A reader’s
guide

This is Novo Nordisk’s Annual Report 2005. It accounts for the company’s performance during the year and discusses key challenges. It presents the strategic initiatives to develop the business in order to meet its targets and sustain long-term value creation. And it explains Novo Nordisk’s way of doing business as a values-based company guided by a vision.
     The vision sets the direction and aims to inspire everyone at Novo Nordisk to make their contribution to shaping the future for the company: achieving competitive business results, defending the company’s leadership in diabetes care, offering innovative products and services in biopharmaceuticals, making the company a challenging workplace and putting values into action. Each of the vision

statements translates into short- and medium-term targets throughout the organisation.

Opportunities and challenges
The feature articles are organised under the vision’s five headings, and present the key opportunities and challenges for Novo Nordisk as a global healthcare company. They present company-driven activities in pursuit of the Novo Nordisk vision and strategic objectives, and respond to concerns identified through interactions with shareholders, financial analysts and other stakeholders during the year. These topics have been identified as material for readers’ valuation of the company’s position for the future.
     Four challenges stand out as particularly critical to address: access to health for everyone, innovation in the pharmaceutical industry, the implications of globalisation and standards of business ethics. These are put in the spotlight and framed as key stakeholders see them. For each, Novo Nordisk has a strategic response in place, but also dilemmas to confront.

     You will find a more detailed account of performance in the consolidated financial and non-financial statements. This section also includes the management report and discussion, topical articles on corporate governance and risk management, management profiles and additional shareholder information.

Information on demand
The online annual reporting provides more background, context and data. It presents information about the company and its approach to doing business and serves as a point-of-entry for users with specific information wishes. Each article references additional information online. On the website you will also find a list of contact persons.

Enjoy reading!

Accounting for performance

The Novo Nordisk Annual Report covers the fiscal year 2005. It is issued in January 2006, for approval by shareholders at the Annual General Meeting in March.
     The Annual Report does not include the Financial Statements of the Parent Company, Novo Nordisk A/S. These form an integral part of the complete Annual Report, which will be filed with the Danish Commerce and Com-

Financial
performance

Environmental
performance

In 2005, Novo Nordisk increased sales by 16% to a total value of DKK 33,760 million.
     There has been a continued strong demand for Novo Nordisk’s key strategic products: the insulin analogues and NovoSeven^®. Sales of insulin analogues increased by 62%, while sales of NovoSeven^® increased by 16%. Novo Nordisk’s other therapeutic areas have also experienced solid growth in sales.
     North America and International Operations are strong growth drivers, with sales increases at 27% and 25% respectively.
     The operating profit increased by 16% to DKK 8,088 million while the underlying operating profit (measured in local currencies and excluding non-recurring items) increased by approximately 20%. Net profit increased by 17% to DKK 5,864 million and earnings per share (diluted) increased by 20% to DKK 17.83.
     In 2006, Novo Nordisk expects to increase sales measured in local currencies by at least 10%, and reported operating profit is expected to grow by slightly more than 10%.

Dividend
At the Annual General Meeting on 8 March 2006, the Board of Directors will propose a 25% increase in dividend to DKK 6.0 per share of DKK 2. A new share repurchase programme of DKK 6 billion is expected to be initiated in 2006.

Long-term financial targets
By 2005, Novo Nordisk is approaching the achievement of its long-term financial targets, defined in 2001. The targets were established to ensure a long-term focus towards shareholder value generation and included operating profit, growth, profitability, financial return and generation of cash.
     The four revised targets guide the financial development of Novo Nordisk, given the current scope of business activities, and have been prepared assuming that currency exchange rates remain at the current level. Individually and combined these four financial targets are considered to be competitive compared to the overall performance of the pharmaceutical industry.

In 2005, Novo Nordisk continued to improve eco-efficiency, a measure of the ability to produce more products with use of less energy and water. In the period 2001–2005 the average annual realised improvements were 8% for water and 14% for energy, as measured by EPI indices. Hence, the five-year targets of improvements of the water and energy use efficiency at 5% and 4% per annum, respectively, have been achieved.
     Global implementation of environmental management standards progresses on schedule; in 2005, an additional two of Novo Nordisk’s production facilities achieved ISO 14001 certification. This is instrumental in putting local management focus on pollution prevention and compliance.
     In 2005, the environmental strategy was reviewed. There are six corporate focus areas for 2005–2008: genetically modified organisms, energy and climate change, sustainable process/product, product stewardship, transportation and sustainable supply chain management.
     During 2005, a total of 340 suppliers,

Poised for
continued growth

The year 2005 was another solid growth year for Novo Nordisk. In the markets, there is growing demand for the company’s diabetes care products and biopharmaceut-icals. In production, global sourcing and efficiency gains help curb costs, and eco-

efficiency measures are paying off in terms of significantly reduced use of water and energy. And across the organisation people are reinforcing the company’s position as a values-based business.

Four long-term financial targets ensure management focus on the long-term growth of the business and ensure achievement of a competitive shareholder return.

Social
performance

accounting for 20% of the total value of Novo Nordisk’s purchases, were evaluated on their environmental and social performance. Of these, 87% reported a satisfactory performance. Novo Nordisk has requested corrective actions from those who achieved a rating for poor performance.

Long-term environmental targets
At the end of 2005, Novo Nordisk finalised a climate strategy that sets an ambitious target for reducing its CO₂ emissions by 10% in the period 2004–2014, as compared with 2004. In the absence of reduction initiatives, the company’s emissions would increase by 67% in step with production growth. The target has been defined in an agreement with the WWF, making Novo Nordisk the 10th company in the world to become a member of the Climate Savers programme.
     The significant CO₂ reductions will be achieved through a broad range of measures including improved energy efficiency, fuel switching and conversion to renewable sources.

cess to health programmes are estimated to reach out to at least 22 million people worldwide through awareness raising, education, diagnosis or treatment.
     In 2005, Novo Nordisk implemented a new global business ethics policy supported by a set of guidelines. The policy adheres to the principles of the UN Convention against Corruption and the Global Compact. Implementation measures include training, an advisory function and compliance audits.

Long-term social targets
Novo Nordisk is leading the fight against diabetes. With its mission of changing diabetes, concerted efforts focus on improved health management for people with diabetes and preventative measures for those at risk of acquiring it. In 2006, Novo Nordisk will define long-term targets for impacts of its interventions.
     One initiative is the Oxford Health Alliance, established as an independent body to focus on prevention of chronic diseases.

looking forward to launching this product in the US in 2006, complementing our portfolio of treatment options in the US.
     Treatment of people with haemophilia with NovoSeven^® is still expanding. And in 2005, groundbreaking new knowledge on the utilisation of NovoSeven^® in the treatment of stroke was published in the New England Journal of Medicine, indicating the great promise of NovoSeven^® in this indication. Phase 3 trials are ongoing in the area of stroke as well as trauma for the purpose of filing for approval with regulatory authorities.
     A combination of our insulin device technology and a liquid formulation of Norditropin^® (human growth hormone) has proven very user-friendly and is therefore highly competitive, gaining market share in all major markets.

Leadership entails responsibility
There is a general desire within the diabetes community to improve treatment outcomes in

diabetes. New and improved treatment regimens, such as insulin analogues, have therefore been well received and as a result have expanded the diabetes market. This is also the case for countries outside the established pharmaceutical markets in Europe, the US and Japan. Countries such as Brazil, China and India are increasingly able to provide treatment for lifestyle-related chronic diseases such as type 2 diabetes. The need for better methods of intervention is exacerbated by the escalating incidence of diabetes worldwide at an ever-faster pace in low- and middle-income countries where increased urbanisation and growing affluence are leading to more sedentary lifestyles and Western-style diets high in fat, sugar and salt.

A commitment to changing diabetes
As a world leader in diabetes care, Novo Nordisk has the opportunity to grow. But not at any cost. Type 2 diabetes, as a lifestyle disease, can be prevented. Three risk factors –smoking, poor nutrition and lack of physical activity – lead to chronic disease such as heart disease, diabetes, pulmonary disease and some cancers, which together account for more than 50% of global mortality. We have a responsibility as part of our vision to try to influence the negative trends of this global health issue and avoid unnecessary human suffering and a staggering cost to society. That is why we wish to be a catalyst for changing diabetes. As part of this commitment, we are also actively involved in trying to improve access to diabetes care in both developed and developing countries.

Investing for the future
Looking forward, we seek to balance current value creation with long-term growth. The profit from the current positive business cycle, efficiencies in operation and lower costs from strategic global sourcing will be invested into research and development within our core business areas, and into expanded sales and marketing activities, in particular in the US and other international markets.

     By 2005, Novo Nordisk was close to meeting its long-term financial targets. Hence the company has revisited the targets and revised the return and liquidity targets upwards to reflect current performance and future ambition.
     It is our ambition to build a broader bio-pharmaceuticals business with new business areas focusing on immunotherapy in cancer and on inflammation. Our projects in these areas are still in the early phases of research and development and unlikely to significantly contribute to our business within the next 10 years. However, to accelerate the process we are establishing the technology platform and strengthening the skills base required, both in-house and with partners, and we are looking into identifying the best investments to match our aspirations.
     In other words, we are committed to growth in the near term – balanced with growth in the longer term.

The globalisation challenge
There are also costs associated with globalisa-tion. While globalisation provides many business opportunities, it also provides dilemmas for us as a corporation and to some of our people it may come at a price. Our ambition is to become a truly global leader in diabetes and other disease areas. But not at any cost.
     A global economy offers opportunities in the form of access to markets, innovation, talent and competitive manufacturing environments. As markets become global, so does competition. Information is instantly shared and available, capital is abundant, and talent and high-quality education are giving rise to new insights, fresh competitors and potential technological breakthroughs.
     On the other hand, operating in the pharmaceutical industry globally presents many challenges. It exposes the company to cultural and social environments that in many ways may differ from those with which we are familiar. We respect and encourage cultural differences, but we will not deviate from the Novo Nordisk Way of Management. As a global corporation we have a commitment to one global set of standards, namely the Novo Nordisk Way of Management that guides our operations, whether it concerns environmental, social and labour affairs, marketing practices or business ethics in general – in every market where we are active.
     As we grow and move into new markets, our people need more concrete directions for putting these guiding principles into action. As a

result, we have clarified our internal policies for business ethics, for example regarding conflict of interest, bribery and interaction with suppliers as well as promotion of pharmaceutical products to healthcare professionals, and contracts with marketing consultants and agents. The company is also complying with new requirements for transparency of clinical trial results. Such initiatives will be strengthened and supplemented in the future.
     As we grow and become more global, we will likely leave a greater environmental footprint, but here too Novo Nordisk has set very ambitious global targets for reduction of CO₂ emissions, as part of the WWF Climate Savers Programme.

Dealing with dilemmas and setbacks
However, we did experience some setbacks in 2005. Early in the year, we submitted a registration file to the European regulatory authorities for use of NovoSeven^® in trauma, based on encouraging data from phase 2 trials, but we withdrew the file when the authorities requested additional phase 3 data. Such events are part of the calculated risk that all pharmaceutical companies must be prepared to take.
     Our marketing practices came under scrutiny in the US. Novo Nordisk was also one of many companies listed as paying fees in connection with contracts entered into under the United Nations Oil-for-Food programme, which enabled Iraq to sell limited quantities of oil to meet its people’s humanitarian needs, including life-saving medicines like insulin. Such incidents underline the fact that, in striving to practise a high standard of business ethics, there will always be dilemmas and challenges which we need to address in our daily operations. We will perform as a competitive company, but not at any cost.

Our people make it possible
The financial performance of Novo Nordisk in 2005 was very satisfactory. In fact, it has exceeded our expectations. We are proud of achieving this result while at the same time contributing to sustainable development. This would not be possible without the strong commitment of our employees and the support of suppliers, partners and local communities where we operate. For this we are very grateful. To show our appreciation of an extraordinary performance and provide an incentive for the future, we granted a global offering of shares to all employees in the autumn.

     Following the strong operational, financial and non-financial performance, we yet again saw an appreciation in the Novo Nordisk share price.
     Novo Nordisk adheres to global standards for reporting. The Annual Report complies with International Financial Reporting Standards (IFRS) as adopted by the EU and has been prepared in accordance with the 2002 Global Reporting Initiative (GRI) Guidelines. It represents a balanced and reasonable presentation of our organisation’s economic, environmental and social performance.

We hope you enjoy reading it.

Lars Rebien Sørensen
President and CEO

Mads Øvlisen
Chairman of the Board of Directors
(until 8 March 2006)

As a focused healthcare company, Novo Nordisk is committed to leading the fight against diabetes. In this promise lies a clear business rationale and a social commitment deeply rooted in the company’s way of doing business.

Effective prevention, early diagnosis and optimal treatment improve the health of people with diabetes. This is what drives Novo Nordisk’s mission of changing diabetes. As a world leader in diabetes care, the company pursues its aspiration to defeat diabetes while building its business on sustained and balanced growth.
     Novo Nordisk’s strong position in diabetes care builds on more than 80 years of experience. Since the first successful experiments in 1922, extracting insulin from the pancreas of cows and pigs, Novo Nordisk’s production has been based on biotechnology. Fermentation is the core process, today using genetically modified microorganisms to produce insulin.

A values-based approach
Novo Nordisk is a public limited liability company. Within this framework, shareholders

The Triple Bottom Line
– a broad business principle

have the ultimate authority to exercise decisions for the company. The company ‘strives to conduct its activities in a financially, environmentally and socially responsible way’. This statement is anchored in the articles of association and embraces the principles upon which the company was founded.
     This formal commitment to sustainable development and balanced growth has been built into the corporate governance structures, management tools and individual performance assessments. The Brundtland Commission’s principle of ‘preserving the planet while improving the quality of life for its current and future inhabitants’ resonates well with Novo Nordisk’s business rationale and its values-based approach. This is what lies behind the Triple Bottom Line which the company has adopted as a broad business principle. It ensures that decision-making balances financial growth with corporate responsibility, short-term gains with long-term profitability and shareholder return with other stakeholder interests.

Ownership structure
Novo Nordisk’s ownership is split between holders of A and B shares. A shares are held by Novo A/S, a holding company fully owned by the Novo Nordisk Foundation and established in 1999 to manage the Foundation’s assets and to actively invest in life science businesses. With approximately 25% of the total share capital and approximately 71% of the votes, it maintains a controlling influence with a long-term view to value creation. The A shares held by Novo A/S cannot be divested.
     The Novo Nordisk Foundation is a private, self-governing institution. Its objectives are to provide a stable basis for the commercial and research activities undertaken by the companies in the Novo Group and to support scientific, humanitarian and social purposes. The majority of its grants go to medical and scientific projects.

Corporate governance
Novo Nordisk is committed to the principles of good corporate governance such as trans-

parency, accountability, openness, integrity and responsibility in its operations. The company is in general in compliance with current codes of good corporate governance at stock exchanges in Copenhagen, New York and London, where the Novo Nordisk B share is listed.
     As a Danish public limited liability company, Novo Nordisk has a two-tier board structure consisting of two separate bodies: the non-executive Board of Directors and Executive Management.

Engaged with stakeholders
Novo Nordisk holds itself accountable to the company’s shareholders and other stakeholders as well as individuals or groups affected by its business in local communities. Stakeholders are customers – that is healthcare professionals, people with diabetes and others whose healthcare needs it serves – policy-makers, educators, employees, investors, suppliers and other business partners, and society at large. To better manage its risks and act on opportunities, Novo Nordisk proactively maintains engagements with a broad range of stakeholders within its sphere of interest.

Defining materiality
Ongoing interactions with stakeholders, trendspotting, business monitoring and the integrated systematic risk management process are tools to identify the issues that are material to Novo Nordisk’s business. The company’s response to current and emerging business and societal challenges, in turn, is shaped in a closer dialogue with representatives of the stakeholders affected by the issue. As a result of this process, Novo Nordisk frames its strategic response and defines its targets. The company regularly reviews its key priorities to ensure that they reflect current agendas, and reports on progress against performance targets.

The Novo Nordisk
Way of Management

The Novo Nordisk Way of Management is the framework for how the company does business. It consists of three elements:

annually. Short-term targets, in turn, are managed through the Balanced Scorecard. Corporate goals, both financial and non-financial, are cascaded through the organisation to functional areas and translated into individual or team performance targets.
     A range of internal procedures are in place, such as the quality management system, the risk management system, internal controls, assurance, audits and a whistleblower function.
     Annual employee surveys serve as a dialogue tool about employee engagement and working climate. An ombudsman function gives employees access to fair process in cases of intercompany disputes.

