* In the US, following the Advisory Committee meeting on 2 April,
Novo Nordisk is working with the United States Food and Drug
Administration (FDA) as it completes the review of the
liraglutide application.
* For 2009, operating profit measured in local currencies is now
expected to grow by at least 10% and reported operating profit
growth to be around 8 percentage points higher.
Lars Rebien Sørensen, president and CEO, said: "We are satisfied with
the financial performance during the first quarter of 2009 which is
driven by solid sales growth for the modern insulins and gross margin
improvements. Following the positive opinion in Europe for Victoza®,
we now look forward to launching Victoza® in the first European
markets this summer."
Financial statement for the first three months of 2009
The present interim financial report for the first quarter of 2009
has been prepared in accordance with IAS 34 Interim Financial
Reporting, as issued by IASB and adopted by the EU, and the
additional Danish disclosure requirements applying to listed
companies' interim reports. The interim financial report has not been
audited. See 'Accounting policies' on page 10 for further
information.
Amounts in DKK million, except average number of shares outstanding,
earnings per share and full-time employees.
% change
Q1 2008
Profit and loss Q1 2009 Q1 2008 to Q1 2009
Sales 12,498 10,614 18%
Gross profit 9,990 8,201 22%
Gross margin 79.9% 77.3%
Sales and distribution costs 3,844 2,975 29%
Percent of sales 30.8% 28.0%
Research and development costs 1,744 1,858 (6%)
- hereof discontinuation costs for - 220 -
pulmonary diabetes projects
Percent of sales 14.0% 17.5%
Percent of sales adjusted for pulmonary 14.0% 15.4%
diabetes projects
Administrative expenses 679 627 8%
Percent of sales 5.4% 5.9%
Licence fees and other operating income 87 88 (1%)
Operating profit 3,810 2,829 35%
Operating margin 30.5% 26.7%
Net financials (305) 39 -
Profit before tax 3,505 2,868 22%
Net profit 2,699 2,180 24%
Net profit margin 21.6% 20.5%
Other key numbers
Depreciation, amortisation and impairment 607 563 8%
losses
Capital expenditure 413 214 93%
Cash flow from operating activities 4,148 3,070 35%
Free cash flow 3,626 2,795 30%
Total assets 50,205 47,534 6%
Equity 31,345 31,251 0%
Equity ratio 62.4% 65.7%
Average number of shares outstanding
(million) - diluted 612.7 626.3 (2%)
Diluted earnings per share (in DKK) 4.41 3.48 27%
Full-time employees at the end of the 27,429 25,765 6%
period
Sales development by segments
Sales increased by 18% in Danish kroner and by 11% measured in local
currencies. While growth was realised within both diabetes care and
biopharmaceuticals, the primary growth contribution originated from
the modern insulins.
Sales Growth Growth Share of
Q1 2009 as in local growth
DKK reported currencies in local
million currencies
The diabetes care segment
Modern insulins 4,990 31% 25% 77%
- Levemir® 1,161 42% 37% 25%
- NovoMix® 1,553 25% 21% 22%
- NovoRapid® 2,276 29% 21% 30%
Human insulins 3,004 2% (4%) (9%)
Insulin-related products 484 9% 5% 2%
Oral antidiabetic products 691 8% 1% 0%
Diabetes care - total 9,169 17% 11% 70%
The biopharmaceuticals segment
NovoSeven® 1,805 25% 18% 22%
Growth hormone therapy 18% 9% 7%
(Norditropin®) 1,034
Other products 490 8% 3% 1%
Biopharmaceuticals - total 3,329 20% 13% 30%
Total sales 12,498 18% 11% 100%
Sales development by regions
In the first three months of 2009, sales growth was realised in all
regions. North America was the main contributor to growth with 44%
share of growth measured in local currencies and now constitutes the
largest sales region for Novo Nordisk. International Operations and
Europe contributed 28% and 26%, respectively, of the total sales
growth, whereas Japan and Oceania accounted for 2% of the
growth.
Diabetes care
Sales of diabetes care products increased by 17% measured in Danish
kroner to DKK 9,169 million and by 11% in local currencies compared
to the first three months of 2008.
Modern insulins, human insulins and insulin-related products
In the first three months of 2009, sales of modern insulins, human
insulins and insulin-related products increased by 18% in Danish
kroner to DKK 8,478 million and by 12% measured in local currencies
compared with the same period last year. All regions contributed to
growth measured in local currencies, with North America and
International Operations having the highest growth rates. Novo
Nordisk continues to be the global leader with 52% of the total
insulin market and 45% of the modern insulin market, both measured by
volume.
The sales growth is driven by the portfolio of modern insulins
exhibiting a steady sales growth globally. Sales of modern insulins
increased by 31% in Danish kroner to DKK 4,990 million and by 25% in
local currencies compared with the first three months of 2008. All
regions realised solid growth rates, with North America accounting
for more than half of the growth followed by Europe and International
Operations. Sales of modern insulins now constitute 62% of Novo
Nordisk's sales of insulin.
North America
Sales in North America increased by 39% in Danish kroner and by 22%
in local currencies in the first three months of 2009, reflecting a
solid penetration of the modern insulins Levemir®, NovoLog® and
NovoLog® Mix 70/30. Novo Nordisk maintains its leadership position in
the US insulin market with 42% of the total insulin market and 33% of
the modern insulin market, both measured by volume. Currently, around
38% of Novo Nordisk's modern insulin volume in the US is being sold
in FlexPen®.
Europe
Sales in Europe decreased by 1% measured in Danish kroner and
increased by 3% in local currencies, reflecting continued progress
for the portfolio of modern insulins but also declining human insulin
sales. Novo Nordisk holds 55% of the total insulin market and 51% of
the modern insulin market, both measured by volume, and is capturing
the main share of growth in the modern insulin market. The device
penetration in Europe remains high with more than 95% of Novo
Nordisk's insulin volume being sold in devices, primarily NovoPen®
and FlexPen®.
International Operations
Sales within International Operations increased by 22% in Danish
kroner and by 19% in local currencies. The main contributor to growth
in the first three months of 2009 was sales of modern insulins,
primarily in Turkey and China. Furthermore, sales of human insulins
continue to add to overall growth in the region, also driven by
China.
Japan & Oceania
Sales in Japan & Oceania increased by 23% measured in Danish kroner
and by 1% in local currencies. The sales development reflects sales
growth for all three modern insulins NovoRapid®, NovoRapid Mix® 30
and Levemir®. Novo Nordisk holds 71% of the total insulin market in
Japan and 63% of the modern insulin market, both measured by volume.
The device penetration in Japan remains high with more than 95% of
Novo Nordisk's insulin volume being sold in devices, primarily
NovoPen® and FlexPen®.
Oral antidiabetic products (NovoNorm®/Prandin®)
In the first three months of 2009, sales of oral antidiabetic
products increased by 8% in Danish kroner to DKK 691 million and by
1% in local currencies compared to the same period in 2008. The sales
development reflects increased sales in Europe countered by lower
sales in China in the first quarter of 2009 compared to the same
period last year due to the timing of sales in China in 2008.
Biopharmaceuticals
In the first three months of 2009, sales of biopharmaceutical
products increased by 20% measured in Danish kroner to DKK 3,329
million and by 13% measured in local currencies compared to the first
three months of 2008.
NovoSeven®
Sales of NovoSeven® increased by 25% in Danish kroner to DKK 1,805
million and by 18% in local currencies compared with the first three
months of 2008. Sales growth for NovoSeven® was primarily realised in
Europe and International Operations and is positively impacted by
timing of sales in these regions. The sales growth for NovoSeven®
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 18% measured in Danish kroner to DKK 1,034
million and by 9% measured in local currencies compared with the
first three months of 2008. North America and Europe were the main
contributors to growth measured in local currencies. Novo Nordisk
remains the second-largest company in the global growth hormone
market with 23% market share measured by volume.
Other products
Sales of other products within biopharmaceuticals, which
predominantly consist of hormone replacement therapy (HRT)-related
products, increased by 8% in Danish kroner to DKK 490 million and by
3% in local currencies. This development primarily reflects continued
sales progress for Vagifem®, a topical oestrogen product, partly due
to a US price increase countered by generic competition in the US
with Activella® (Activelle® outside the US), Novo Nordisk's
continuous-combined HRT product. The low-dose version of Activelle®
was launched in Europe in April 2009 and has been available in the US
since 2007.
Costs, licence fees and other operating income
The cost of goods sold was DKK 2,508 million in the first three
months of 2009 representing a gross margin of 79.9% compared with
77.3% in the same period of 2008. This improvement reflects improved
production efficiency and higher average selling prices in the US.
The gross margin was positively impacted by around 1.0 percentage
point due to a positive currency development, primarily the higher
value of the US dollar and the Japanese yen versus the Danish krone
compared with the first three months of 2008.
In the first three months of 2009, total non-production-related costs
increased by 15% to DKK 6,267 million compared with the same period
last year. Slightly more than half of the increase in
non-production-related costs, or around 8 percentage points, reflect
the higher value of key currencies versus the Danish krone in the
first three months of 2009 compared with the first three months of
2008. The underlying development in non-production-related costs
relate to the expanded sales force in certain key markets like US,
UK, Germany and China countered by lower research and development
costs, primarily reflecting timing with regard to the initiation of
phase 3 clinical trial programmes as well as the non-recurring costs
of DKK 220 million in the first quarter of 2008 related to the
discontinuation of pulmonary diabetes projects.
Licence fees and other operating income were DKK 87 million in the
first three months of 2009 compared with DKK 88 million in the same
period of 2008.
Net financials
Net financials showed a net expense of DKK 305 million in the first
three months of 2009 compared with a net income of DKK 39 million in
the same period of 2008.
Included in net financials is the result from associated companies
with an expense of DKK 35 million, primarily related to Novo
Nordisk's share of losses in ZymoGenetics, Inc. In the same period of
2008, the result from associated companies was an expense of 67 DKK
million.
For the first three months of 2009, the foreign exchange result was
an expense of DKK 327 million compared with an income of DKK 70
million in the first three months of 2008. This development reflects
losses on foreign exchange hedging of especially US dollars and
Japanese yen due to the significant appreciation of these versus
Danish kroner. Foreign exchange hedging losses of around DKK 900
million have been deferred for future income recognition.