Methodology
The set of specific follow-up methods includes three key activities.
     Organisational development is assessed through annual Organisational Audits, commissioned by the Board of Directors and Executive Management. This process, conducted at senior management level, includes an assessment of ‘linking business and organisation’ and succession management, and takes a retrospective and a forward-looking perspective.
     The annual reporting accounts for financial and non-financial performance against short-term and long-term targets, strategies, activities, risk profile and key business opportunities.
     Facilitations are a unique set-up across the

The Novo Nordisk Way of Management is the company’s governance framework.

Novo Group, anchored in the holding company. The facilitators, a global team of senior people with deep insights into the business, evaluate how well the practices and understanding of the Novo Nordisk Way of Management are embedded in the organisation.

Setting priorities
The Novo Nordisk Way of Management is supported by a range of management tools.
     Long-term priorities and objectives are identified through a 10-year Strategic Planning Process, inspired by ongoing trendspotting and 20-year diabetes scenarios, which is revisited

We will achieve competitive business results.
Our focus is our strength. We will stay independent and form alliances whenever they serve our business purpose and the cause we stand for.

With its proven leadership in diabetes care, Novo Nordisk is prepared to take on growing competition in the diabetes field while building on its strengths in biopharmaceuticals.

The incidence of diabetes is growing alarmingly fast, calling for more awareness-building, effective diabetes therapy and improved access to care.
     As a world leader in diabetes care, Novo Nordisk is ready to meet that challenge. Its approach is built not only on having superior products and conducting cutting-edge scientific research, but also on partnerships with a wide range of stakeholders who share the company’s vision to defeat diabetes.
     Business results in 2005 further cemented the company’s position in diabetes care. This was due mainly to continued solid growth in insulin analogues and injection devices. Novo

Long-term
financial targets

Focusing on growth, profitability, financial return and generation of cash, the four targets serve to balance short- and long-term considerations, thereby ensuring a focus on shareholder value creation. By 2005, Novo Nordisk was approaching the achievement of the long-term financial targets and they no longer provide sufficient guidance on the targeted financial performance on a five-year horizon.
     The four revised targets guide the financial development of Novo Nordisk, given the current scope of business activities, and have been prepared assuming that currency exchange rates remain at the current level. Individually and combined, these four financial targets are considered to be competitive compared to the overall performance of the pharmaceutical industry.

have still gained a leadership position because of our product profiles and strong commitment to diabetes care. I am confident that we will also be able to get our fair share of the market within these new treatment categories.”

Strategy to develop biopharmaceuticals
The biopharmaceuticals business showed healthy growth in 2005, particularly in sales of NovoSeven^®, but also within growth hormone therapy.
     The company’s biopharmaceuticals business is an increasing growth driver, primarily fuelled by the blood coagulation factor rFVIIa, marketed as NovoSeven^®. The drug is currently marketed for people with haemophilia with inhibitors (antibodies) against their existing factor medication and for other people with rare bleeding disorders.
     NovoSeven^® is currently in phase 3 clinical development for use in the treatment of blunt trauma, for example in connection with traffic accidents, and for intracerebral haemorrhage (ICH), and in phase 2 for other critical bleeding conditions. (See p 24.)

Moving into new territory within cancer
Recently, Novo Nordisk started research within cancer and inflammation.
   “Our strategy is to build up a sustainable portfolio of promising biological drug candidates,” says Lars Rebien Sørensen, president and CEO of Novo Nordisk.
     “With our expertise in proteins and bio-pharmaceuticals and knowledge of immunology from type 1 diabetes, there is a clear rationale for us to move into inflammation and cancer. Also, the areas we are looking at have many similarities to diabetes and haemophilia. They represent chronic therapy areas, they increasingly require patient self-management through injections, and they require specialist and hospital-based treatment. All in all they suit the skills and competences of Novo Nordisk very well,” adds Mads Krogsgaard Thomsen, chief science officer for Novo Nordisk.

At home with
the Pearl

     Steven Renouf, 35 years old, known throughout Australia and the world as the ‘Pearl’ of World Class Rugby League, was 22 when he was diagnosed with type 1 diabetes. He was on the brink of his athletic career; his first-born son Sam was only six weeks old.
     Four children later, diabetes once more entered the family’s life. Charlie, their second-youngest son, was only three years old when they received the news that he too had diabetes. Then Billy, their second-eldest son, was diagnosed at the age of eight, and then Freddie, their baby, was diagnosed at the age of two. Their eldest son, Sam, and their daughter, Sunita, do not have diabetes, but still their blood glucose levels are being monitored on a regular basis.
     “We try never to blame diabetes for anything and that’s what we teach our children too,” says Steven Renouf. “My attitude towards it is that diabetes is just something you have to deal with, and that’s how we’ve taught the boys to see it.”
     There is no doubt that for 11-year-old Billy, six-year-old Charlie and four-year-old Freddie, diabetes will never stop them from accomplishing and doing whatever they set their minds to. It provides no restrictions for their father, and neither will it be allowed to present any obstacles for them. Together, the Renouf family is changing what it means to live with diabetes.

Mads Krogsgaard Thomsen, chief science officer for Novo Nordisk, explains the rationale behind the company’s R&D strategy.

What are the key elements of the Novo Nordisk R&D strategy?
There are three main areas of competence –research into diabetes, therapeutic proteins and the delivery of these. These form the basis of our R&D strategy and core competences that have been developed over more than 80 years and continuously refined in the process. In 2005, the research activities within diabetes care and biopharmaceuticals were split into two separate research units to boost innovation and to build a broader presence within biopharmaceuticals.

In diabetes, Novo Nordisk is defining its leadership through insulin analogues. Why?
In type 1 diabetes insulin is the only therapy, and in type 2 diabetes, in many cases, the best therapy. Insulin analogues are a critical step in helping people with diabetes achieve better control of their condition and avoid serious complications. That is the focus of our ongoing development and continued refinement of our insulin analogues: to bring patients back to a near-normal blood sugar level without increasing the risk of low blood glucose levels (hypoglycaemia). Many studies have shown that more intensified treatment can significantly reduce the risk of developing late-stage complications.
     In January 2006, the first of our next-generation insulins entered phase 1 trials. We believe these new insulins will provide even greater treatment benefits.

Is Novo Nordisk developing new compounds for the treatment of diabetes?
Yes. Our human GLP-1 analogue, liraglutide, is one in a new class of products for the treatment of type 2 diabetes. GLP-1 is a human hormone produced in the intestine. It stimulates the pancreas to secrete insulin, and also tells the brain to reduce appetite.

     In a recent phase 2b study, patients achieved significant improvements in blood glucose control when using liraglutide. There were no cases of major or minor hypoglycaemia and patients also lost weight. We have turned the natural hormone into a drug by stabilising it so that, instead of breaking down within a couple of minutes, its effect is sustained for 24 hours meaning that it can be taken once daily for the treatment of type 2 diabetes. I expect Novo Nordisk to be the first company to market with a once-daily product based on human GLP-1. So, while our GLP-1 won’t be first in class, it will be the best in class.

You mentioned delivery as a core component of your strategy. What’s new with delivery devices?
We have the broadest portfolio of insulin injection devices and are exploring new concepts for insulin delivery, including the AERx^® iDMS. The AERx^® insulin Diabetes Management System is an inhalable insulin, which we believe will be a viable treatment option that makes it easier for some people with diabetes to begin insulin therapy.

What about oral antidiabetic treatment (OAD) for people with type 2 diabetes? Isn’t Novo Nordisk lagging in this area?
In recent years we’ve had to abandon OAD projects when clinical results failed to indicate a sufficient competitive advantage for our compounds compared with similar marketed products. This does not mean we’ve given up. In fact, a new project entered phase 1 in late 2005. Of course we would prefer to have an OAD drug candidate further on in the development pipeline, but these projects haven’t yet been able to meet our requirements. That said, we will continue to invest in OAD projects when they show significant advantages over current treatment standards.
     Our research focus in OADs relates to blood sugar regulation, insulin resistance and obesity.

Novo Nordisk also conducts research into a cure for diabetes. Tell us about that.
A cure is our ultimate goal. Although we be-

lieve it will take at least a decade to find a cure for type 1 diabetes, we are very much at the forefront of stem cell research in this area. We believe this holds the greatest promise of creating a safe, stable and widely available source of insulin-secreting cells for transplantation into people with type1 diabetes.
     Through the Hagedorn Research Institute, an independent basic research component of Novo Nordisk, we are currently investing more than 15 million Danish kroner (2 million euros) in developmental biology and stem cell research. Hagedorn is presently the only industrial partner in two cutting-edge research efforts: the Beta Cell Biology Consortium (BCBC) supported by the National Institutes of Health (NIH), and the Juvenile Diabetes Research Foundation Center for Beta Cell Therapy in Diabetes in Europe. In 2005, this centre received an 11.8 million euro grant from the EU over five years, together with Hagedorn, to lead the work of 15 laboratories across Europe to further study the potential of embryonic stem cells

Globally, more than 3,000 people are working together on R&D activities at Novo Nordisk in a number of very diverse areas: basic and discovery research, preclinical and clinical development, production/formulation and delivery of drug substance, regulatory, quality, licensing, patenting, portfolio management and bioethics.

to become mature functional beta cells in vitro.
     Hagedorn also received a prestigious grant of 4.3 million US dollars (3.6 million euros) over four years from the US government-funded NIH to coordinate a mainly European research effort in development biology at the BCBC.

What is the company’s position on the ethics of using embryonic stem cells?
We recognise that the use of human embryos for stem cell research has evoked an important ethical debate. At Novo Nordisk, we only use human embryonic stem cells when we anticipate that the same scientific results can’t be obtained from the use of adult stem cells. At present no source other than embryonic stem cells has proven useful in generating insulin-producing cells in vitro. We support an open dialogue and an ethical and political clarification regarding the use of human embryonic stem cells, and we fully back laws that ensure that this important research is adequately regulated and controlled.

Novo Nordisk is part of a biomarkers project. What is its aim?
Along with the University of Oxford and the UK National Health Service, we are a partner in the Oxford Centre for Diabetes, Endocrinol-ogy and Metabolism (OCDEM). This is the first diabetes centre outside Denmark to combine basic and clinical research with patient care and medical training under one roof. OCDEM is heading up a project in the European Union to look for biomarkers for diabetes: molecules

in the body that reveal the development of the disease and can shape more individualised diagnosis and treatment.

What is the strategy for developing the company’s biopharmaceuticals area?
We are committed to developing NovoSeven^® as the world’s first general haemostatic agent. We have come a long way in establishing a new portfolio of projects in haemophilia and other critical bleeding conditions with rFVIIa, the active substance in NovoSeven^®. For example, we have shown proof of concept in both trauma and intracerebral haemorrhage (ICH).
     We are about to initiate clinical development of the first new rFVIIa analogue with enhanced therapeutic properties including faster onset of action. We are also excited about the potential of recombinant FXIII, which has been tested in patients with FXIII deficiency. We have started an additional study – currently in connection with cardiac surgery – where rFXIII is being tested alone and later will be tested in combination with NovoSeven^®.

The company has announced it will develop new therapy areas in cancer and inflammation. What makes you think Novo Nordisk can be competitive in this field?
There are four main reasons why it makes sense for Novo Nordisk to move into this area.

news

EU approves
NovoMix^® 50 and
NovoMix^® 70

In 2005, the European Commission granted EU marketing authorisation for the new premixed insulin analogues NovoMix^® 50 and NovoMix^® 70. These complement NovoMix^® 30 in the company’s portfolio of premixed insulins, which contain both rapid- and intermediate-acting insulin, and therefore cover both the need at mealtimes and the basal need for insulin. The new products make it possible to intensify insulin treatment over time – important because diabetes is a progressive disease. In these mixes, the percentage of rapid-acting insulin is raised from 30% in NovoMix^® 30 to 50% and 70% respectively.
     The new product ratios make it possible to start insulin treatment with NovoMix^® 30 and, without changing insulin, intensify treatment over time, making the NovoMix^® product range simple to use for both healthcare professionals and people with type 2 diabetes.
     NovoMix^® 30 celebrated its third anniversary in 2005.

TakeAction! kids
changing diabetes

Novo Nordisk employees put their energy into getting the message about healthy living across to young people in the TakeAction! School Challenge that kicked off on World Diabetes Day 2005. TakeAction! is the employee volunteer programme to support initiatives that reflect the company’s Triple Bottom Line commitment, focusing on leveraging the company’s

Improving healthcare
provider safety with
NovoFine^® Autocover^®

The NovoFine^® Autocover^® safety needle is designed to minimise the risk of accidental needle prick injuries for healthcare providers, who can contract infectious diseases like HIV/AIDS and hepatitis B/C by pricking themselves after having injected patients. The NovoFine^® Autocover^® safety needle is automatically covered by a piece of plastic that locks around the needle after injection. It was introduced in the US in 2005 and will be launched in Europe in 2006. NovoFine^® Autocover^® is the latest needle innovation from Novo Nordisk.
     Since the discomfort of insulin injections is closely connected with the diameter of the needle, Novo Nordisk is committed to producing even thinner, shorter needles in order to make injections easier. NovoFine^® 32G Tip needle, one of the world’s thinnest globally available needles, was rolled out to major markets in 2005.

Better health in
the workplace

NovoSund is a voluntary prevention programme aimed at offering support to improving the health of Novo Nordisk employees. Currently, it is active only in Denmark, where 56% of the company’s employees are based, but it will eventually become global. A smoking cessation programme, which included 700 employees, has been very successful. After 12 months, close to 47% of them were still not

New lower-dose option
for menopausal women

In 2005, Novo Nordisk announced the positive results of phase 3 data of its new ultra-low-dose product Activelle^® (Activella^®), underscoring Novo Nordisk’s commitment to offering a range of low-dose hormone replacement therapy (HRT; HT in the US) products. Novo Nordisk believes that women needing this type of therapy should start when they first experience severe menopausal symptoms and use this therapy for the shortest possible period of time. This position reflects the findings from recent studies that reported potential health risks associated with HRT. Most health authorities recommend using the lowest effective dose for the shortest effective period of time to relieve symptoms of menopause.

NovoPen^® turns 20
with NovoPen^® 4

In 2005, the revolutionary insulin delivery device, NovoPen^®, turned 20. Prior to NovoPen^®, people with diabetes injected insulin using syringes and vials, a process which many found inconvenient and indiscreet. NovoPen^® helped them to normalise their lifestyle by taking away the embarrassment associated with traditional insulin injections. Today, almost 3.5 million people worldwide use a NovoPen^® system daily.
     NovoPen^® 3, launched in 1992, is the most used insulin pen in the world. In 2005, an improved sleeker version, NovoPen^® 4, was launched in a number of markets. At 155 mm and weighing only 45 g, it is the world’s most compact insulin delivery pen. The larger dose scale ensures correct dosage, 50% less pressure is required to push the injection button, and there is an audible indication when an injection is complete.
     NovoPen^® 4 has won two awards from Good Design Award 2005, for outstanding industrial design and innovative graphic design in the promotion campaign.

Novo Nordisk
creates haemophilia
foundation

The Novo Nordisk Hemophilia Foundation (NNHF) was created in 2005 in Zurich, Switzerland, as a sign of the Novo Nordisk commitment to social responsibility within haemophilia care. This is a response to the significant need to improve haemophilia treatment and infrastructure in developing countries, where haemophilia is currently not a healthcare priority and many haemophilia and inhibitor patients go undiagnosed. Thus, life expectancy for people with haemophilia is short and treatment with clotting factors is suboptimal.
     The foundation is dedicated to supporting the improvement of haemophilia care by funding sustainable local and regional projects. These projects involve stakeholders within the haemophilia community, such as healthcare professionals, patient associations and governmental and nongovernmental organisations.
     NNHF focuses on increasing awareness and diagnosis of haemophilia, its treatment and prevention of complications. NNHF operates on an annual donation of approximately 10 million Danish kroner (1.3 million euros) from Novo Nordisk.
     To date, four projects in Algeria, Poland, Uzbekistan and Venezuela have received approval for funding, and many more projects around the world are in the pipeline. The foundation also presents an annual award to an outstanding individual within the haemophilia community for their contribution to disease betterment.

Levemir^® launched
in 23 markets

Novo Nordisk is gearing up for the launch of Levemir^® in the US, expected in the first half of 2006. This is good news for physicians and other people who are trying to manage and control blood sugar levels. Levemir^®, first launched in Switzerland in March 2004, is a long-acting insulin. Levemir^® provides more predictable day-to-day control of blood glucose levels with a low risk of hypoglycaemia and less weight gain than conventional human insulin preparations. In 2005, Levemir^® was launched in

Being the preferred partner in diabetes care isn’t just about having competitive products. For Novo Nordisk, the real competitive edge comes from the company’s commitment to changing diabetes. Perhaps nowhere is this more evident than in the US, which is facing an explosive rise in diabetes.