Outlook 2009
The current expectations for 2009 are summarised and compared to the
previous expectations in the table below (changes highlighted in bold
and italic):
+-------------------------------------------------------------------+
| Expectations are as | Current | Previous |
| reported, if not | expectations | expectations |
| otherwise stated | 30 April 2009 | 29 January 2009 |
|-----------------------+---------------------+---------------------|
| Sales growth | | |
| - in local | At the level of 10% | At the level of 10% |
| currencies | Around 4.5 | Around 5 percentage |
| - as reported | percentage | points higher |
| | points higher | |
|-----------------------+---------------------+---------------------|
| Operating profit | | |
| growth | At least 10% | At the level of 10% |
| - underlying | Around 8 percentage | Around 9 percentage |
| - as reported | points higher | points higher |
| | | |
|-----------------------+---------------------+---------------------|
| Net financial expense | Around DKK 1.5 | Around DKK 1.6 |
| | billion | billion |
|-----------------------+---------------------+---------------------|
| Effective tax rate | Approximately 23% | Approximately 24% |
|-----------------------+---------------------+---------------------|
| Capital expenditure | Around DKK 3 | Around DKK 3 |
| | billion | billion |
|-----------------------+---------------------+---------------------|
| Depreciation, | Around DKK 2.6 | Around DKK 2.6 |
| amortisation | billion | billion |
| and impairment losses | | |
|-----------------------+---------------------+---------------------|
| Free cash flow | Around DKK 10 | At least DKK 9 |
| | billion | billion |
+-------------------------------------------------------------------+
Novo Nordisk still expects sales growth in 2009 at the level of 10%
measured in local currencies. This is based on expectations of
continued market penetration for Novo Nordisk's key strategic
products within diabetes care and biopharmaceuticals as well as
expectations of continued intense competition during 2009. Given the
current level of exchange rates versus Danish kroner, the reported
sales growth is now expected to be around 4.5 percentage points
higher than the growth rate measured in local currencies.
For 2009, growth in operating profit is now expected to be at least
10% measured in local currencies. The increase reflects lower
expected research and development costs for 2009 due to timing of
phase 3 clinical trial programmes. Furthermore, the forecast is based
on assumptions of a continued improvement of the gross margin and
increased spending for sales and distribution relative to sales due
to the increase in Novo Nordisk's global sales force. Given the
current level of exchange rates versus Danish kroner, the reported
operating profit growth is now expected to be around 8 percentage
points higher than the growth rate measured in local currencies.
For 2009, Novo Nordisk now expects a net financial expense of DKK 1.5
billion. The current expectation reflects significant foreign
exchange hedging losses, primarily related to the US dollar and the
Japanese yen.
The effective tax rate for 2009 is now expected to be around 23%.
Capital expenditure is still expected to be around DKK 3 billion in
2009. Expectations for depreciations, amortisation and impairment
losses of around DKK 2.6 billion are unchanged, and free cash flow is
now expected to be around DKK 10 billion.
All of the above expectations are based on the assumption that the
global economic downturn will not significantly change the business
environment for Novo Nordisk during 2009. In addition, all of the
above expectations are provided that currency exchange rates,
especially the US dollar, remain at the current level versus the
Danish krone for the rest of 2009 (see appendix 7). Novo Nordisk has
hedged expected net cash flows in key invoicing currencies and, all
other things being equal, movements in key invoicing currencies will
impact Novo Nordisk's operating profit as outlined in the below
table.
Key invoicing Annual impact on Novo Nordisk's Hedging period
currencies operating profit of a 5% (months)
movement in currency
USD DKK 530 million 15
JPY DKK 150 million 14
GBP DKK 80 million 13
CNY DKK 80 million 15*
CAD DKK 40 million 5
*USD used as proxy when hedging Novo Nordisk's CNY currency exposure
The financial impact from foreign exchange hedging is included in
'Net financials'.
Research and development update
Diabetes care
In Europe, the Committee for Medicinal Products for Human Use (CHMP)
under the European Medicines Agency (EMEA) on 23 April adopted a
positive opinion for Victoza® for the treatment of type 2 diabetes.
Victoza® is the first once-daily human Glucagon-Like Peptide-1
(GLP-1) analogue developed for the treatment of type 2 diabetes. The
positive opinion for Victoza® covers the expected indications of:
combination treatment with metformin or a sulphonylurea in patients
with insufficient glycaemic control despite maximal tolerated dose of
monotherapy with metformin or sulphonylurea and combination treatment
with metformin and a sulphonylurea or metformin and a
thiazolidinedione in patients with insufficient glycaemic control
despite dual therapy. Novo Nordisk expects to receive the European
Marketing Authorisation from the European Commission within
approximately two months.
The regulatory process for liraglutide in Japan is progressing
according to plans and a decision by the Japanese regulatory
authorities is expected in 2010.
On 2 April and as previously communicated, the Endocrinologic and
Metabolic Drug Advisory Committee of the United States Food and Drug
Administration (FDA) discussed questions related to liraglutide, Novo
Nordisk's once-daily human GLP-1 analogue which was filed for
regulatory approval in the US in May 2008. The Advisory Committee
voted on four questions related to the risk profile of liraglutide. A
majority of Advisory Committee members supported that appropriate
evidence of cardiovascular safety had been provided to rule out
excess cardiovascular risk of liraglutide relative to comparators.
Novo Nordisk has committed to do a large post-approval cardiovascular
outcome study.
A majority of Advisory Committee members voted no to the question on
whether the data available with the regulatory submission on thyroid
C-cell tumours showed that this finding is not relevant to humans.
However, the Advisory Committee was split on the FDA question related
to whether the available data on C-cell tumours permitted
approvability. Finally, the Advisory Committee unanimously dismissed
any risk of papillary thyroid cancer related to liraglutide.
Following the meeting, Novo Nordisk will be discussing next steps
with the FDA to resolve the issues raised at the Advisory Committee
meeting. US approval of liraglutide, and the timing thereof, will
depend on the completion of the FDA's review of the application.
Novo Nordisk recently obtained two-year data from the liraglutide
plus metformin combination study (LEAD(TM) 2). On a background of
metformin therapy three different doses of liraglutide were compared
to glimepiride treatment and placebo in people with type 2 diabetes.
In total 880 people with diabetes completed the initial first six
months of the study and 529 completed two years. People treated with
liraglutide achieved statistically significant reductions in HbA1c
compared to placebo after two years. Furthermore, significantly more
people treated with the highest dose of liraglutide were below 7%
HbA1c, the American Diabetes Association (ADA) target for good
glycaemic control, compared to treatment with glimepiride. Finally,
the favourable benefit to risk profile of liraglutide was confirmed
in this study.
At the annual meeting of the American Diabetes Association (ADA) to
be held in New Orleans on 5-9 June 2009, Novo Nordisk expects to
present further detailed results from the global liraglutide clinical
development programme.
Novo Nordisk very recently finalised a phase 2 study investigating
safety and efficacy of five doses of semaglutide (NN9535), a
once-weekly human GLP-1 analogue, versus placebo and open-label
liraglutide add-on therapy in people with type 2 diabetes. At study
start, patients were treated with metformin or controlled with diet
and exercise. The 12-week multi-centre, multinational, double-blind,
placebo-controlled, randomised dose-finding trial, which included a
little more than 400 patients, demonstrated that clinical efficacy
and safety of semaglutide was broadly in line with liraglutide.
Semaglutide was generally well tolerated and was not associated with
an increase in injection site reactions, antibody formation or
calcitonin levels. After more detailed analysis of the dose-response
findings on efficacy and safety, Novo Nordisk will discuss the future
plans for semaglutide development with regulatory authorities before
initiation of phase 3 development.
Novo Nordisk is preparing initiation of phase 3 programmes for the
new generation of insulins, known as NN5401 and NN1250, in the second
half of 2009 and good progress has been made with regulatory agencies
around the world. The first phase 3 trials with NN1250 and NN5401 are
expected to be initiated in the third and fourth quarters of 2009,
respectively. Novo Nordisk expects to give a more detailed update on
expected timelines and design of the phase 3 programmes in connection
with the release of financial results for the first half of 2009 on 6
August 2009.
Biopharmaceuticals
In April 2009, Novo Nordisk initiated a phase 3 trial of a
recombinant factor VIII compound in patients with haemophilia A. The
trial is conducted as a multi-centre, open-label, non-controlled
trial and evaluates the efficacy and safety in both prevention and
on-demand treatment of haemophilia A bleeding episodes. A sub-trial
investigates efficacy and safety of the recombinant factor VIII
compound in patients undergoing major or minor elective surgery
requiring factor VIII replenishment. Novo Nordisk expects to enrol a
total of 140 patients in the phase 3 programme.
Novo Nordisk recently received approval from the Japanese
Pharmaceuticals and Medical Devices Agency for an expansion of the
Norditropin® label to include treatment of growth hormone deficiency
in adults. Growth hormone deficiency in adults is an approved
indication for Norditropin® in both Europe and the US.
As previously communicated, Novo Nordisk initiated a phase 3 study
with recombinant
FXIII in congenital factor XIII deficiency in August 2008. All 41
patients have now been recruited and entered into the one-year
treatment period of this trial.
Equity
Total equity was DKK 31,345 million at the end of the first three
months of 2009, equal to 62.4% of total assets, compared with 65.2%
at the end of 2008. Please refer to appendix 6 for further
elaboration of changes in equity during the first three months of
2009.
Reduction of share capital
The Annual General Meeting of Novo Nordisk A/S, which was held on 18
March 2009, approved a 2.2% reduction in the total share capital by
cancellation of 14,000,000 treasury B shares of DKK 1 at a nominal
value of DKK 14,000,000. After the legal implementation of the share
capital reduction, which is expected to take place after expiry of
the legal notice period in June 2009, Novo Nordisk's share capital
will amount to DKK 620,000,000 divided into an A share capital of DKK
107,487,200 and a B share capital of DKK 512,512,800.
Treasury shares and share repurchase programme
Novo Nordisk's ongoing share repurchase programme is conducted in
accordance with the provisions of the European Commission's
regulation no 2273/2003 of 22 December 2003, also known as 'Safe
Harbour Regulation', with J.P. Morgan Securities Ltd. as lead
manager. According to this, J.P. Morgan Securities Ltd. will
repurchase shares on behalf of Novo Nordisk for up to DKK 3.0 billion
during the trading period that started on 29 January 2009 and will
end on 5 August 2009. A maximum of 159,541 shares can be bought
during one single trading day, equal to 15% of the average daily
trading volume of Novo Nordisk B shares on NASDAQ OMX Copenhagen
during the month of December 2008, and a maximum of 20,580,773 shares
in total can be bought during the trading period.
As per 29 April 2009, Novo Nordisk A/S and its wholly-owned
affiliates owned 29,940.023 of its own B shares, corresponding to
4.7% of the total share capital.
The overall DKK 18.5 billion share repurchase programme initiated in
2006 is still expected to be finalised before the end of 2009. In
2006, 2007 and 2008 Novo Nordisk repurchased B shares equal to a cash
value of DKK 12.5 billion and Novo Nordisk still expects to
repurchase B shares equal to a cash value of around DKK 6 billion in
2009.
Sustainability issues update
Expanding access to treatment
In the first quarter of 2009, Novo Nordisk made progress towards its
ambitious plan to expand access to treatment for children in Africa
with type 1 diabetes. Software was installed and training provided to
begin patient registries in four countries, and collaboration was
initiated with Ministries of Health on treatment strategies in all of
the five pilot countries, Cameroon, the Democratic Republic of Congo,
Guinea-Conakry, Tanzania and Uganda. The objective of the programme
is to reduce child mortality due to lack of or insufficient diabetes
care in the world's poorest countries. It will offer free insulin,
treatment and diabetes education for children and their families, and
the goal is to reach 10,000 children on a five-year horizon.