Dr Francine Kaufman is a leading paediatric endocrinologist in the US. Too often, she says, the children that she treats are not in optimal control of their diabetes. This has a direct impact on their quality of life and can raise the risk of developing serious complications in the long term.
     “The challenges faced by children – and adults – with diabetes are immense,” says Dr Kaufman, professor of Pediatrics at the Keck School of Medicine and head of the diabetes programme at Children’s Hospital, Los Angeles. “They are never free of their diabetes.”
     Dr Kaufman’s experience underlines the fact that it takes more than good products to treat diabetes. Such a complex disease demands a high level of self-management and an individualised treatment approach not always possible for overwhelmed physicians and a health-care system oriented towards acute rather than chronic care.
     “We need to get people to confront the fact that we have a system that is fundamentally unable to deal with diabetes as a chronic disease,” she adds.

Catalyst for change
Dr Kaufman is one of many key opinion leaders in the diabetes field who are supporting the National Changing Diabetes Program, a programme launched by Novo Nordisk in 2005 to help bring about meaningful change and foster collaboration among all parties in the healthcare system.

     “We want to be a catalyst for changing diabetes,” says Martin Soeters, president, Novo Nordisk in the US. “That means better serving the needs of the 21 million Americans with diabetes. A third of these don’t even know they have diabetes, and two thirds of those being treated are not in good control. Healthcare professionals today have little time for anything other than keeping up with their patients’ needs. It is understandable that they have only a little time available for pharmaceutical industry representatives. The time we are allowed with the diabetes specialists is therefore used to not only inform about our products, but also to discuss how we can work together – even if the shared mission is something as ambitious as facilitating change in the healthcare system. We try to engage as partners with one shared goal – the well-being and health outcomes of people with diabetes.”
     Novo Nordisk is making a multi-million dollar commitment to the National Changing Diabetes Program over the next five years. It will work to remove barriers to chronic disease management, create new incentives for better diabetes care, enhance medical training for diabetes and chronic care, and help people

Dr Francine Kaufman is a supporter of the National Changing Diabetes Program.

with diabetes manage their condition more effectively. The programme was launched in November 2005 in Washington, DC, with a diabetes forum attended by around 200 people involved in diabetes in the US, from policy-makers and patient organisations to physicians, nurses and diabetes educators. For many, it was the first time that all the relevant stakeholders were gathered in the same room.
     “Our vision and our commitment to social responsibility compel us to pursue a National Changing Diabetes Program because of the very poor state of diabetes control in this country,” says Andrew Purcell, vice president, Strategic Business Development in the US.
     A report published in 2005 by Yale University Schools of Public Health and Medicine with the Institute for Alternative Futures and sponsored by Novo Nordisk predicted that if the system remains unchanged, by 2025 an estimated 50 million people (15% of the population) will develop diabetes, more than double the current number. It will also cost America 351 billion dollars (298 billion euros) in direct medical and indirect societal costs, more than double the amount currently spent.

A different approach
Novo Nordisk is working for change through its Government Affairs office in Washington, DC. Its goal is to increase patient focus and resources for changing diabetes care in the US by working together with Congress and the Federal Government. One result of this effort is that insulin devices are now covered under Medicare, the government assistance programme for people over age 65; another achievement is that Medicare recipients now qualify for preventive services that can help detect diabetes.

     ”Our approach is very different, and that’s what gets us heard in Washington,” says Michael Mawby, chief government affairs officer for Novo Nordisk.

Great place to work
Based on the belief that people come first in building a successful business, Novo Nordisk in the US has worked to create a ‘my company’ culture among its more than 2,300 employees. The company culture is very important to the US affiliate, which has experienced annual growth in sales of 30% over a period of five years.
     “The Novo Nordisk approach to business has played a big part in how we attract and retain people,” says Jeff Frazier, vice president of Human Resources for Novo Nordisk in the US.
     “The values, the access to top management and the feeling of contributing to the company’s mission of helping people with diabetes and other serious health needs are all highly motivating. This is borne out by annual

surveys on the work climate and by a retention rate for top performers that is significantly higher than for the industry as a whole,” says Jeff Frazier. The company earned recognition as an employer in 2005 when it was named the best place to work among large companies in New Jersey by NJBIZ magazine and The Best Companies Group.

The way forward
In 2005, Novo Nordisk achieved for the first time the largest insulin market share in the US by volume at 39%, edging out long-established, much larger competitors. The US is the company’s fastest-growing market. While still small in comparison with its competitors, the company’s sales force of 1,200 has grown sixfold since 2001. Novo Nordisk is building its US market through a strategic approach that includes several elements: expanding the sales force, attracting and retaining talented people, increasing market penetration for the company’s insulin analogue portfolio and working

together with key stakeholders to make positive changes in the healthcare system that will benefit people with diabetes.
     While Martin Soeters is pleased with Novo Nordisk’s growth in the US, there is a lot more work ahead as it faces growing competition. His next goal is to continue and accelerate the growth of the company’s insulin analogue portfolio. To accomplish this, Novo Nordisk is preparing to launch Levemir^®, the newest addition to the family of insulin analogues.
     “The US represents 50% of the world’s global sales of pharmaceutical products. There is no reason Novo Nordisk’s sales shouldn’t reflect that. This will happen not just because of our products, but because of our focus on people with diabetes, employees and society. That is the only way to build a sustainable business,” concludes Martin Soeters.

Curbing the unfolding epidemic of diabetes requires a focused business strategy that takes into account the need to get more people into better control of the condition.

Diabetes is a major global public health problem. In 2003, 194 million people worldwide had diabetes, according to the International Diabetes Federation. That number is expected to reach 333 million by 2025. Moreover, diabetes is associated with long-term complications such as heart disease and stroke, blindness, kidney failure, foot complications, nerve damage and amputations. The human and socio-economic costs associated with diabetes are exorbitant. In the US alone, total health-care costs were estimated at 132 billion US dollars (112 billion euros) in 2002. There is clearly scope for disease management strategies that will help to reduce this burden.

Reducing complications
Improved blood sugar control is at the core of preventing or delaying complications, and this

is where Novo Nordisk is targeting its efforts.
     The level of haemoglobin A1c shows the average amount of sugar in the blood over the previous two to three months and is the best way to find out if the blood sugar is under control. Recommendations are that HbA1c should be below 6.5%. Lowering HbA1c has been shown to have a significant impact on the risk of late-stage complications. People with diabetes in very poor control run a significant risk of developing late-stage complications. Lowering the HbA1c level by just 1% can achieve significant benefits.
     “Novo Nordisk has a vision of being the world’s leading diabetes care company. This is an ambitious goal and one that we approach by way of our full portfolio of insulin analogues. Our message is that control matters. Strict blood sugar control is the key to successful management of diabetes,” says Jakob Riis, senior vice president of International Marketing.
     With the new insulin preparations that more closely mimic physiological insulin secretion, blood sugar levels can be better controlled and an acceptable HbA1c level can be achieved. Achieving near-normal blood glu-

cose has been an elusive goal for many people with diabetes and one that has often been associated with the increased risk of hypogly-caemic events and weight gain. With the new insulin analogues it is however possible to reap the benefits of tight control without the increased risk of hypoglycaemia and unnecessary weight gain.
     While this is a significant step towards an optimal disease management strategy, Jakob Riis also recognises that not all people with diabetes can deal with this level of rigorous self-management.

Individually tailored treatment
Acknowledging that people are different and that optimal control is achieved by understanding the people behind the disease is a firm conviction of Novo Nordisk. Novo Nordisk’s DAWN programme builds on the findings of a breakthrough study conducted by Novo Nordisk into the attitudes, wishes and needs of people with diabetes and diabetes healthcare professionals. The study has created a platform for working with other stakeholders to better understand what it takes to

help people with diabetes achieve better control of their diabetes. It starts by understanding the person behind the disease.
     “People with a high level of support from family and friends, and people who cope actively have different t r eatment preferences from people who feel overwhelmed by the condition and have poor social support. A person who leads a highly active lifestyle with variable mealtimes and a high level of physical activity needs a very different insulin regimen from a retired person living a quieter lifestyle with regular meals and long-established habits. Tailoring therapies to fit each person’s needs may be key to improving treatment outcomes in diabetes in the future,” says Søren Skovlund, manager of the DAWN programme.
     “The great thing about the new insulin analogues is that we can customise treatments to the patient’s preferred lifestyle. Previously,

people with diabetes and their families had to adhere to a rigid meal plan that evolved around the insulin dose. Now the insulin dose evolves around people’s preferred lifestyles. So modern diabetes therapy has provided both health and lifestyle benefits,” says Jakob Riis.
     “For people who grew up with diabetes from early childhood or adolescence, diabetes often becomes a part of life; it is something you just deal with,” he continues.
     “For many adults with type 2 diabetes, there is a need for a more convenient insulin regimen. Our premixed insulins are good ‘starter insulins’ that give good physiological coverage and can be intensified over time if the need for more intensive therapy arises,” concludes Jakob Riis.

Earlier diagnosis
One area that Novo Nordisk feels strongly about is the need for earlier diagnosis of dia-

Range of options for
best treatment outcome

The Novo Nordisk approach to diabetes treatment is based on the company’s recognition that people with diabetes have differing needs and requirements for treatment, which may change over time. By choosing the treatment best suited to the individual, there is a greater chance of an optimal treatment outcome.

A tailored diabetes strategy
The company’s insulin portfolio is built on the knowledge that to effectively control blood glucose it is important to address both fasting blood glucose (in between mealtimes) and post-prandial glucose (after mealtimes). Therefore, the Novo Nordisk product range includes both fast-acting and long-acting insulin analogues. A full range of insulin analogues accommodates the need for people with diabetes to intensify insulin treatment over time

in order to reach optimal blood glucose levels and avoid serious complications.
     Insulin analogues are designed to mimic more closely the body’s own physiological insulin regulation of blood glucose levels than human insulin, and offer better mealtime glucose control, less hypoglycaemia and increased convenience for all types of people with diabetes.

Levemir^® brings new benefits
Levemir^®, the latest of the insulin analogues developed by Novo Nordisk, is a long-acting insulin that provides more consistent day-to-day control of blood glucose levels than conventional human insulins. Among the benefits for people with diabetes is that it has been demonstrated that Levemir^® reduces the fasting blood glucose with a low risk of hypoglycaemia.
     In addition, studies have shown that people using Levemir^® may not experience the signifi-

cant weight gain often associated with conventional insulin preparations.
     Other insulin analogues marketed by Novo Nordisk include:

Diabetes is among the epidemic chronic diseases that are costing too many people their health and lives. Prevention is the most effective weapon in this fight, especially if young people lead the change towards healthier lifestyles.

Diabetes and three other epidemic chronic diseases – cardiovascular disease, chronic lung disease and some types of cancer – account for more than 50% of deaths globally. These diseases are linked to three risk factors: tobacco, unhealthy diets with too much fat and sugar and too little physical exercise. Eighty percent of these deaths occur in low- and middle-income countries, according to the World Health Organization (WHO).
     “This is not tomorrow’s epidemic, this is today’s epidemic,” says Derek Yach, head of the

Global Health Division at Yale University and former chronic disease expert with the WHO.
     Prevention is key to halting the course of epidemic chronic diseases, but raising awareness, changing behaviour and reorienting healthcare systems to meet this challenge are a huge undertaking. That is the goal of the Oxford Health Alliance, a broad stakeholder initiative launched by Novo Nordisk and the University of Oxford to focus attention on the importance of preventing chronic diseases.

Raising the level of urgency
In 2004, Novo Nordisk, which is represented on the board of trustees, committed 3 million British pounds (4.4 million euros) over three years to support the Alliance. In 2005, it became an independent non-profit foundation, which allows the group to attract a wider range of partners and funding than would be pos-

inevitably lead to more and better treatment, and probably lead to greater use of our products. But that is not the main reason we are involved,” he says. “Our vision is to defeat diabetes, and that is only possible if the world finds better ways to prevent diabetes. Part of our success as a company is due to the dialogue and relations we have with people who in one way or another form public opinion. Through the Alliance we meet with, learn from and have the opportunity to work with some of the people who will shape health policies over the next decade. We benefit by being part of an initiative that will lead to new ways of thinking about healthcare, spur our own ideas about what role private industry can play and create solutions for tomorrow.”

Everyone has a role to play
The experts gathered at Yale University all agreed that action must start at the grassroots level but that global coordination is key. A major challenge is changing healthcare systems to deal with the complex nature of chronic diseases.
     Bernard Lown, Nobel prize-winning director of the Lown Cardiovascular Center and

Research Foundation, said that a decisive factor in better treatment outcomes for the people treated at his centre is that “we spend time with the patient – as much time as it takes. We do as much for the patient and as little as possible to the patient.”
     In Alaska, that philosophy is taking hold in one of the CAPCoD projects.
     Native Alaskan-Americans, experiencing a much higher incidence of diabetes than the non-native Alaskan population, are finding that lifestyle coaches – government-paid community health workers – are giving them the tools they need to adopt healthier lifestyles through basic health information, community advocacy and learning how to teach others.
     “I’ve learned that a few people can make a profound difference – but not alone, only together with others,” said Bernard Lown.
     “We have spent three days agreeing that something has to be done to deal with this global health problem,” said Lise Kingo, executive vice president for people, reputation and relations, who represented Novo Nordisk at the meeting. “Now is the time to take action.

“Changing the mindset about diabetes has to start with young people,” says Hala Khalaf, author of Young Voices, produced by Novo Nordisk. Proceeds from the book are donated to the World Diabetes Foundation to benefit diabetes care for young people in the developing world.

It has been a welcome challenge to have young people represented at this meeting. They’ve been reminding us that problems are not solved simply by getting a group of experts together in dialogue. I think we have enough knowledge now to simply get going.” The young people are representatives of Novo Nordisk’s Youth Panel who, together with a group of young journalists, participated to offer recommendations for how their generation can be mobilised to adopt healthier lifestyles.

Reaching young people:
what will it take?

One in three children born in the US today will develop diabetes during their lifetime, according to the US Centers for Disease Control. Due to rising rates of obesity and a less active lifestyle, children and young people are developing type 2 diabetes, once only found in adults. In addition, many children with type 1 diabetes are in poor control of their condition.
     In 2005, Novo Nordisk set up a panel of young people from countries like China, the US, Jordan, Denmark and the UK, some with diabetes, who all want to help prevent chronic disease. They are helping Novo Nordisk and its partners to better understand how it is possible to engage young people in taking active responsibility for their own health.
     “If we want to defeat diabetes, we have to

make an impact before problems have become irreversible. That is why we focus on improving control among young people with diabetes – to prevent complications; and why we work to encourage healthy lifestyles among young people – to prevent diabetes in their lifetime,” says Lise Kingo. “This is an undertaking that requires us to rethink the way we communicate health messages. It also requires a whole new way of engaging stakeholders in the needs of young people.”

Here, five young people answer the question: What is the single most important message to young people about the importance of a healthier lifestyle to avoid chronic diseases?

Take responsibility for yourself and for future generations.
Joanna Matthews, 22, UK

Communicate in a language we care about. Then we will be compelled to act.
Erik Dunham, 21, US, type 2 diabetes

It’s possible to enjoy life without the threat of chronic disease hanging over your head.
Ronald Cummings-John, 18, UK

We think we’re immortal. We know the risks, but we don’t want to change. Find out what motivates us to change. That’s the only way to get the message through.
Anja Østergren Nielsen, 21, Denmark, type 1 diabetes

Look out for your own fitness, diet and health. No one is going to do it for you. It’s in your hands.
Hala Khalaf, 24, Jordan

THE BIG PICTURE

The right to basic
healthcare services

Historically, people have had implicit trust in their doctors, and have felt they could relegate responsibility for their care to the medical profession.
     Today however, healthcare systems face economic pressure and doctors are overburdened. Healthcare is being rationed, worsening already existing inequities. People no longer feel comfortable relinquishing control of their healthcare, sparking a growing patient rights’ movement around the world.
     But, while richer and more educated patients are adept at placing demands on the system, poorer and disenfranchised groups are less able to fight for their rights. Yet those who don’t get access to care quickly enough get sicker, and become a greater burden on society.
     Politicians are aware of the need for a patient-centred approach to healthcare; some even believe this could help reduce

healthcare bills. But, governments’ approaches – such as Patient Charters –have had little impact, as they are poorly implemented. What is having an effect are grassroots movements among patients and civic groups. These groups realise that the public must take charge of the management of their own health-care, especially in matters of prevention.
     Prevention is key to addressing chronic diseases. However, if patients are to take greater responsibility for managing their own care, they must be afforded the rights to do so. The big challenge for the next decade will be equitable health reform. Without placing the ultimate users of the healthcare system – the public – at the centre, it is difficult to see how governments will ever achieve the cost reductions they seek, while still fulfilling their responsibility to ensure fair and adequate access to healthcare for their citizens.