Legal issues update
US hormone therapy litigation
As of 29 April 2009, Novo Nordisk Inc., as well as the majority of
hormone therapy product manufacturers in the US, is a defendant in
product liability lawsuits related to hormone therapy products. These
lawsuits currently involve a total of 53 individuals who allege use
of a Novo Nordisk hormone therapy product. These products (Activella®
and Vagifem®) have been sold and marketed in the US since 2000. Until
July 2003, the products were sold and marketed exclusively in the US
by Pharmacia & Upjohn Company (now Pfizer Inc.). A further 63
individuals currently allege, in relation to similar lawsuits against
Pfizer Inc., that they have also used a Novo Nordisk hormone therapy
product. Novo Nordisk does not currently have any court trials
scheduled for 2009. Novo Nordisk does not expect the pending claims
to impact Novo Nordisk's financial outlook.
Conference call details
At 13.00 CET today, corresponding to 7.00 am EDT, 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.
Accounting policies
The present interim financial report for the first quarter of 2009
has been prepared in accordance with IAS 34 Interim Financial
Reporting, as issued by IASB and adopted by the EU, and the
additional Danish disclosure requirements applying to listed
companies' interim reports.
The following standards relevant to Novo Nordisk have been adopted by
the EU and were implemented with effective date 1 January 2009 as
described in the 2008 Annual Report:
* IAS 1 (Revised) 'Presentation of financial statements'.
* IAS 23 (Amendment) 'Borrowing costs'.
* IFRS 2 (Amendment) 'Share-based payment'.
* IAS 28 (Amendment) 'Investment in associates' (and consequential
amendments to IAS 32, 'Financial Instruments: Disclosure and
Presentation'.
* IAS 36 (Amendment) 'Impairment of assets'.
* IAS 38 (Amendment) 'Intangible assets'.
* IAS 19 (Amendment) 'Employee benefits'.
* Minor amendments to IFRS 7, IAS 1, IAS 8, IAS 10, IAS 18, IAS 34
and IAS 39.
* IFRIC 16 'Hedges of net investment in a foreign operation'.
The adoption of these standards has not affected recognition and
measurement in Novo Nordisk's interim financial report for the first
quarter of 2009. Except for the above-mentioned implemented
standards, the interim financial report has been prepared using the
same accounting policies as the Annual Report for 2008.
Forward-looking statement
Novo Nordisk's reports filed with or furnished to the US Securities
and Exchange Commission (SEC), including this document as well as the
company's Annual Report 2008 and Form 20-F, both filed with the SEC
in February 2009, and written information released, or oral
statements made, to the public in the future by or on behalf of Novo
Nordisk, may contain forward-looking statements. Words such as
'believe', 'expect', 'may', 'will', 'plan', 'strategy', 'prospect',
'foresee', 'estimate', 'project', 'anticipate', 'can', 'intend',
'target' and other words and terms of similar meaning in connection
with any discussion of future operating or financial performance
identify forward-looking statements. Examples of such forward-looking
statements include, but are not limited to
- statements of plans, objectives or goals for future operations,
including those related to Novo Nordisk's products, product research,
product development, product introductions and product approvals as
well as cooperations in relation thereto,
- statements containing projections of or targets for revenues,
income (or loss), earnings per share, capital expenditures,
dividends, capital structure or other net financials,
- statements of future economic performance, future actions and
outcome of contingencies such as legal proceedings, and
- statements of the assumptions underlying or relating to such
statements.
In this document, examples of forward-looking statements can be found
under the headings 'Outlook 2009', 'Research and development update',
'Equity' and 'Legal issues update'.
These statements are based on current plans, estimates and
projections. By their very nature, forward-looking statements involve
inherent risks and uncertainties, both general and specific. Novo
Nordisk cautions that a number of important factors, including those
described in this document, could cause actual results to differ
materially from those contemplated in any forward-looking statements.
Factors that may affect future results include, but are not limited
to, global as well as local political and economic conditions,
including interest rate and currency exchange rate fluctuations,
delay or failure of projects related to research and/or development,
unplanned loss of patents, interruptions of supplies and production,
product recall, unexpected contract breaches or terminations,
government-mandated or market-driven price decreases for Novo
Nordisk's products, introduction of competing products, reliance on
information technology, Novo Nordisk's ability to successfully market
current and new products, exposure to product liability and legal
proceedings and investigations, changes in governmental laws and
related interpretation thereof, including on reimbursement,
intellectual property protection and regulatory controls on testing,
approval, manufacturing and marketing, perceived or actual failure to
adhere to ethical marketing practices, investments in and
divestitures of domestic and foreign companies, unexpected growth in
costs and expenses, failure to recruit and retain the right employees
and failure to maintain a culture of compliance.
Please also refer to the overview of risk factors in 'Managing Risks'
on pp 24-25 of the Annual Report 2008 available on the company's
website (novonordisk.com).
Unless required by law Novo Nordisk is under no duty and undertakes
no obligation to update or revise any forward-looking statement after
the distribution of this document, whether as a result of new
information, future events or otherwise.
Management statement
Today, the Board of Directors and Executive Management reviewed and
approved the interim report and accounts of Novo Nordisk A/S for the
first three months of 2009.
The interim report and accounts have been prepared in accordance with
International Financial Reporting Standards and the additional Danish
disclosure requirements applying to listed companies' interim reports
and accounts.
In our opinion the accounting policies used are appropriate and the
overall presentation of the interim report and accounts is adequate.
Furthermore, in our opinion the interim report and accounts include a
fair review of the development and performance of the business and
the financial position of the group, as well as an overview of the
material risks and uncertainties the group faces.