Alexandra Wyke
Founder and CEO of PatientView

THE NOVO NORDISK APPROACH

Partnerships can bridge
gap in access to care

It wasn’t until he ended up in hospital that Li Guang Jun discovered that he had type 2 diabetes. Recently retired at the age of 63, he was ready to devote himself to his passion for calligraphy. Instead, he had to learn to live a different sort of life. Today, Li Guang Jun, 74, is in control of his diabetes through medicine, diet, exercise (his faithful morning tai chi) and constant monitoring of his blood sugar.
     “By understanding, accepting and having the right attitude about my diabetes, I am able to rise above it and control it,” he says.
     Li Guang Jun is lucky. He has access to doctors, medicine and the other support he needs to manage his chronic condition. That is not the case for many others, in both the developed and developing world, who lack access to nurses, doctors, clinics or hospitals or the knowledge and awareness to manage their health.

Pressing need for new solutions
Novo Nordisk is committed to ensuring greater access to health. The company’s approach is built on the four priorities (see model on opposite page) of the World Health Organization (WHO). The aim is to partner with key stakeholders to develop entirely new strategies and solutions for how to better meet the needs of people with or at risk of developing diabetes.

Alexandra Wyke was invited by Novo Nordisk to provide a perspective on the hot topic of access to health and to outline some of the issues currently under debate.

     The economic burden of diabetes, already huge, will increase in the future if nothing is done. As part of its strategy for access to health, Novo Nordisk undertakes socio-economic studies to better understand what it takes to change societies and how the company can contribute to such change.
     Novo Nordisk’s studies show that poor control of diabetes translates into lost lives, lost quality of life and lost national productivity. With proper treatment, people with diabetes can lead an almost normal life and reduce the risk of disabilities and premature death. But proper treatment of diabetes is far from universal, even in the developed world, due to lack of awareness. In the developing world the problem is made worse by too few economic resources and inadequate healthcare infrastructure.

National Diabetes Programme in China
In 2003, a National Diabetes Management Programme was set up jointly by Novo Nordisk, the World Diabetes Foundation and the Chinese Ministry of Health. This five-year programme, supported with 18 million Danish kroner (2.4 million euros), aims to prevent, de-

Strategies for access to health

Novo Nordisk has built its strategy for improved access to diabetes care on WHO recommendations.

tect and treat diabetes, and thereby reduce the burden of diabetes on Chinese society.
     The total number of people with diabetes in China is currently estimated to be in excess of 30 million and continuing to grow.
     Project activities will cover an area with a population of around 500 million people, including 20 million people with diabetes. The aim is to introduce systematic diabetes education for doctors and nurses. Fifty thousand doctors and nurses will be trained in diabetes care and management through seminars and on-the-job training. The first national training programme, with approximately 3,500 participants in 33 cities, has now finished.
     In addition, Novo Nordisk is working with partners in seven developing countries to improve diabetes care through activities such as establishing diabetes clinics, training doctors and nurses, and working with governments to set up national diabetes programmes. These countries are Bangladesh, Costa Rica, El Sal-vador, India, Malaysia, Tanzania and Zambia.

Focus on low-income minorities
Access to diabetes care is also an issue in the developed world. Some groups of people, due to their ethnic background and genetic predisposition, experience a higher incidence of diabetes; some of them also experience inequities in access to care. In 2005, Novo Nordisk’s initiatives to better serve the needs of low-income minority populations included:

Best possible pricing
Novo Nordisk offers human insulin to the public health systems in the 50 Least Developed Countries (LDCs), as defined by the UN, at prices not to exceed 20% of the average price in North America, Europe and Japan. For 2005, Novo Nordisk offered this pricing policy to all 50 countries and sold human insulin in a total of 32 countries at or below this price, compared with 33 in 2004.

Reaching the poorest nations
The World Diabetes Foundation (WDF) was launched by Novo Nordisk in 2001 as an independent non-profit organisation with a grant of 500 million Danish kroner (about 67 million euros) to be spent over 10 years to improve diabetes care and prevention in the world’s poorest countries. Funding goes towards sustainable projects in education and awareness programmes, and assistance in building healthcare capacity. Today the WDF is supporting 57 ongoing projects with an estimated direct impact on 24 million people in more than 65 countries in the developing world.

In 2005, Novo Nordisk focused on growing its biopharmaceuticals business within critical bleeds as well as new therapy areas in cancer and inflammation.

Terje Kalland, head of the Novo Nordisk Bio-pharmaceuticals Research Unit, is a determined man. His mission is to expand the Novo Nordisk biopharmaceuticals business, a challenge he does not take lightly. But he takes heart from the fact that in 2005, clinical trials continued to demonstrate the potential of blood coagulation factor NovoSeven^® to address critical bleeds in situations where there had previously been little hope of medical treatment.
     “NovoSeven^® is poised to grow. If results from our ongoing clinical trials hold up, it will make a difference to a patient population that had little hope in the past,” says Terje Kalland.
     “Many physicians truly believe NovoSeven^® has the potential to save lives,” says Richard Weiskopf, project vice president for Emergency Bleeds for Novo Nordisk.

Boost from new R&D centre in the US
In North Brunswick, New Jersey, Marcus Carr is heading up a first-of-its-kind haemostasis research centre, established by Novo Nordisk in 2005. It will provide additional scientific support for building the company’s haemosta-sis business.
     “My goal is to help Novo Nordisk become a world leader in haemostasis,” says Marcus Carr, a renowned expert in the field of coagulation with extensive experience in basic and clinical research from more than 25 years in both clinical practice and academia. “In five to six years I’d like to see us recognised as the preferred partner for evaluating novel ways of treating bleeding and related complications.”

New hope in stroke and trauma
In 2005, Novo Nordisk moved NovoSeven^® for treatment of intracerebral haemorrhage (ICH), the most deadly form of stroke, into phase 3

trials. This followed the positive clinical results from a phase 2 trial, reported in the New England Journal of Medicine in February 2005. The results signalled the first-ever breakthrough within ICH. The phase 2 trial found that people given NovoSeven^® soon after having experienced an intracerebral haemorrhage were more likely to survive without severe disability.
     About 40% of people who experience ICH die within 30 days; those who survive are left with more severe disabilities than survivors of other forms of stroke, including loss of movement, speech and mental capability.
     NovoSeven^® is also in phase 3 trials for use in trauma, such as acute bleeding due to traffic accidents. “Many clinicians with whom I speak who have used NovoSeven^® investigationally for trauma-associated haemorrhage feel strongly that the product can effectively stop bleeding in patients with severe trauma. We still need confirmation of the clinical proof of concept, as can be provided by a phase 3 study, and that’s why we’re conducting these trials,” explains Richard Weiskopf.
     For more on Novo Nordisk’s R&D within haemostasis, see pp 10–11. For the status of the pipeline, see pp 12–13.

Targeting cancer and inflammation
The company will exploit its technology platform to develop molecules to target cancer and inflammation as a new therapy area. As a scientist specialising in oncology and inflammation, Terje Kalland is committed to developing a number of projects that will allow the company to gain a foothold in these new therapy areas.
     “In the future, Novo Nordisk will not be content just to defend and extend its leadership in diabetes and haemostasis. We will accelerate the development of protein-based drugs in new therapeutic areas, such as cancer and inflammation. We would welcome another string to our competitive bow, and we are

looking to these areas to give us that in due course,” says Terje Kalland.
     Immunotherapy is a promising form of treatment in the fight against cancer. The concept is either to stimulate the immune system or to use proteins produced by the immune system, for example cytokines or monoclonal antibodies, to combat malignant tumours.
     At the moment, the substance that has reached the furthest stage of development is IL-21, which is licensed from ZymoGenetics, Inc, a US biotech company partly owned by Novo Nordisk. This compound is currently being tested in humans with widespread malignant melanoma and renal cancer.
     Novo Nordisk has increased its number of early-stage compounds and has thereby expanded its portfolio of exciting projects.
     “These are areas where, because the success rate is simply very low, you need to have critical mass in your number of research projects, and that is what we are working towards,” says Terje Kalland.
     Terje Kalland acknowledges that there are hurdles to be overcome before Novo Nordisk achieves its ambition of becoming a player in a new therapy area. Its current projects are still at an early stage, with only animal data and early-stage human data available. Yet he believes that Novo Nordisk can make a difference in this area relative to competitors – both within its own areas of expertise and through in-licensing agreements with other firms that can complement that expertise.
     “The management at Novo Nordisk is serious about its commitment to this area. They have ambitious aims to grow the area rapidly and to invest what’s necessary in order to succeed.”

THE BIG PICTURE

New paradigm to
unleash innovation

It is fair to say that large pharmaceutical companies have not been as innovative as they need to be. The standard paradigm centred around a few conventional drug targets has proven a much harder approach than first believed. In stark contrast, smaller firms that have pursued biologics have had a pretty spectacular turn in the past decade – opportunities large pharma have failed to grasp. This is not to say the industry lacks innovation; most products get to market through some sort of pharmaceutical development. The challenge is to find a new model of innovation.
     Engaging with the small company sector and academia has proven to be fertile ground for innovation. Success in such partnerships is more than simply putting money on the table, but rather having industry contribute its unique skills

in drug development and set aside its prejudices about appropriate therapeutic targets. Companies must determine how much they can sensibly outsource without losing their ability to make good decisions. It is a matter of managing those relationships well, and having on board a certain amount of expertise.
     While the old model no longer works, a new model has not yet evolved. Such a model will have to go to the sources of innovation in biomedicine, to academia and small biotech. The winners will be smaller rather than larger, have a diverse range of both therapeutic approaches and molecules, be quick on their feet and very good at external relationships. That is the best model for the moment, but whether it will continue to hold for the next decade remains to be seen.

John Bell
Regius Professor of Medicine, University of Oxford

THE NOVO NORDISK APPROACH

Harnessing creativity
through partnerships

When it comes to cracking the nut of complex chronic diseases, no single company or institution holds the patent on innovation. For that reason, Nicolai Wagtmann, vice president of Biopharmaceuticals Biology at Novo Nordisk, is constantly on the lookout for partners that can help Novo Nordisk assemble a portfolio of promising biological drug candidates within cancer and inflammation.
     He found such a partner in Innate Pharma, a small biotech company in France specialising in cancer immunotherapy. Since 2003, Innate Pharma and Novo Nordisk have been collaborating on the generation of a new therapeutic class of immuno-modulatory antibodies targeting natural killer (NK) cells that may prove to be effective in the treatment of some cancers.
     Novo Nordisk was a preferred partner for Innate Pharma not only for its ability to provide large-scale production, but also for its expertise within biology, Nicolai Wagtmann explains. “If you have good science in-house, you become a more credible player and more interesting to potential partners,” he says.
     ZymoGenetics is another biotechnology firm, based in the US, with which Novo Nordisk has

been able to capitalise on synergies in the development of new compounds for the treatment of cancer (see p 24). Novo Nordisk has around 240 collaborations through scientific in-licensing with biotech firms as well as universities around the world. University research is often at an early stage of development, for example at the biological hypothesis stage or first-patent application, but it can nonetheless provide interesting opportunities to exploit synergies.

Creating a culture of innovation
For Novo Nordisk, innovation is about exploiting ideas that can provide added value for the company and its stakeholders. Innovation is a high priority throughout the entire organisation. The company is working on finding the right balance between management systems and space for new ideas in order to create a true culture of innovation.
     Recently, an external review was conducted of Novo Nordisk’s capacity to innovate relative to other organisations. As a response to the review, a number of innovation projects were selected by top management and are now in the process of being realised. Examples include new models for sales and marketing, new insulin devices for the developing world and more efficient methods for insulin production.
     Nurturing a more risk-taking, entrepreneurial spirit, and yet still managing the inherent risks of drug development to an appropriate level, is critical in the pharmaceutical industry, which faces a risk of around 30% that drugs tested as far as in phase 3 studies will never reach the market. Delays in development of new drugs

or failure to obtain approval from regulatory authorities could have a significant negative impact on Novo Nordisk’s ability to maintain its position as a market leader in diabetes care and to reach its long-term financial targets.

Translating knowledge into practice
There are many examples of how Novo Nordisk takes innovative ideas and technologies and puts them into practice. For example, in 1985, the launch of NovoPen^® set a new standard in diabetes care. As the world’s first insulin delivery pen, it offered people with diabetes a unique and innovative tool that combined the syringe and insulin container in one instrument.
     Over the last 20 years, Novo Nordisk has continued to enhance and update the NovoPen^® range of insulin delivery pens. There have been improvements in accuracy, convenience, durability, discretion and ease of use. The company launched the first-ever prefilled insulin device in 1989. In 2005, on the 20th anniversary of NovoPen^®, NovoPen^® 4 was launched. It is the world’s most compact insulin delivery pen, with significant user-friendly enhancements such as a three-times larger, easy-to-read dose scale, 50% less pressure required to push the button compared with current available insulin pens, and audible indication when injection is complete.
     These developments in insulin delivery pens have had a significant impact on treatment outcomes for people with diabetes, since patient preference for insulin delivery devices strongly influences their compliance with treatment in the long term.
     Another example of innovation in practice is

the Norditropin^® SimpleXx^® delivery system for human growth hormone (hGH). Novo Nordisk used its knowledge in developing pens for insulin delivery in order to develop the world’s first liquid hGH in a superior pen device, offering the same simplicity of use and discretion as NovoPen^®.

Taking a cue from nature
The discovery of new technologies in the world of science is a rare event. Novo Nordisk succeeded in just that with its acylation technology, a new technology for prolonging the duration of insulin. The technology has been used in the development of Levemir^®, the company’s latest insulin analogue, and in the development of liraglutide, a GLP-1 product for diabetes (see p 10).
     What is exciting about the technology, according to Peter Kurtzhals, senior vice president for the Diabetes Research Unit at Novo Nordisk, is that it appears to be generally applicable to any biopharmaceutical compound, which means that use of the technology could result in a potential value upgrade for any compound in the company’s diabetes pipeline.
     “In some ways, this technology is nature’s own idea,” he explains. “We have engineered a natural principle into a pharmacological utility. For me, that’s what innovation is about – taking knowledge and using it for practical purposes to develop better products and processes.”

Having a diverse and mobile work-force is a prerequisite for Novo Nordisk to stay competitive in the global marketplace. That way, people can operate seamlessly across national borders as well as functional areas. The People Strategy drives strategic efforts to build an agile organisation guided by a strong set of values.

In less than four years, Jack Chen’s career at Novo Nordisk has taken him in a number of different directions – across functions, business areas and geographical borders. Eighteen months after joining the company in 2002 as strategic planning manager for the company’s US affiliate, he moved to diabetes product management in the US. Then later he returned to his native China to serve first as business development director and now as director of

the Biopharmaceuticals Business Unit for Novo Nordisk in China.
     The frequent new job assignments keep him challenged, says Jack Chen. He realises that his broad skills base and his ease at working in different countries make him a valuable employee in a company like Novo Nordisk seeking to expand its global reach.
     “All the career moves add to my operational experience,” says Jack Chen. “What I have learned in the US has been a tremendous help in bringing best practice to China. For example, I challenged our affiliate to adapt the more dynamic style of US national sales meetings and, when they did, it was a great success.”
     Jack Chen’s experience illustrates the four anchors of the People Strategy: recruitment, talent development, rewards and mobility, and performance.
     “Everything we do depends on our people. Every employee must have a chance to devel-

op personally and professionally. We’re expanding our operations internationally, which means we need a diverse and mobile work-force. There are tough business challenges ahead, which means we need to develop leaders,” explains Lars Christian Lassen, senior vice president for Corporate People & Organisation at Novo Nordisk.
     The ambition is to achieve more transparent and uniform performance measures. This will give more flexibility in spotting the right people for vacant positions across borders and functions.

Clear business benefits
The Novo Nordisk People Strategy focuses on two key areas: supporting the values of the company and contributing to meeting business challenges in the markets. People development programmes are designed to achieve closer alignment between competence devel-

opment and business goals, and talent programmes are a priority to prepare tomorrow’s leaders and facilitate succession management. Furthermore, work is ongoing to develop competitive performance rewards and global health and safety standards for Novo Nordisk’s global workforce.
     The expected long-term business benefits would be higher job satisfaction, lower absence rates and a people retention rate that can outperform industry peers. In 2005, Novo Nordisk was ranked as Best Place to Work in several of its markets (see p 35), and rated as one of the most attractive places to work among engineering, life science and management graduates in Denmark.