Bagsværd 30 April 2009
Executive Management:
Lars Rebien Sørensen Jesper Brandgaard
President and CEO CFO
Lise Kingo Kåre Schultz Mads Krogsgaard Thomsen
Board of Directors:
Sten Scheibye Göran A Ando
Chairman Vice chairman
Henrik Gürtler Johnny Henriksen Pamela J Kirby
Anne Marie Kverneland Kurt Anker Nielsen Søren Thuesen Pedersen
Hannu Ryöppönen Stig Strøbæk Jørgen Wedel
Contacts for further information
Media: Investors:
Mike Rulis Mads Veggerby Lausten
Tel: (+45) 4442 3573 Tel: (+45) 4443 7919
E-mail: mike@novonordisk.com E-mail: mlau@novonordisk.com
Kasper Roseeuw Poulsen
Tel: (+45) 4442 4471
E-mail: krop@novonordisk.com
In North America:
Sean Clements Hans Rommer
Tel: (+1) 609 514 8316 Tel: (+1) 609 919 7937
E-mail: secl@novonordisk.com E-mail: hrmm@novonordisk.com
Further information on Novo Nordisk is available on the company's
internet homepage at the address: novonordisk.com
Company Announcement no 25 / 2009
Appendix 1: Quarterly numbers in DKK
%
change
Q1 2009
2009 2008 vs
Q1 Q4 Q3 Q2 Q1 Q1 2008
Sales 12,498 12,583 11,246 11,110 10,614 18%
Gross profit 9,990 10,047 8,640 8,556 8,201 22%
Gross margin 79.9% 79.8% 76.8% 77.0% 77.3%
Sales and
distribution costs 3,844 3,558 3,155 3,178 2,975 29%
Percent of sales 30.8% 28.3% 28.1% 28.6% 28.0%
Research and
development costs 1,744 2,439 1,579 1,980 1,858 (6%)
- Hereof costs
related to AERx®* - - 50 (155) (220)
Percent of sales 14.0% 19.4% 14.0% 17.8% 17.5%
Percent of sales
(excl AERx®*) 14.0% 19.4% 14.5% 16.4% 15.4%
Administrative
expenses 679 749 633 626 627 8%
Percent of sales 5.4% 6.0% 5.6% 5.6% 5.9%
Licence fees and
other operating
income (net) 87 73 51 74 88 (1%)
Operating profit 3,810 3,374 3,324 2,846 2,829 35%
Operating margin 30.5% 26.8% 29.6% 25.6% 26.7%
Operating profit
(excl AERx®*) 3,810 3,374 3,274 3,001 3,049 25%
Operating margin
(excl AERx®*) 30.5% 26.8% 29.1% 27.0% 28.7%
Share of
profit/(loss)
in associated
companies (35) 4 (58) (3) (67) (48%)
Financial income 142 (82) 306 429 474 (70%)
Financial expenses 412 226 66 21 368 12%
Profit before income
taxes 3,505 3,070 3,506 3,251 2,868 22%
Net profit 2,699 2,330 2,664 2,471 2,180 24%
Depreciation,
amortisation and
impairment losses 607 752 560 567 563 8%
Capital expenditure 413 764 448 328 214 93%
Cash flow from
operating activities 4,148 3,204 3,673 2,916 3,070 35%
Free cash flow 3,626 2,421 3,210 2,589 2,795 30%
Equity 31,345 32,979 32,173 33,046 31,251 0%
Total assets 50,205 50,603 48,990 48,478 47,534 6%
Equity ratio 62.4% 65.2% 65.7% 68.2% 65.7%
Full-time employees
at the end of the
period 27,429 26,575 26,360 26,060 25,765 6%
Basic earnings per
share (in DKK) 4.44 3.82 4.34 3.99 3.51 26%
Diluted earnings
per share (in DKK) 4.41 3.80 4.30 3.96 3.48 27%
Average number of
shares outstanding
(million) 607.4 609.3 614.2 618.6 620.9 (2%)
Average number of
shares outstanding
incl
dilutive effect of
options 'in the
money'
(million) 612.7 614.4 618.6 623.5 626.3 (2%)
Sales by business
segments:
Modern insulins
(insulin analogues) 4,990 5,028 4,365 4,103 3,821 31%
Human insulins 3,004 3,093 2,806 2,966 2,939 2%
Insulin-related
sales 484 477 464 460 443 9%
Oral antidiabetic
products (OAD) 691 602 671 478 640 8%
Diabetes care
total 9,169 9,200 8,306 8,007 7,843 17%
NovoSeven® 1,805 1,774 1,534 1,648 1,440 25%
Growth hormone
therapy 1,034 1,060 941 986 878 18%
Hormone
Replacement
therapy 409 442 394 391 385 6%
Other products 81 107 71 78 68 19%
Biopharma-
ceuticals total 3,329 3,383 2,940 3,103 2,771 20%
Sales by geographic
regions:
Europe 4,195 4,453 4,305 4,400 4,061 3%
North America 4,532 4,478 3,759 3,467 3,450 31%
International
Operations 2,513 2,186 2,074 2,069 2,096 20%
Japan & Oceania 1,258 1,466 1,108 1,174 1,007 25%
Segment operating
profit:
Diabetes care 2,171 2,424 1,963 1,510 1,672 30%
Diabetes care
(excl AERx®*) 2,171 2,424 1,913 1,665 1,892 15%
Biopharma- 42%
ceuticals 1,639 950 1,361 1,336 1,157
*) Costs related to the discontinuation of all pulmonary
diabetes projects.
Appendix 2: Quarterly numbers in EUR
(Amounts in EUR million, except number of employees,
earnings per share and number of shares outstanding.)