Mobility to seize talent
For Novo Nordisk, mobility is making sure that the very best talents are identified and selected, globally. This task is in the hands of the Global Rewards & Mobility Centre of Excellence at Novo Nordisk’s headquarters in Denmark, which is itself a microcosm of the way the company wants to internationalise: the centre’s 11 staff members have diverse backgrounds and come from Denmark, France, Mexico, Portugal, the UK and the US. “We are supporting highly mobile people, so we want to make sure we have international experience ourselves. That way we do our work best,” says Neil Miller, vice president, Global Rewards & Mobility.
     While only 6% of Novo Nordisk’s employees

work outside their home country, this represents a notable increase since 2004. Likewise, the overall global mobility – that is employees on expatriate contracts, extended business trips, transfers on local conditions or in graduate programmes – has increased by nearly 50% since 2002.
     Diversity management is also a priority with Novo Nordisk, but management recognises that there are no quick fixes. For instance, there is a range of initiatives to encourage more women in management, including development and mentor programmes. While the company won awards in 2005 for its efforts in and commitment to equal opportunities (see p 35), results are yet to translate into solid data.
     “In this field, we share the challenges that many other companies are facing – change takes time,” says Global HR Partner Ove Munch Ovesen, who leads the diversity programmes.
     Ove Munch Ovesen is confident that concrete results will materialise: “The programme is paying off, and numbers are moving in the right direction. An example is our talent pool for senior managers, where we have recruited more women in 2005. So in the coming years we are likely to have more women in senior management positions.” The company does not favour quotas, but seeks to nurture the best talent for any job.

Growing talent
Globalisation requires leadership. It requires future talents to be developed to have a global mindset, possess strong traits and values and an ability to work across cultures, lead people from different cultural backgrounds and manage complexity in a constantly changing environment. Novo Nordisk has two global talent pools for management positions: the Lighthouse programme for senior managers and the Greenhouse programme for younger managerial talents.
     Joan Schmidt, American and manager of the Licensing & Litigation team, Corporate Legal, and a member of the Greenhouse programme, is encouraged by this opportunity to learn of the bigger picture and see broader career opportunities in the company: “I’ve worked for Novo Nordisk for 10 years, first as assistant general counsel at Novo Nordisk, Inc

in the US for eight years before transferring to Denmark. When your company says ‘we‘ve been watching you, we think you’re doing a good job and we want to give you additional tools to develop further’, that’s highly motivating. I’ve also found that the more I lead other people and acquire responsibility, the more prominent the Novo Nordisk values and the Triple Bottom Line figure in my work life.”
     Moreover, the company offers competence development for all its employees to better equip them to match the business goals. In 2005, investments in people development amounted to an average of 9,899 Danish kroner (1,327 euros) per employee.

Never just a job
     While the People Strategy aims to improve Novo Nordisk’s competitiveness through its people, other programmes also inspire and encourage employee engagement. Novo Nordisk conducted a study on The Future Work Life together with employee unions in Denmark. The project indicated that in an increasingly networked society where change is the only constant, it becomes even more important for people to be engaged in their job and to share a sense of community and support.
     One global programme in particular inspires employees to support the company values. TakeAction!, a volunteer programme, encourages employees to undertake team activities that contribute to the Triple Bottom Line. Activities are in support of social objectives and often involve local communities. The only prerequisite is that activities are aligned with the company’s business objectives.
     Another is NovoSund, a prevention programme that aims to inspire and enable employees and their families to adopt a healthier lifestyle and reduce their risk of developing chronic diseases like diabetes. Novo Nordisk is taking a rigorous approach and works to produce solid data that can show the impact of various interventions. In this way the company will package its offerings of healthy choices and activities to the maximum benefit of its people.

THE BIG PICTURE

Plug into the
global economy

I know of a New York restaurant that has outsourced its reservation service to a company in India. That’s my favourite metaphor for globalisation. What they’ve done is to take advantage of the digital revolution to move one function – just the one function where it makes perfect business sense to do so. The chef and waiters stay in New York. You don’t have to disaggregrate an entire business; but if you want to stay competitive, you have to look at what elements can be done better in new ways. That’s how a company can be responsible to shareholders, employees and society.
     There are evidently two sides to glob-alisation. Fundamentally it offers advantages. In emerging economies, by and large Western companies are a force for good. Paying a premium for talent sends a signal that education pays. The biggest

hope we have – and the solution to global inequity – is moving these countries in the right direction. Acquire technological skills, knowledge – that’s how we can improve the world. The message to people should be: you can plug into the global economy and prosper.
     The caveat is that there is going to be intense competitive pressure on the workforce in the West. That’s the central dilemma. We owe it to Western workers to enable them to move up the value chain. Those with easily reproducible skills are most at risk. The real challenge is to make massive investments in training and retraining. This requires governments and private organisations to invest and work together – not just take protective measures, which is a short-term defense.

Fareed Zakaria
Editor, Newsweek International

THE NOVO NORDISK APPROACH

Striving for
balanced growth

For Niels-Erik Olsen, shop steward for Novo Nordisk’s largest insulin production facility in Kalundborg, Denmark, the company’s strategy to expand its production beyond its traditional production base in Denmark prompts anxiety among some of his fellow workers concerned about their job security.
     In meetings held in 2005 between employees in Denmark and Lars Rebien Sørensen, president and CEO of Novo Nordisk, globalisa-tion was a hot topic: employees wanted to understand the rationale behind the decision to extend production outside Denmark, and they wanted senior management to advocate wage tax reductions in Denmark to lower living costs and the ensuing pressure to retain a high wage level.
     Lars Rebien Sørensen recognises the dilemmas. “Many rich countries with high tax levels and living costs are concerned that glob-alisation will mean jobs moving out. The reality is that in recent years we have managed to create around 2,500 new jobs outside Denmark while at the same time creating around 800 new jobs in Denmark. This has been possible because we are competitive and constantly

grow our business. We have also been able to secure existing jobs through new skills development and job transfers. The company’s success is the best job guarantee for anyone. But I can understand that for the individuals exposed to these changes, it causes a lot of anxiety. That’s why we engage in a dialogue with our people and offer competence upgrades.” A Job Transfer Center for production employees in Denmark gives employees from downsized Danish production sites a chance to register their skills and preferences and be referred to jobs and relevant training within Novo Nordisk. Since May 2004, 166 employees have received a new job at Novo Nordisk through the centre. In another initiative, employee trade unions in Denmark and Novo Nordisk management took part in the Future Work Life project to explore conditions for and development opportunities in operations in Denmark over the next 10 years.
     “We appreciate the open dialogue; it’s important that we can talk about these issues,” says Niels-Erik Olsen.

Many faces to globalisation
There is another side to the story: Novo Nordisk’s investments in new and growing markets, often with struggling economies, are also seen as a boon. For example, Athos Avelino, mayor of Montes Claros, Brazil, welcomed Novo Nordisk’s decision to invest substantially in an additional insulin production facility in his city. It meant jobs and a boost to the local economy.
     “The investment brings more money to our community, not just the 600 permanent jobs at the facility, but 2,500 construction jobs and

more service jobs to satisfy the needs of the influx of people into the city,” says Mayor Avelino.
     It comes down to balanced growth. Novo Nordisk views globalisation as an opportunity to retain its competitive edge as a focused pharmaceutical company through market expansion, global sourcing and building a diverse workforce. But these are transitions that must be handled responsibly. Novo Nordisk recognises its role in supporting balanced economic growth and assumes a particular responsibility wherever the company has a local presence. Global outreach and a strong international mindset are required in a globalised economy, as well as consistent values, global standards of business conduct and a readiness to deal with the concerns of those affected by the impact of globalisation.

Getting access to talent
Globalisation is not only about moving work-places to locations with lower costs and taxation levels. It is also about getting access to international talent and investments.
     “In today’s business environment, it is critical that we can attract the best people,” says Kåre Schultz, chief operating officer for Novo Nordisk. “Among other things, this means having a presence where we have the best conditions for attracting top talent.”
     That was one of the reasons why the NovoSeven^® marketing function was moved from Denmark to Zurich, Switzerland, in 2005. “This decision offers a number of advantages seen from an operational and organisational perspective,” says Kåre Schultz. “The international environment, access to highly qualified people with pharmaceutical experience, and

the proximity to two of our regional headquarters make Zurich an attractive location.”

Wider reach, deeper impacts
With its global expansion Novo Nordisk achieves significant business benefits and helps build healthier societies through the provision of its core products and services.
     In addition, the company seeks to measure its economic footprint and its contributions to social benefits and economic growth by providing increased employment, skills development, technology transfer and investments.
     At the same time, establishing business and operations across diverse cultural and political boundaries exposes the company to a host of ethical challenges around issues such as labour rights, human rights and bribery and corruption. This makes it more essential than ever to ensure that business is conducted in accordance with the principles and values laid out in the Novo Nordisk Way of Management and the Triple Bottom Line approach.
     To be better prepared to take on these challenges, in 2005, Novo Nordisk formulated a business ethics policy (see pp 36–37) setting global standards for ethical business conduct. Several support functions launched programmes in response to strategic responsibility challenges. Examples are the People Strategy with its focus on mobility and leadership development (see pp 28–29), and the corporate brand promise ‘changing diabetes’ that builds on the company’s core value propositions.

See more about Novo Nordisk’s initiatives in
response to globalisation at novonordisk.com/
annual-report Click: How we work

Novo Nordisk puts quality front and centre. Even more so after the establishment of Quality Mindset as a fundamental in the Novo Nordisk Way of Management. As consumers and governments are raising the quality bar, quality is turning into a real competitive parameter.

Today’s healthcare consumers are demanding; they know good quality from poor, and they expect the best for themselves and their loved ones. People living with a chronic condition expect outstanding quality from the products they use every day over a lifetime. When product safety is called into question, it leads to general mistrust from consumers and raises awareness about the need for vigilance on quality matters.
     “It is not enough to simply comply with quality standards. We must ensure that the products we develop and manufacture meet the healthcare needs of the people we serve, and live up to their expectations for quality – every time, long term,” says Lars Almblom Jørgensen, executive vice president, Quality, Regulatory Affairs and Business Development at Novo Nordisk.
     Trust takes time to earn, and comes from consistently showing a strong quality mindset in everything the company does; from the products it brings to the market to the responsiveness of people across the organisation, he adds.

Strong focus on quality
A new fundamental principle has been added to the Novo Nordisk Way of Management: ‘Everyone must continuously improve the quality of their work.’
     This is being integrated through a Quality Mindset that encourages all employees to work across organisational barriers. Some 14,000 separate quality action plans are consistently tracked.  There has been a significant improvement in timely adverse event reporting and

customer surveys indicate an improvement in the level of customer satisfaction.
     Overall, Novo Nordisk follows a ‘cut-no-corners’ philosophy in the way it develops new products and makes improvements. Quality is part of the way the company builds on its core competences and knowledge. For example, customers’ suggestions for improvement were instrumental in the development of the NovoPen^® insulin device product line that celebrated its 20th anniversary in 2005 with the newest-generation pen, NovoPen^® 4 (see p15).

Increased vigilance
Governments are becoming increasingly vigilant about ensuring that healthcare products live up to high quality standards in order to ensure safety for consumers and in the interest of society. Greater regulation and monitoring of product safety are being introduced worldwide, among other things through inspections to ensure that facilities employ Good Manufacturing Practice (GMP).
     Novo Nordisk is in compliance with regulatory demands and averages approximately 50 inspections per year. None of the inspections in 2005 revealed any major non-compliance with regulations concerning customer health and safety.
     In fact, the US Food and Drug Administration (FDA) has used the Novo Nordisk production facilities in Clayton, US, as a sterile product-processing training site for its inspectors. During such inspections, the FDA trainers have identified some ‘best practice’ processes used by the operation. Novo Nordisk requires the same GMP standards wherever it operates in the world. “One important benefit from being vigilant about our quality standards has been the strengthening of relations with regulatory authorities. They’ve come to expect our facilities to be in good shape and in compliance,

and we do our best to live up to their trust,” says Lars Almblom Jørgensen.
     Novo Nordisk has also introduced cLEAN^®, the Novo Nordisk version of the LEAN production philosophy aiming at optimising flow and increasing productivity. It is a way of thinking, a new and smarter work culture being applied within quality, production, laboratories, processes, distribution channels and administrative units.
     Within Product Supply its goal is optimisation throughout the supply chain by shortening lead times and focusing on zero defects, simplicity and continuous improvement. For Quality, it is also about improved monitoring of critical processes to prevent potential problems and allow effective communication.
     The dedication to quality is a fundamental commitment to the millions of people using Novo Nordisk products every day.

Faster response to customers
There are numerous examples of where cLEAN^® has had positive results. For example, the Novo Nordisk Customer Complaint Center reduced the turnaround time from up to 20 calendar days to only two working days through a dedicated cLEAN^® effort involving all employees in the Customer Complaint Center. Furthermore, the effort to improve customer relations through optimising complaint-handling continues.
     Increased productivity in insulin production means that Novo Nordisk affiliates rarely face product shortages. Solving a bottleneck in the dispensing unit on the filling line at the Clayton facility reduced downtime by 93%. At the Chartres production facility, technicians carry out maintenance on machines while their colleagues are at lunch, so no time is wasted.

When lives hang
in the balance

Every day, Signe Wenneberg juggles to keep her son Simon (centre), who is 10 and has type1 diabetes, healthy and happy. And at the same time keeping family life as normal as possible for little brother Noah, who is five. Being able to trust the insulin and insulin pump her son uses to stay in control of his diabetes gives her one less thing to worry about.

     “I know these products save my child’s life every day,” says Signe Wenneberg, a writer who lives in Denmark. “I rely on these products but I don’t take them for granted. There are so many things that can go wrong when you have a child with diabetes. You have to consider how much your child will exercise each day, what he will eat, whether the insulin in his schoolbag will be left out in the sun and get too warm. It’s a huge pressure. Anything that can ease that pressure makes our lives easier.”

news

Employee share
programme

To stimulate the ownership interest in the company and to provide incentive, the employees were granted a global offering of shares in the autumn of 2005. The offering includes approximately 1 million B shares (equivalent to around 0.3% of the total share capital), which was sold from the company’s holding of treasury shares at a price of 150 Danish kroner per share. These shares will generally have a minimum restricted period of five years for employees in Denmark and three years for employees outside Denmark. A total of 13,400 employees have bought shares.

Lars Rebien Sørensen,
a principal voice

The president and CEO of Novo Nordisk was one of 13 individuals invited to take part in Principal Voices, a project aimed at stimulating discussion on some of the major challenges facing the world today. Throughout 2005, the project sponsors, Time, Fortune and CNN, in association with Shell, brought together a group of globally renowned experts in a series of videos, articles and round-table discussions.

Novo Nordisk cited as
sustainability leader

In its 2005 analysis of sustainability leadership, the Zurich-based SAM Group rated Novo Nordisk a Super Sector Leader in healthcare.
     The rating places Novo Nordisk as a health-care leader on the global Dow Jones Sustainability World Index as well as the pan-European Dow Jones STOXX Sustainability Index. These global indexes track the financial performance of the leading sustainability-driven companies worldwide. Novo Nordisk is consistently placed among the best in the indexes, but this is the first time it has been named Super Sector Leader.
     Lars Rebien Sørensen, president and CEO of Novo Nordisk, was awarded the Sustainability Leadership Award by the Sustainability Forum in 2005. The prize is given annually to an individual for personal leadership or pioneering work in implementing the principles of sustainability within the private sector.

Supporting youth
soccer in Brazil

Seventeen Brazilian teenagers travelled to Den-mark in 2005 to play in the Tivoli Cup 2005, an international soccer tournament with Novo Nordisk as its main sponsor. They made it undefeated through the tournament to win the

finals. The youths come from the poor neighbourhoods around the city of Montes Claros, where Novo Nordisk has a production site. The soccer team is one of several community projects initiated by Novo Nordisk in the local community. There are 24 youths, ages 14 to 16, currently on the team, but that number will soon increase to 50 players.

South African scoops
media prize 2005

The winner of the 2005 Novo Nordisk Media Prize is South African journalist Justine Joseph. With a mother and stepfather with diabetes, Justine Joseph grew up in a household where diabetes was considered an opportunity for a healthier lifestyle rather than a burden. In the winning article in the South African magazine Shape, What diabetes can do for you, Justine Joseph describes how her family and close friends with diabetes lead full, healthy lives. The Novo Nordisk Media Prize, supported by IDF, was first awarded in 2003. A certificate and a 10,000 euro award are given every year for excellence in writing on diabetes in the lay press.