Key figures are translated into EUR as supplementary information
- the translation is based on average exchange rate
for income statement and exchange rate at the balance sheet date
for balance sheet items.
%
change
Q1 2009
2009 2008 vs
Q1 Q4 Q3 Q2 Q1 Q1 2008
Sales 1,677 1,688 1,508 1,489 1,424 18%
Gross profit 1,341 1,348 1,159 1,147 1,100 22%
Gross margin 79.9% 79.8% 76.8% 77.0% 77.3%
Sales and distribution
costs 516 478 423 426 399 29%
Percent of sales 30.8% 28.3% 28.1% 28.6% 28.0%
Research and
development costs 234 327 211 266 249 (6%)
- Hereof costs related
to
AERx®* - - 7 (20) (30)
Percent of sales 14.0% 19.4% 14.0% 17.8% 17.5%
Percent of sales 14.0%
(excl AERx®*) 19.4% 14.4% 16.4% 15.4%
Administrative
expenses 91 100 85 84 84 8%
Percent of sales 5.4% 6.0% 5.6% 5.6% 5.9%
Licence fees and
other operating
income (net) 12 10 7 10 12 (1%)
Operating profit 512 453 446 381 380 35%
Operating margin 30.5% 26.8% 29.6% 25.6% 26.7%
Operating profit
(excl AERx®*) 512 453 439 401 410 25%
Operating margin 30.5%
(excl AERx®*) 26.8% 29.1% 27.0% 28.7%
Share of profit/(loss)
in associated
companies (5) 2 (8) 0 (9) (48%)
Financial income 19 8 41 57 64 (70%)
Financial expenses 55 50 9 3 49 12%
Profit before income
taxes 471 413 470 436 385 22%
Net profit 362 313 357 332 292 24%
Depreciation,
amortisation and
impairment losses 81 101 75 76 76 8%
Capital expenditure 55 102 60 44 29 93%
Cash flow from
operating activities 557 429 492 391 412 35%
Free cash flow 487 325 430 347 375 30%
Equity 4,208 4,426 4,312 4,431 4,191 0%
Total assets 6,741 6,792 6,566 6,500 6,375 6%
Equity ratio 62.4% 65.2% 65.7% 68.2% 65.7%
Full-time employees
at the end of the
period 27,429 26,575 26,360 26,060 25,765 6%
Basic earnings per
share (in EUR) 0.60 0.51 0.58 0.54 0.47 26%
Diluted earnings per
share (in EUR) 0.59 0.51 0.57 0.53 0.47 27%
Average number of
shares outstanding
(million) 607.4 609.3 614.2 618.6 620.9 (2%)
Average number of
shares outstanding
incl
dilutive effect of
options 'in the
money' (million) 612.7 614.4 618.6 623.5 626.3 (2%)
Sales by business
segments:
Modern insulins
(insulin analogues) 670 675 585 550 513 31%
Human insulins 403 415 376 398 394 2%
Insulin-related
sales 65 64 62 62 59 9%
Oral antidiabetic
products (OAD) 93 81 90 64 86 8%
Diabetes care
total 1,231 1,235 1,113 1,074 1,052 17%
NovoSeven® 242 238 206 221 193 25%
Growth hormone
therapy 139 142 126 132 118 18%
Hormone
replacement therapy 55 59 53 52 52 6%
Other products 10 14 9 11 9 19%
Biopharmaceuticals
total 446 453 394 416 372 20%
Sales by geographic
regions:
Europe 563 597 577 590 545 3%
North America 608 601 504 465 463 31%
International
Operations 337 293 278 278 281 20%
Japan & Oceania 169 197 149 157 135 25%
Segment operating
profit:
Diabetes care 291 325 263 203 224 30%
Diabetes care
(excl AERx®*) 291 325 256 223 254 15%
Biopharmaceuticals 221 127 183 179 155 42%
*) Costs related to the discontinuation of all pulmonary diabetes
projects.
Appendix 3: Income statement
Q1 Q1
DKK million 2009 2008
Sales 12,498 10,614
Cost of goods sold 2,508 2,413
Gross profit 9,990 8,201
Sales and
distribution costs 3,844 2,975
Research and
development costs 1,744 1,858
- hereof costs related
to AERx®* - (220)
Administrative expenses 679 627
Licence fees and
other operating
income (net) 87 88
Operating profit 3,810 2,829
Operating profit (excl AERx®*) 3,810 3,049
Share of profit/(loss)
in associated companies (35) (67)
Financial income 142 474
Financial expenses 412 368
Profit before income taxes 3,505 2,868
Income taxes 806 688
NET PROFIT 2,699 2,180
Basic earnings per
share (DKK) 4.44 3.51
Diluted earnings
per share (DKK) 4.41 3.48
Segment Information
Segment sales:
Diabetes care 9,169 7,843
Biopharmaceuticals 3,329 2,771
Segment operating
profit:
Diabetes care 2,171 1,672
Operating margin 23.7% 21.3%
Biopharmaceuticals 1,639 1,157
Operating margin 49.2% 41.8%
Total segment
operating profit 3,810 2,829
Statement of comprehensive income
Net profit for the
period 2,699 2,180
Other comprehensive
income:
Exchange rate
adjustment of
investments in
subsidiaries 163 (109)
Novo Nordisk share
of equity recognised
by associated
companies 8 9
Deferred
(gain)/loss on cash
flow hedges at the
beginning of the year
recognised in the
Income statement for the period 113 (208)
Fair value
adjustments on
financial instruments (181) 572
Tax on fair value
adjustments on
financial instruments 4 -
Other adjustments (14) (38)
Tax on other
adjustments 17 -
Other comprehensive
income for the
period, net of tax 110 226
TOTAL COMPREHENSIVE
INCOME FOR THE
PERIOD 2,809 2,406
*) Excluding costs related to discontinuation of
pulmonary diabetes projects
Appendix 4: Balance sheet
DKK million 31Mar2009 31Dec2008
ASSETS
Intangible assets 912 788
Property, plant and
equipment 18,684 18,639