Novo Nordisk ranked
top place to work

The Novo Nordisk affiliates in Argentina, Brazil, Denmark, Sweden, the UK and the US were recognised as a ‘Great Place to Work’ in 2005. In the UK competition, Novo Nordisk received a special award in the category Corporate Responsibility and in the European competition an award for Pride. Novo Nordisk in the UK and Sweden were both named among the 100 Best Workplaces in Europe.
     Novo Nordisk in Brazil was named as one of the top 50 best workplaces for women in the country. In Argentina Novo Nordisk was named among the 100 best work-places in Latin America and as one of the three best companies to work for in Argentina.
     All the awards were given by the Great Place to Work Institute. It organises annual competitions in 24 countries, asking employees about the level of trust and quality of relationships that exist between themselves and management.
     Novo Nordisk was rewarded twice in Denmark during 2005 for diversity and equal opportunities. The MIA Prize for diversity, established by the Danish Institute for Human Rights with support from the EU, was presented to Novo Nordisk by Her Royal Highness Crown Princess Mary of Denmark. The prize for equal opportunities was awarded by the Great Place to Work Institute based on a survey among 100 Danish companies. Novo Nordisk was recognised for its guidelines on equal opportunities and their presence in the company’s Balanced Scorecard.
     The journal The Scientist ranked Novo Nordisk as the fourth best place to work in the world among large biotechnology and pharmaceutical companies. This was based on the responses of1,600 scientists working in the US, Canada and Western Europe.

Her Royal Highness Crown Princess Mary of Denmark and Lise Kingo, Novo Nordisk.

Reaching out to
disaster victims

A number of natural disasters in 2005 took a heavy toll on human life and suffering, including people with diabetes. In the aftermath of the devastating earthquake in Pakistan, Novo Nordisk committed 1 million Danish kroner (134,000 euros) from the company to the relief work. Half was directed to the Danish Red Cross in support of the organisation’s general relief efforts in the region, while the other half is to be used at the discretion of the Novo Nordisk affiliate in Pakistan for projects aimed at rebuilding diabetes care infrastructure in the region. Directly after the earthquake, the affiliate donated insulin and other products worth around 0.7 million kroner (94,000 euros).
     When Hurricane Katrina hit the Gulf Coast of the US, the Novo Nordisk US affiliate shipped

nearly 4 million US dollars’ (3.4 million euros) worth of FlexPen^® insulin pens, insulin vials and needles to shelters, clinics and doctors in the area. Over 65,700 packages were sent to 118 different locations, benefiting many thousands of people with diabetes. Novo Nordisk has also matched private donations by staff to the American Red Cross. On top of this, a total cash donation of 1 million dollars (846,000 euros) was donated to selected relief organisations.
     Other natural disasters recede from the headlines, but their painful legacy lives on. Sri Lanka is still trying to rebuild after the 2004 tsunami. In its continuing efforts to help the country, Novo Nordisk donated about 180,000 dollars (153,000 euros) to Sri Lanka in 2005 to help rebuild and upgrade the diabetes care facilities that were destroyed. The contribution will also provide necessary facilities for early detection and health education.

THE BIG PICTURE

With integrity
at stake, industry
needs to act

Companies must take a forceful and vigilant stance against bribery and corruption and other violations of good business conduct. To achieve this, comprehensive ethics policies and procedures are essential. These require time and effort to develop and then improve, but a greater challenge still is to make sure that all employees live by them and to translate them into everyday business practices.
     Applying business ethics is not just a matter of how a company’s employees operate but also how the company’s partners, its consultants and agents operate. They too must behave according to high ethical standards. The company must also communicate publicly to its stakeholders that they can expect the company to behave ethically.

     For pharmaceutical companies, ethical issues often extend beyond bribery. Avoiding conflicts of interest, ethical marketing and ensuring that the health of consumers remains foremost must be integral to their ethical policies.
     Pharmaceutical companies must be proactive and anticipatory rather than rely on simply responding when a crisis occurs. By adopting sound ethical policies and procedures, and implementing them openly and transparently, pharmaceutical companies can minimise the risk of corruption and foster confidence among their employees, their stakeholders and consumers at large.

David Nussbaum
Chief executive, Transparency International

NOVO NORDISK’S APPROACH

Providing clarity and
direction for good
business practice

Managers who work for the regional office of Novo Nordisk in Latin America often come to Maria Augusta S Buarraj, the region’s legal manager, for guidance on how to deal with issues that come up in their daily business – for instance, the proper procedures regarding handling of donations.
     Now Maria Buarraj’s job, and that of the managers she advises, is a bit easier, thanks to a new Novo Nordisk business ethics policy launched in September 2005 and supported by new standard operating procedures and company-wide training.
     “Having the policy and procedures in place will help avoid different interpretations of what is acceptable practice,” she says. “The managers in our region have a good sense of what is ethical, but it can be a subjective matter; there are always grey areas. The policy makes very clear the company’s ethical standards regarding donations, gifts and commission fees for local distributors, all of which our managers deal with as part of their everyday business. Taking the policy on board has not been difficult; in fact, it saves us time. And our

employees do expect a very high ethical standard from the company.”
     Novo Nordisk believes it is important for employees working in a high-pressure, competitive environment to have clear guidance on ethical behaviour. Increasingly, stakeholders expect companies to hold themselves to high standards of conduct. And companies that have clear guidance and transparency will be better prepared to respond to those expectations.

Facing dilemmas
While the Novo Nordisk Way of Management serves as the overall guiding principles, the company recognises that, particularly in situations where ethical judgement is left to individual employees, those principles cannot stand alone. Staying true to principles of good business conduct can present dilemmas. Nevertheless, to Novo Nordisk this must never be used as an excuse.
     Despite its long-standing commitments to conduct its business responsibly, dilemmas do emerge and must be addressed case by case. In a report published in October 2005 by an enquiry committee under the United Nations (UN), Novo Nordisk was mentioned as one of around 2,200 companies that allegedly paid so-called after-sales service fees in connection with contracts entered into under the UN Oil-for-Food Programme. Between 1996 and 2003, the programme enabled Iraq to sell limited quantities of oil to meet the humanitarian needs of its people during the economic sanctions that were imposed on Iraq following its invasion of Kuwait.
     Novo Nordisk’s own assessment is that no il-

legal activities have taken place in connection with Novo Nordisk’s contracts or payments.
     This situation does however underline the difficulty of operating in countries around the world with very different business practices.
     This presents one dilemma, according to Lars Rebien Sørensen, president and CEO of Novo Nordisk: “We have supplied the Iraqi people with insulin for the last 15 years, and we have traded there for 30 years. If we had opted to withdraw from Iraq, I’m not sure that the Iraqis would have been able to obtain the medicine they needed,” he says.

Putting policy into practice
As a signatory to the United Nations Global Compact, Novo Nordisk is working actively to implement the 10 Global Compact principles into its business and within its sphere of influence. This includes working against all forms of corruption, including extortion and bribery. The new business ethics policy is backed by three procedures:

contributions and limits for entertainment of customers. It also states that employees can never offer anything of value to a public official for the purpose of obtaining an improper benefit for Novo Nordisk.
     It is the responsibility of all managers to communicate the new procedures to employees, promote business ethics and lead by example. Therefore, training in the policy and procedures began in January 2006. This includes mandatory e-learning for all managers worldwide.
     Moreover, all top management groups in the markets, International Marketing and Strategic Sourcing will run customised workshops prepared by Corporate Legal during 2006 discussing business ethics within their area in detail.
     In addition to the training, advice in specific situations is available to employees through the Corporate Legal function, concerns can be raised through a whistleblower function via the Audit Committee, and the Group Internal Audit and the facilitation function will review the implementation of business ethics. Furthermore, the commitment to business ethics is incorporated in the company’s Balanced Scorecard.

Demands for greater accountability and transparency are rising, with companies expected to show how they ensure ethical considerations in the process of bringing products to market.

Healthcare companies hold a unique ethical responsibility by the very nature of their business. While regulatory authorities monitor that research is conducted in accordance with relevant laws and universal principles, stakeholders also seek reassurance that companies consider any ethical concerns that may emerge. In particular, this is a matter of being respectful of the integrity of people participating in medical studies, animal welfare and culturally founded objections to certain types of research.

Disclosure of clinical study results
The pharmaceutical industry came under fire in 2004. It was suspected of not making all results publicly available from its clinical trials, particularly results compromising the market value of its products. One response was a decision by the International Committee of Medical Journal Editors (ICMJE) to only publish clinical trial results from trials that had been registered in a public database at their inception. The US National Institutes of Health (NIH) extended their site for use on a global scale – www.clinicaltrials.gov. Additionally, the Pharmaceutical Research and Manufacturers of America (PhRMA), an industry association, established a site to hold clinical information and references to publications, and requested its member companies to include all clinical trials finalised after 1 October 2002 for marketed products (www.clinicalstudyresults.org). Novo Nordisk complies with the ICMJE requirements and also posts its trial results on the PhRMA site. The ICMJE requires the registration of trials that started recruiting on or after 1 July 2005. Because many ongoing trials were not registered at inception, the ICMJE will consider for publication ongoing trials registered before 13 September 2005. Novo Nordisk has met both deadlines, with 51 trials of compounds registered at the NIH site by the

end of 2005 and 73 trials for marketed compounds posted on the PhRMA site.
     “Honest and full disclosure of all studies is an important first step towards transparent and ethical practices. What we need to do next is to establish a mechanism for independent validation and a body to monitor and execute any required sanctions,” says Torben V Schroeder, member of the ICMJE and editor of the Journal of the Danish Medical Association.

Informed consent
The principle of informed consent is at the core of human drug testing and is contained in guidelines endorsed worldwide, such as the World Health Organization’s Helsinki Declaration. These rules prohibit coercion and trickery, and give patients the right to withdraw from a trial at any time for any reason. A hotly debated topic is whether informed consent can be upheld in countries where the participants may be impoverished and illiterate or where government ethical oversight may be lacking or limited. Obtaining informed consent also presents dilemmas, such as in cases where patients’ condition makes them unable to give informed consent.
     “Novo Nordisk ensures that the people participating in the trials are given detailed information both verbally and in written form. We provide information on the purpose of the trial in the native language, both the potential risks and benefits of participation,” says Anders Dejgaard, chief medical officer in endocrinol-ogy reporting, Novo Nordisk. “We make sure that illiteracy, poverty or cultural barriers do not prevent a person’s full understanding of the issues involved in participating in a clinical trial. Moreover, we only initiate trials in countries that can provide approval from an external local ethical committee.”

Leading standards for animal welfare
The use of animals is essential for the discovery, development and production of pharma-

ceutical and medical products, and is required by regulatory authorities. However, it is also a source of concern for many people. That is why animal experimentation is one of the industry-specific reputational risks identified by financial analysts. They want to see evidence that companies duly consider this issue, and are also vigilant in looking for best practices.
     Novo Nordisk has a long history of engaging with stakeholders such as animal welfare organisations to find solutions for improving the welfare of experimental animals. The company recognises that not all animal experiments can be replaced in the foreseeable future, but will only use animals where no available and acceptable alternative exists. With its ongoing commitment to finding new ways to replace, reduce and refine the use of animals for testing (the three Rs), Novo Nordisk has been setting new standards in this area. One example is the state-of-the-art housing standards.
     Due to a higher activity level in the discovery phase in 2005, there was a 22% increase in the number of purchased animals, from a total of 47,311 to 57,905 animals, of which 97% are mice, transgenic mice and rats.
     Novo Nordisk is the pioneer of a new discipline called biosimulation, which involves computer models that simulate human beings as closely as possible. In the long term, biosimu-lation can lead to fewer and better experiments on animals, and fewer people will be needed for clinical trials of new drugs. Novo Nordisk is the only healthcare company participating in a new, EU-supported network of scientists working on biosimulation.

Today, with ample evidence that the global climate is changing, there is a strong case for global leaders to take responsible action. The business case is equally clear: proactively preparing for a carbon-constrained future is a matter of cost-effective environmental management and risk mitigation.

While the world’s political leaders were preparing to travel to Montreal, Canada, for what was to become an encouraging breakthrough commitment to negotiate future binding CO₂ reduction targets, more than 130 people from Novo Nordisk with responsibilities for environmental management in Product Supply and Research & Development met in Denmark to kick off an ambitious plan for CO₂ reductions: by 2014, the company will have achieved a reduction of 10% of its CO₂ emissions as compared with 2004 emission levels.
     The target has been defined in an agreement with WWF, which makes Novo Nordisk the 10th company in the world to become a member of the Climate Savers programme.
     Climate change cuts across the dimensions of the Triple Bottom Line: it is now generally recognised as a huge global challenge, with potentially devastating consequences for the world’s environment, for people’s health and for economic development. To Novo Nordisk it also taps directly into the company’s strategic business objectives.

Going for a stretch target
The Climate Savers agreement marks the successful conclusion to more than a year of preparations, assessments and investigations. “We have indeed set the organisation up for

an ambitious stretch target,” says Per Valstorp, senior vice president of Novo Nordisk Product Supply. “In the absence of emission reduction programmes, Novo Nordisk’s emissions would increase by approximately 67% during the period 2004–2014.”
   Such projections speak for themselves. Given the diabetes pandemic, there will be increased demand for insulin, and manufacturing facilities are bound to be expanded within the 10-year timeframe. Furthermore, the production of insulin analogues is highly resource intensive.
    The CO₂ strategy encompasses all production sites globally and will also be implemented under the broad umbrella of the cLEAN^® programme. The significant CO₂ reductions will be achieved through a broad range of measures which include energy efficiency, fuel switching and conversion to renewable sources. Given the fact that currently 91% of the company’s CO₂ emissions arise in Denmark, where energy supplies are predominantly based on fossil fuels, significantly reducing CO₂ emissions will require genuinely innovative thinking and technology leaps, and –most importantly – it will rely on the active participation of everyone in the organisation.
   “We believe that we can find 20% of the necessary CO₂ reductions through energy savings, and that is why we invited all of our people responsible for environmental management to get involved. They know our equipment and processes better than anyone, and they have already given us many ideas to explore,” says Per Valstorp. Furthermore, Novo

Nordisk Product Supply is well underway in implementing cLEAN^® – an adapted LEAN manufacturing programme that aims at optimising flow and increasing productivity. In other words, cLEAN^® leads to better exploitation of production facilities, raw materials and energy, thereby making it possible to postpone expansions of production facilities. By producing more with less, so to speak, cLEAN^® will have a significant positive effect on the use of energy, and consequently CO₂ emissions.

Revisiting priorities
In 2005, Novo Nordisk revisited its environmental strategy to prioritise and align environmental focus areas with business objectives. While the climate change strategy is the number one priority, other corporate-led initiatives look at different aspects of the products’ lifecycle: the safe use of genetically modified organisms (GMOs), sustainable processes, product stewardship, transportation and supply chain management. Regular management of environmental impacts, in turn, is organised through ISO 14001-certified processes at the individual sites. Here, compliance with regulatory requirements, pollution prevention and eco-efficiency are the responsibility of line managers, and achieving these targets is factored into their bonus schemes.

internal controls over financial reporting, as required by the Sarbanes–Oxley Act. Novo Nordisk provides this information in its Form 20-F filed in February 2006.

Corporate governance codes
As an international company listed on the stock exchanges in Copenhagen, New York and London, Novo Nordisk is in compliance with Danish, US and UK securities laws, with the Danish Recommendations on Corporate Governance, and is in general in compliance with corporate governance standards on the New York and London Stock Exchanges.

AA1000 Framework
Novo Nordisk’s non-financial reporting follows the accountability standard, AA1000 Framework. It states that reporting must provide a complete, accurate, relevant and balanced picture of the organisation’s approach to and impact on society. The annual report is assured against AA1000AS.

Global Reporting Initiative Guidelines
Novo Nordisk reports in accordance with the Global Reporting Initiative’s (GRI’s) 2002 Sustainability Reporting Guidelines which require reporting according to 11 principles and against a list of indicators. In the online report there is a GRI index with an overview of the full ‘in accordance’ reporting.

Global Compact
Novo Nordisk is a signatory to the United Nations Global Compact, a platform to promote good corporate principles and learning in the areas of human rights, labour, environment and anti-corruption. The company reports on actions to implement its 10 principles during 2005 in a Communication on Progress, including performance metrics aligned with the GRI Guidelines.

Novo Nordisk is very pleased with the strong financial results that have been achieved in 2005. This has been a year of continued strong demand for Novo Nordisk’s key strategic products: the insulin analogues and NovoSeven^®. There has also been solid growth in the sales of products within Novo Nordisk’s other therapeutic areas.

During 2005, the company continued to realise efficiency gains in its production. In combination with the strong growth in sales this has enabled Novo Nordisk to further expand the diabetes care sales force in the important North American market as well as in key markets in Europe. Furthermore, additional funds have been allocated to research and development to ensure the best possible foundation for moving key projects forward in clinical development.

Business performance and discussion

Reported sales in 2005 of DKK 33,760 million correspond to a sales growth of 16% as compared with sales in 2004 of DKK 29,031 million, with the key drivers of growth being:

     The total net capital expenditure for property, plant and equipment was realised at DKK 3.7 billion – in line with expectations for the year when including the acquisition of tangible assets of approximately DKK 300 million from Aradigm Corporation related to the AERx^® iDMS project.
     Return on invested capital (ROIC) was 24.7%, an increase from 21.5% in 2004. This is mainly due to operating profits, less taxes, increasing at a higher rate than the average invested capital combined with a positive impact from the non-recurring impact on the effective tax rate. Adjusted for the impact of the effective tax rate from non-recurring items, ROIC was realised at 23.9% in 2005.
     The cash to earnings ratio for 2005 was 82%, slightly down from 85% in 2004. The free cash flow for 2005 was expected to be more than DKK 2 billion, but was realised at a significantly higher level of DKK 4.8 billion, reflecting primarily the higher realised net profit for 2005, an increase in trade payables and a positive impact from the sale of shares in Ferrosan A/S.

Long-term financial targets

Following the demerger of Novozymes towards the end of 2000, Novo Nordisk communicated four long-term financial targets in early 2001. Focusing on growth, profitability, financial return and generation of cash, the four targets have served to balance short- and long-term considerations, thereby ensuring a

focus on shareholder value creation.
     By 2005, Novo Nordisk was approaching the achievement of the long-term financial targets. The four ratios are still considered the best way to ensure value creation; however, the current targets are no longer providing sufficient guidance on the targeted financial performance on a five-year horizon. Following a review, the targets for the four ratios have been reassessed and the updated targets are illustrated below.
     The updated targets are guiding the financial development of Novo Nordisk given the current scope of business activities. Individually, and on a combined basis, these four financial targets are considered to be competitive compared to the overall performance of the pharmaceutical industry.
     The target for operating margin remains at 25%, as further productivity improvements in production and administrative areas are expected to be re-invested in research and development activities.
     The targeted growth in operating profit remains at 15% on average. The target allows for a deviation in an individual year if necessi-

tated by business opportunities or market conditions.
     The target for return on invested capital (ROIC) measured post tax is raised from 25% to 30%. The increased target reflects the expectation of continued lower growth in invested capital compared to operating profit as well as a recurring lower effective tax rate, partly due to the lowering of the Danish corporate tax rate from 30% to 28% effective for the year 2005 onwards.
     The targeted cash to earnings ratio is raised from 60% to 70% reflecting the improved cash conversion ability in the last three years. As previously, this target will be pursued as an average over a three-year period. Performance measured by this ratio may be impacted in individual years by significant in-licensing activities or other major investments.

Sales development by segments

Sales in 2005 increased by 16% in Danish kroner and by 15% measured in local currencies. Sales growth was realised both within dia-

betes care and biopharmaceuticals – primarily driven by the portfolio of insulin analogues as well as NovoSeven^®. Furthermore, sales of growth hormone therapy products contributed to growth.
     Sales growth was realised in all regions. The main growth driver was North America, constituting 28% of total sales, followed by International Operations with 18% of total sales.
     The growth of 16% in sales for 2005 exceeded the around 10% growth expectations outlined in January 2005 as a result of improved currency exchange rates as well as a stronger underlying sales performance.

Diabetes care
Sales of diabetes care products increased by 17% in Danish kroner to DKK 24,012 million compared to 2004 and by 16% in local currencies.

Insulin analogues, human insulin and insulin-related products
Sales of insulin analogues, human insulin and insulin-related products increased by 18% measured in Danish kroner to DKK 22,304

million and by 17% in local currencies. All regions contributed to growth measured in local currencies as well as in Danish kroner, with North America and International Operations having the highest growth rates.
     Novo Nordisk continues to consolidate its global leadership position within the insulin segment: the company’s total insulin market share worldwide is 51% and the analogue market share is 34%, both measured in volume. The similar market shares in 2004 were 50% and 28%, respectively.
     Sales of insulin analogues increased by 62% in Danish kroner to DKK 7,298 million in 2005 and by 61% in local currencies. Insulin analogues constituted around 62% of the overall sales growth for Novo Nordisk in 2005, measured in local currencies, as compared to 55% in 2004.

North America
Sales in North America increased by 40% in Danish kroner and by 39% in local currencies in 2005, reflecting solid sales performance for the insulin analogues NovoLog^® and NovoLog^® Mix 70/30. Novo Nordisk now holds 38% of the total US insulin market and 23% of the analogue market, both measured in volume. The similar market shares in 2004 were 34% and 18%, respectively. The human insulin products also contributed to the sales increase in 2005 due to higher volumes and higher average sales prices.
     Novo Nordisk has in the final quarter of 2005 expanded its US diabetes care sales force by adding around 400 individuals, thereby bringing the total sales force to 1,200. The company is thereby well positioned to launch Levemir^® in the US market, which is expected to take place during the second quarter of 2006.

Europe
Insulin sales in Europe increased by 8% in Danish kroner and by 7% in local currencies, primarily reflecting progress for the portfolio of insulin analogues, including Levemir^®. Novo Nordisk continues to consolidate the leadership position in the insulin analogue market, holding 43% of the market, measured in volume.

International Operations
Sales in International Operations increased by 27% in Danish kroner and by 23% in local

currencies. The primary growth drivers in 2005 were sales in China, Russia and Brazil. China accounted for close to 20% of total insulin sales in International Operations and 25% of the increase in insulin sales during 2005. Novo Nordisk holds close to 60% of the Chinese insulin market, measured in volume.
     Whereas insulin sales in International Operations remain dominated by human insulin products, the portfolio of insulin analogue products continues to add to the overall sales growth in the region, with Turkey and Russia as the largest growth drivers. Novo Nordisk remains the overall insulin market leader within the International Operations region and also holds the leadership position within insulin analogues.

Japan & Oceania
Sales in Japan & Oceania increased by 10% in Danish kroner and by 11% in local currencies, primarily reflecting higher sales of NovoRapid^® and NovoRapid^® 30 Mix, assisted by the ongoing switch from durable to prefilled devices. In Japan, Novo Nordisk holds close to 60% and in Australia close to 70% of the insulin analogue market, measured by volume.

Oral antidiabetic products
Sales of oral antidiabetic products increased by 4% in Danish kroner to DKK 1,708 million and by 3% in local currencies, compared to 2004. While the sales development was positive both in Europe and International Operations, this was partly offset by slightly lower sales in the US market, compared to 2004, reflecting a lower market share for Prandin^®.

Biopharmaceuticals
Sales of biopharmaceutical products increased by 15% in Danish kroner to DKK 9,748 million and by 14% in local currencies compared to 2004.

NovoSeven^®
Sales of NovoSeven^® increased by 16% in Danish kroner to DKK 5,064 million and by 16% in local currencies compared to 2004. All regions contributed to the increase in sales, with North America as the main contributor to growth.
     The sales growth of NovoSeven^® was influenced by several factors during 2005. Due to

the high penetration within spontaneous bleeds in congenital inhibitor patients, the predominant part of the growth within the inhibitor segment was generated by treatment of acquired haemophilia patients and usage of NovoSeven^® in connection with elective surgery. Treatment of spontaneous bleeds for congenital inhibitor patients remains the largest area of use. In addition, sales are perceived to have been positively affected by increased investigational use of NovoSeven^®.

Growth hormone therapy (Norditropin^® and Norditropin^® SimpleXx^®)
Sales of growth hormone therapy products increased by 20% in Danish kroner to DKK 2,781 million and by 20% in local currencies, and all regions contributed to the sales increase compared to 2004, with North America and Europe having the highest growth rates. The NordiFlex^® prefilled ready-to-use delivery device was the main reason for the increase in sales.

Other products
Sales of other products within biopharmaceut-icals, which predominantly consist of hormone replacement therapy (HRT) products, increased by 4% in Danish kroner to DKK 1,903 million and by 4% in local currencies compared to last year. The main sales increase occurred in the US market, while sales in Europe were slightly above the levels realised in 2004.

Costs, licence fees and other operating income

The cost of goods sold increased by 14% to DKK 9,177 million, representing a gross margin of 72.8%, compared to 72.3% in 2004. The improvement mainly reflects an improved product mix and increased production efficiency.
     Total non-production-related costs increased by 16% to DKK 16,898 million. The increase in non-production-related costs in particular reflects increased sales and distribution costs, which increased in line with the growth in sales. This was mainly due to the increase in the US diabetes care sales force during the fourth quarter of 2005 as well as costs related to the continued roll-out of Levemir^® in the European market, including expansion of sales forces in key markets.
     Total costs related to depreciation, amorti-

sation and impairment losses in 2005 were DKK 1,930 million compared to DKK 1,892 million in 2004. The costs for 2005 include DKK 171 million in impairment charges, primarily related to fixed assets, compared to DKK 326 million in 2004.
     In 2005, Novo Nordisk expensed costs in relation to share-based incentive programmes for senior management and other senior employees amounting to DKK 83 million. The comparable expense for 2004 was DKK 104 million. In addition, costs amounting to DKK140 million in connection with the previously announced general employee share programme were expensed during the fourth quarter of 2005.
     Licence fees and other operating income in 2005 were DKK 403 million, compared to DKK 575 million in 2004, reflecting a lower level of non-recurring income in 2005.

Net financials and tax

Net financials showed an income of DKK 146 million in 2005 compared to an income of DKK 477 million in 2004.

     The result from associated companies was an income of DKK 319 million compared to an expense of DKK 117 million in 2004, primarily reflecting Novo Nordisk’s share of the net loss in ZymoGenetics, Inc being more than offset by total non-recurring gains during 2005 of approximately DKK 450 million from sales of shares in Ferrosan A/S and an offering of new shares in ZymoGenetics, Inc.
     The foreign exchange result was a loss of DKK 40 million compared to a gain of DKK 533 million in 2004. The loss on foreign exchange in 2005 reflects losses from foreign exchange hedging activities due to the higher level in 2005 of especially US dollars versus Danish kroner compared to 2004. In accordance with IFRS, an unrealised loss of DKK 345 million was deferred by the end of December 2005 for profit and loss recognition in 2006 and 2007 when the hedged operational cash flows occur.
     Novo Nordisk has as per 26 January 2006 hedged expected net cash flows in US dollars, Japanese yen and British pounds for 13, 12 and 10 months respectively. In accordance with IFRS, the financial impact from foreign

exchange contracts will be included in ‘Net financials’ as the underlying operational cash flows materialise.
     The effective tax rate for 2005 was 28.8%, a decrease from 32.8% in 2004, equivalent to a total tax expense of DKK 2.4 billion in 2005. The lower effective tax rate for 2005 is a result of several factors, including the reduction of the Danish corporate income tax rate from 30% to 28%, effective for the entire 2005, and a beneficial impact from the re-evaluation of the company’s deferred tax liabilities, as well as the tax-exempt status of the non-recurring gains from associated companies as mentioned above.

Capital expenditure and free cash flow

Net capital expenditure for property, plant and equipment for 2005 was realised at DKK 3.7 billion, compared to DKK 3.0 billion for 2004. The main investment projects in 2005 were the expansion of purification and filling capacity for insulin products.
     Free cash flow for 2005 was realised at DKK

4.8 billion compared to DKK 4.3 billion for 2004.
     Novo Nordisk’s financial resources at the end of 2005 were DKK 11.4 billion compared to DKK 10.2 billion in 2004. Included in the financial resources are undrawn committed credit facilities of approximately DKK 7.5 billion.

Non-financial performance

In managing its business with a Triple Bottom Line approach, the corporate Balanced Scorecard reflects financial as well as non-financial goals that are subsequently cascaded as appropriate to line management. Moreover, the performance-based incentive programme for Executive Management and the Senior Management Board is based on long-term value creation, following achievement of predefined overall business-related targets (see management’s remuneration p 83).

Performance indicators
A set of top-level indicators help track the company’s performance in terms of economic, environmental and social responsibility. They relate to areas of strategic importance: direct and indirect economic impacts; direct and indirect environmental impacts; and internal (people) and external (patients and society) social impacts. See performance data and comments in the consolidated non-financial statements on pp 92–97.
     In addition, Novo Nordisk reports in accordance with the Global Reporting Initiative’s 2002 Sustainability Reporting Guidelines and the principles of the Global Compact (see p 40).

Defining materiality
Ongoing interactions with stakeholders, trend-spotting, business monitoring and the integrated systematic risk management process are tools to identify the issues that are material to Novo Nordisk’s business. As a result of these processes Novo Nordisk frames its strategic response and defines its targets. The company regularly reviews its key priorities to ensure that they reflect current agendas and reports on progress.

Economic impacts
Job creation
In 2005, Novo Nordisk created 1,735 new positions globally and had 22,007 full-time positions, measured as full-time equivalents (FTE). This is an increase of 8% from 2004. These jobs translate into 52,200 indirect jobs globally, primarily in the supply chain from production needs, but also as a result of employees’ private consumption.

Economic contribution in Denmark
Novo Nordisk’s sales in 2005 accounted for 2.2% of the Danish GDP. The company’s economic contribution to overall economic wealth for the Danish society through the value added was 1.3% of gross value added (GVA), and 4.8% of Danish exports compared to 3.9% in 2004.

Environmental impacts
Eco-efficiency
In 2005, Novo Nordisk continued to improve eco-efficiency, a measure for the ability to produce more pharmaceutical products with less use of water and energy. In the period 2001–2005 the average annual realised improvements were 8% for water and 14% for energy as measured by EPI indices. Hence, the five-year targets of improvements of the water and energy use efficiency at 5% and 4% per annum respectively were achieved.

Climate change
At the end of 2005, Novo Nordisk finalised a climate strategy that sets an ambitious target for reducing its CO2 emissions by 10% in the period 2004–2014 as compared with 2004. In the absence of reduction initiatives, the company’s emissions would increase by 67% in line with production growth. The target has been defined in an agreement with the WWF, which makes Novo Nordisk the 10th company in the world to become a member of the Climate Savers programme. The significant ^CO2 reductions will be achieved through a broad range of measures including improved energy efficiency, fuel switching and conversion to renewable sources.

Compliance
In 2005, Novo Nordisk continued to be challenged on compliance. The number of breaches

of regulatory limit values increased to 174 from 74 in 2004. The number of accidental releases increased from 29 in 2004 to 83 in 2005.
     The registered breaches and accidental releases are evaluated to be minor incidents with no or only minor impact on the external environment. Out of 174 breaches of regulatory limits 164 (94%) are related to pH and temperature in waste water, which are monitored through continuous measurements. The number of breaches is largely due to the fact that at several production sites there have been challenges in managing pH levels in the wastewater in spite of the fact that the company has invested up to DKK 10 million per neutralisation system at some sites.
     A total of 50 out of the 83 accidental releases (60%) were related to accidental releases of cooling agents such as HCFCs and HFCs. In 2005, a campaign set focus on accidental releases from these types of facilities. There was one accidental release of GMOs at the site in Montes Claros. There will be a continued focus on compliance and preventive measures to help curb the curve.
     In 2006, a three-stringed approach will be taken to ensure increased focus on compliance: first, a revision of approvals in close cooperation with authorities, second, education, and third, focused exchange of experiences.

Environmental management
Global implementation of environmental management standards progresses on schedule. In 2005, an additional two of Novo Nordisk’s production facilities achieved ISO 14001 certification. This is instrumental in focusing local management on pollution prevention and compliance.

Sustainable supply chain management
During 2005, a total of 340 suppliers, accounting for 20% of the total value of Novo Nordisk’s purchases, were evaluated on their environmental and social performance. Of these, 87% reported a satisfactory performance, while 8% received a rating for poor environmental performance and 5% of suppliers received a rating for both poor environmental and social performance. Following implementation of corrective actions, Novo Nordisk has not yet had to withdraw from the relationship as a result of repeated poor performance.