Investments in
associated companies 162 222
Deferred income tax
assets 1,572 1,696
Other financial assets 212 194
TOTAL LONG-TERM ASSETS 21,542 21,539
Inventories 9,930 9,611
Trade receivables 6,677 6,581
Tax receivables 948 1,010
Other receivables 1,795 1,704
Marketable securities
and financial derivatives 1,264 1,377
Cash at bank and in
hand 8,049 8,781
TOTAL CURRENT ASSETS 28,663 29,064
TOTAL ASSETS 50,205 50,603
EQUITY AND LIABILITIES
Share capital 634 634
Treasury shares (28) (26)
Retained earnings 31,691 33,433
Other comprehensive
income (952) (1,062)
TOTAL EQUITY 31,345 32,979
Long-term debt 1,010 980
Deferred income tax
liabilities 2,357 2,404
Provision for pensions 441 419
Other provisions 911 863
Total long-term
liabilities 4,719 4,666
Short-term debt and
financial derivatives 1,451 1,334
Trade payables 1,744 2,281
Tax payables 354 567
Other liabilities 7,556 5,853
Other provisions 3,036 2,923
Total current liabilities 14,141 12,958
TOTAL LIABILITIES 18,860 17,624
TOTAL EQUITY AND LIABILITIES 50,205 50,603
Appendix 5: Cash flow statement
DKK million Q1 2009 Q1 2008
Net profit 2,699 2,180
Adjustment for non-cash items 1,482 1,435
Income taxes paid and net interest
received (756) (359)
Cash flow before change in
working capital 3,425 3,256
Net change in working capital 723 (186)
Cash flow from operating
activities 4,148 3,070
Net investments in intangible assets
and long-term financial assets (127) (61)
Capital expenditure for property,
plant and equipment (413) (214)
Net change in marketable securities
(maturity exceeding three months) - 4
Received dividend 18 -
Net cash used in investing
activities (522) (271)
Cash flow from financing
activities (4,488) (3,371)
NET CASH FLOW (862) (572)
Unrealised gain/(loss) on exchange
rates and marketable securities
included in cash and cash
equivalents 10 (23)
Net change in cash and cash
equivalents (852) (595)
Cash and cash equivalents at the
beginning of the year 8,726 4,617
Cash and cash equivalents at the
end of the period 7,874 4,022
Bonds with original term to maturity
exceeding three months 1,015 1,490
Undrawn committed credit facilities 7,448 7,451
FINANCIAL RESOURCES AT THE
END OF THE PERIOD 16,337 12,963
Cash flow from operating activities 4,148 3,070
+ Net cash used in investing
activities (522) (271)
- Net change in marketable
securities (maturity exceeding
three months) - 4
FREE CASH FLOW 3,626 2,795
Appendix 6: Statement of changes in equity
Other reserves
De-
Ferred
gain/
Ex- loss
Ret- Change on
Trea- Ained Rate cash Other
Share sury Ear- adjust- flow adjust-
DKK million capital shares nings ments hedges ments Total
Q1 2009
Balance at
the
beginning of
the period 634 (26) 33,433 (256) (859) 53 32,979
Total
Comprehensive
income for
the
period 2,699 163 (64) 11 2,809
Dividends (3,650) (3,650)
Share-based
payment 53 53
Purchase of
treasury
shares (3) (907) (910)
Sale of
treasury
shares 1 63 64
Balance at
the end of
the period 634 (28) 31,691 (93) (923) 64 31,345
At the end of the year proposed dividends (declared in 2009)
of DKK 3,650 million (6.00 DKK per share) are
included in Retained earnings.
No dividend is declared on treasury shares.
Other reserves
De-
Ferred
gain/
Ex- loss
Ret- Change on
Ained Rate cash Other
Share Treasury Ear- adjust- flow adjust-
DKK million capital shares nings ments hedges ents Total
Q1 2008
Balance at
the
beginning of
the period 647 (26) 30,661 209 678 13 32,182
Total
Comprehensive
income for
the
period 2,180 (109) 364 (29) 2,406
Dividends (2,795) (2,795)
Share-based
payment 34 34
Purchase of
treasury
shares (2) (620) (622)
Sale of
treasury
shares 1 45 46
Balance at
the end of
the period 647 (27) 29,505 100 1,042 (16) 31,251
At the end of the year proposed dividends (declared in 2008)
of DKK 2,795 million (4.50 DKK per share) are
included in Retained earnings.
No dividend is declared on treasury shares.
Appendix 7: Assumptions for key currencies
+-------------------------------------------------------------------+
| DKK per | 2008 average | YTD 2009 | Current exchange rate |
| 100 | exchange rates | average | as of |
| | | exchange rates | 27 April 2009 |
| | | as of | |
| | | 27 April 2009 | |
|---------+----------------+----------------+-----------------------|
| USD | 509 | 570 | 568 |
|---------+----------------+----------------+-----------------------|
| JPY | 4.96 | 6.02 | 5.87 |
|---------+----------------+----------------+-----------------------|
| GBP | 938 | 822 | 827 |
|---------+----------------+----------------+-----------------------|
| CNY | 73 | 83 | 83 |
|---------+----------------+----------------+-----------------------|
| CAD | 479 | 459 | 467 |
+-------------------------------------------------------------------+
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