     As of 2005, the programme includes audits of suppliers, following similar processes as Novo Nordisk’s regular quality audits. In 2005, 12 of 340 key suppliers were audited. These are mainly located in countries with high risk of violation of Novo Nordisk’s requirements. The conclusions from the audits are a generally satisfying social and environmental performance. A close follow-up on non-satisfactory performance ensures that corrective actions are taken.

Social impacts
People
Living the values is a key performance parameter, as this is seen to impact business results. In 2005, there was a 100% fulfilment of action plans arising from facilitations which support a company-wide adherence to the Novo Nordisk Way of Management.
     Employee satisfaction surveys underscore the internal support for the company’s values-based approach. In the annual employee survey, the average of respondents’ answers as to whether social and environmental issues are important for the future of the company were

2005, which is not satisfactory. These figures cover the entire organisation; however, 70% of the injuries happen at production sites.

Patients
In 2005, Novo Nordisk provided insulin for 12–14 million people around the world. Of these, 6.5 million live in Europe, the US, Japan & Oceania; the remaining 5.5–7.5 million people live in the International Operations region. The range here is due to the fact that in the developing world two or three persons may share a daily dose of insulin.
     During 2005, Novo Nordisk set off leading the fight against diabetes. With its mission of changing diabetes, concerted efforts focus on improved health management for people with diabetes and preventative measures for those at risk of acquiring it. The goal is to effectively curb the curve of the global diabetes pandemic.
     Among the initiatives in 2005 was the Oxford Health Alliance that was established as an independent body to focus attention to prevention of chronic diseases.
     Novo Nordisk’s programmes to help provide global access to health continued in 2005. It is

estimated that the corporate and locally-driven programmes, most notably the National Diabetes Programme, reach out to at least 22 million people through awareness raising, education, diagnosis or treatment.
     For 2005, Novo Nordisk offered its best possible pricing scheme to all 50 Least Developed Countries as defined by the United Nations. Novo Nordisk operates in 35 of these countries, and during 2005, the company sold insulin in 32 of the LDCs at or below the maximum price at 20% of the average prices in the Western world.

Society
In 2005, Novo Nordisk implemented a new global business ethics policy supported by a set of guidelines. The policy adheres to the principles of the UN Convention against Corruption and the Global Compact. Implementation measures include training, an advisory function and compliance audits.
     Full disclosure of current clinical studies was completed within the deadlines requested by the Pharmaceutical Research and Manufacturers of America (PhRMA) and the International Committee of Medical Journal Editors (ICMJE). Each of these bodies specifies a website at which clinical trial results must be registered. By the end of 2005, Novo Nordisk had 51 trials of compounds registered at the website required by the ICMJE and 73 trials for marketed compounds at the PhRMA site.

The value of knowledge
People and talent development is one of the cornerstones in the People Strategy. This includes offers for continued education for all, talent pools and leadership training. In 2005, the annual spending for training, measured as average spend per employee, increased by 10% to 9,899 Danish kroner. The money spent per employee does not fully reflect investments in training, since on-the-job-training, internal seminars and other similar activities are not included.

Research and development update

Diabetes care
Levemir^® was approved by the US Food and Drug Administration (FDA) in June 2005, and

Novo Nordisk is thereby the only company with a complete range of insulin analogues approved in the US, encompassing rapid-acting NovoLog^®, premixed NovoLog^® Mix 70/30 and now also the long-acting analogue, Levemir^®. Novo Nordisk expects to launch Levemir^® in the US market in the second quarter of 2006.
     Levemir^® was also filed for marketing approval in Japan. As is already the case in the US and Europe, Novo Nordisk expects, upon approval of the product, to be the first and only company with both rapid-acting, premixed and long-acting insulin analogues in Japan.
     In Europe, the European Commission has extended the marketing authorisation for Levemir^® to include treatment of diabetes in children and adolescents 6–17 years of age. Moreover, an extended authorisation has also been received in Europe for NovoRapid^® to include treatment of diabetes in children 2–6 years of age. Also the US regulatory authorities (FDA) extended the marketing authorisa-tion for both NovoLog^® and Levemir^® to include paediatric treatment.
     A label expansion for NovoLog^® Mix 70/30 in the US has been approved by the FDA. Key additions to the label include blood glucose control data showing that more patients on a NovoLog^® Mix 70/30 regimen reach an HbA1c target of 7.0% compared to treatment with a basal insulin analogue. The label expansion is expected to support further market share gains for NovoLog^® Mix 70/30 in the US market.
     Novo Nordisk has received marketing au-thorisation from the European Commission for NovoMix^® 50 and NovoMix^® 70. For filing of NovoMix^® 50 in Japan, additional data will be required for approval. Novo Nordisk is currently planning the initiation of the necessary additional clinical trials. For the US, Novo Nordisk filed an application in June with the FDA for a marketing authorisation for NovoLog^® Mix 50/50 and NovoLog^® Mix 30/70 (the US trade names for NovoMix^® 50 and NovoMix^® 70).
     At the annual meeting of the European Association for the Study of Diabetes (EASD) in September 2005, Novo Nordisk launched the NovoPen^® 4 durable pen device for insulin treatment of patients with diabetes. This is the fourth generation of the NovoPen^® range of durable devices, and NovoPen^® 4 offers patients a more convenient treatment option,

compared to other marketed products.
     The phase 2b study with liraglutide was successfully completed in November 2005. The results from the 14-week study showed an improvement of long-term glycaemic control, as measured by haemoglobinA1c (HbA1c), of between 1.5 and 2 percentage points by treatment with liraglutide compared to placebo. Liraglutide was well tolerated and nausea was reported at a level of 5–10%. There were no cases of major or minor hypoglycaemia in spite of the impressive glycaemic control. Phase 3 studies with liraglutide including approximately 3,800 patients are still expected to start in February 2006.

Biopharmaceuticals
In August 2005, the FDA approved the use of NovoSeven^® in surgical procedures involving haemophilia patients with inhibitors against their existing factor VIII or factor IX treatment. Furthermore, the FDA has also approved the use of NovoSeven^® in patients with factor VII deficiency, a rare hereditary haemorrhagic disease caused by the diminution or absence of this coagulation factor. Additionally, Novo Nordisk filed in December an application with the FDA for US marketing approval of NovoSeven^® for treatment of bleeding episodes in patients with acquired haemophilia.
     In October, Novo Nordisk filed in the EU for marketing approval of NovoSeven^® in ICH, based on results of clinical phase 2 trials. Novo Nordisk has received preliminary feedback from EMEA, indicating a preference for receiving additional data. Based on this, and a higher than expected recruitment rate in the ongoing global phase 3 study, Novo Nordisk will withdraw the current file and resubmit an application following the completion of phase 3. The updated application will reflect the less restrictive inclusion criteria in the phase 3 trial. This trial, now expected to be completed by the end of 2006, is aimed at satisfying the needs of regulatory agencies for approval worldwide outside Japan. A phase 2 clinical study has been initiated in Japan, which is expected to include around 100 patients and to be completed during 2007.
     The NovoSeven^® phase 3 clinical study in trauma outside the US is continuing as planned. The study includes mortality as a primary study outcome and is expected to in-

clude around 1,500 patients.
     In the US, the FDA has asked for additional data related to the feasibility of conducting a NovoSeven^® phase 3 clinical study in trauma without a waiver of informed consent. Therefore, Novo Nordisk has decided to initiate a phase 3 study without a waiver of informed consent, with the same primary endpoint as the non-US trial, in order to provide the required data to the FDA. Novo Nordisk expects this process to take at least one year, but the timeline will ultimately depend on how the FDA interprets preliminary patient enrolment data from the study conducted without a waiver of informed consent.
     Novo Nordisk expects to finalise four ongoing phase 2 studies with NovoSeven^® within traumatic brain injury, cardiac surgery, spinal surgery and upper gastro-intestinal bleeds, respectively, in the second half of 2006.
     In the HRT area, Novo Nordisk expects to file in February 2006 in Europe and the US for marketing approval of an ultra-low-dose version of Activelle^® (Activella^® in the US).
     See also discussions of Novo Nordisk’s research and development activities on pp 10–11 and 24–25 and the pipeline on pp 12–13.

Equity

Total equity was DKK 27,634 million at the end of 2005, equal to 65.9% of total assets, compared to 70.8% at the end of 2004. The lower equity ratio reflects the accelerated completion of the DKK 5 billion share repurchase programme announced in April 2004 as well as unrealised losses on cash flow hedges, deferred as part of net equity for profit and loss recognition in 2006 and 2007.

Proposed dividend and reduction of share capital
At the Annual General Meeting on 8 March 2006, the Board of Directors will propose a 25% increase in dividend to DKK 6.00 per share of DKK 2, corresponding to a pay-out ratio of 33.2%, compared to 31.8% for the financial year 2004. No dividend will be paid on the company’s holding of treasury B shares.
     In order to maintain capital structure flexibility the Board of Directors will also propose a reduction in the B share capital, by cancellation of nominally DKK 35.5 million (17,734,708

shares) of current treasury B shares, to DKK 566.4 million. This corresponds to a 5% reduction of the total share capital.

Treasury shares and share repurchase programme
As per 27 January 2006, Novo Nordisk A/S and its wholly-owned affiliates owned 30,979,219 of its own B shares, corresponding to 8.73% of the total share capital. In 2005, a total of 852,647 B shares were disposed of to employees under the general employee share programme.
     During 2005, Novo Nordisk purchased 9,657,118 B shares at a cash value of DKK 3 billion which, combined with the DKK 2 billion worth of B shares repurchased during 2004, completes the share repurchase programme of DKK 5 billion announced in April 2004.
     The Board of Directors has approved the initiation of a new share repurchase programme of DKK 6 billion to be repurchased during 2006–2007. The objective is to align Novo Nordisk’s capital structure to the expected positive development in free cash flow. The completion of the new programme will be subject to the shareholders’ approval at the Annual General Meeting on 8 March 2006 of the proposed reduction of the company’s share capital.
     The repurchased shares will be kept as treasury shares and the value of the repurchased shares will, in accordance with Novo Nordisk's accounting policies, be written off against equity. A corresponding reduction will be made in ’number of shares outstanding’ used in the calculation of Novo Nordisk's financial ratios.

Corporate governance

Long-term share-based incentive programme
As from 2004, Novo Nordisk’s Executive Management and the Senior Management Board (26 in total) participate in a performance-based incentive programme where Novo Nordisk B shares are allocated annually to a bonus pool when certain predefined business-related targets have been achieved. The annual maximum allocation of shares to the bonus pool is capped at the equivalent of eight

months of salary on average per participant. The shares in the bonus pool are locked up for a three-year period before they are transferred to the executives at the expiry of the three-year lock-up period.
     Based on an assessment of the economic value generated in 2005 as well as the performance of the R&D portfolio and key sustainability projects, the Board of Directors on 26 January 2006 approved the establishment of a bonus pool for 2005 by allocating a total of 116,013 Novo Nordisk B shares, corresponding to a cash value of DKK 35.5 million. This allocation amounts to seven months of salary on average per participant.

Share option programme
The grant of share options to approximately 400 senior employees, excluding the members of Executive Management and the Senior Management Board, in accordance with Novo Nordisk’s share option programme is subject to the achievement of shareholder value-based targets as determined by the Board of Directors. For 2005, targets were established for operating profit and return on invested capital, respectively, in addition to a number of non-financial targets for the performance of the R&D portfolio and key sustainability projects. These non-financial targets are identical to the targets included in the long-term share-based incentive programme for Executive Management and the Senior Management Board.
     As the majority of the non-financial targets and both financial targets for 2005 were achieved, a total of 820,234 share options will be granted at an exercise price of DKK 306 per option. The options can be exercised in the period 31 January 2009–30 January 2014. The value of the share option programme is estimated to be DKK 47 million, based on the Black-Scholes model. The company’s holding of its own shares will cover this commitment.

Compliance with Sarbanes–Oxley requirements
In 2005, Novo Nordisk completed the process of becoming compliant with the Sarbanes–Oxley Act section 404 that requires detailed documentation of how financial reporting processes are designed and operating: the flow of information, and systems and controls sup-

porting the reporting processes. Novo Nordisk must ensure that there are no material weaknesses in the internal controls which could lead to a material misstatement in the company’s financial reporting. Novo Nordisk will include a conclusion on the evaluation of the financial reporting processes and the auditors’ evaluation hereof in the so-called Form 20-F filing to the US Securities and Exchange Commission, which is submitted in February 2006. Compliance with these requirements as a foreign registrant on the New York Stock Exchange (NYSE) is only required by the end of 2006 and, hence, Novo Nordisk’s compliance with section 404 is achieved one year ahead of requirements.

Legal issues

As of 26 January 2006, Novo Nordisk Inc, 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 37 individuals who allege to have used 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).
     According to information received from Pfizer, an additional 13 individuals currently allege, in relation to similar lawsuits against Pfizer Inc, that they also have used a Novo Nordisk hormone therapy product. Currently, it is expected that the first trial may take place in the third or fourth quarter of 2006; however, Novo Nordisk is not expecting the claims to impact Novo Nordisk’s financial outlook.
     In September 2005, Novo Nordisk filed a patent infringement lawsuit against sanofi-aventis, Aventis Pharmaceuticals Inc, Aventis Pharma Deutschland GmbH, and Aventis Pharma AG alleging that the OptiClik^® pen system marketed in the US by Aventis Pharmaceuticals infringes US patent No. 6582408. In the complaint, Novo Nordisk has asked for an injunction and monetary damages that have and will result from sale of the OptiClik^® pen system. The lawsuit was filed in the US District Court for the district of Delaware. An initial

conference was held on 10 January 2006, at which time the court scheduled the trial for August 2007. The discovery phase will commence in early 2006.
     In June 2005, Novo Nordisk filed a patent infringement lawsuit against Caraco Pharmaceutical Laboratories Ltd in response to their Abbreviated New Drug Application (ANDA) for repaglinide, the active ingredient in Prandin^®. In their ANDA, Caraco requests approval to sell repaglinide following the 2009 expiration of a US patent relating to repaglin-ide, and provides Paragraph IV certification under the statutes of the Drug Competition and Patent Term Extension Restoration Act (Hatch–Waxman Act), alleging non-infringement and invalidity of a Novo Nordisk patent relating to the fixed combination or simultaneous administration of repaglinide with met-formin, which expires in 2018. The discovery phase is expected to commence in early 2006.
     Novo Nordisk Inc is currently a defendant in three separate cases filed in the US alleging that Novo Nordisk and a number of other pharmaceutical companies provided a false Average Wholesale Price for certain drugs covered by Medicaid. These cases have been brought by the State of Alabama, the State of Mississippi and Erie County, New York. Novo Nordisk was recently dismissed from 31 similar cases by counties in the State of New York.
     In December 2005, the office of the US Attorney for the Eastern District of New York served Novo Nordisk with a subpoena calling for the production of documents relating to the company's US marketing and promotional practices. The company believes that the investigation is limited to its insulin products. The subpoena indicates that the documents are necessary for the investigation of potential criminal offences relating to healthcare benefit programmes. Novo Nordisk is cooperating with the US Attorney in this investigation.

     For information on contingencies for pending litigation, see the financial statements, note 37 on p 89.

Outlook 2006

Novo Nordisk expects at least 10% growth in sales measured in local currencies for 2006. This is based on expectations of a strong market for insulin products in general and the continued market penetration of Novo Nordisk’s insulin analogue portfolio, combined with expectations of increasing NovoSeven^® and Norditropin^® SimpleXx^® sales. Given the current level of exchange rates versus Danish kroner, the sales growth rate for 2006 measured in Danish kroner is expected to be slightly higher than the growth rate measured in local currencies.
     For 2006, operating profit growth measured in local currencies and excluding the impact from non-recurring items is expected to grow by around 10%, reflecting the expected higher spending on sales and marketing activities, combined with an increased number of late-stage clinical development projects. Measured in Danish kroner the growth in operating profit is expected to be slightly more than 10%, reflecting a minor positive currency impact and the absence of non-recurring income in 2006.
     Novo Nordisk expects a net financial expense of DKK 350 million in 2006, reflecting:

Novo Nordisk expects the effective tax rate to be 30%, 1 percentage point higher than the tax rate realised for 2005. As previously stated, the tax rate for 2005 was positively impacted by the tax-exempt status of non-recurring gains related to associated companies as well as the positive impact from re-evaluation of deferred tax liabilities.
     Novo Nordisk plans capital expenditures of around DKK 3 billion, primarily related to the construction of additional purification and filling capacity for insulin products. Depreciation, amortisation and impairment losses are expected to be around DKK 2.1 billion and the free cash flow to be around DKK 4 billion.
     All of the above expectations are provided that currency exchange rates remain at the current level for 2006. All other things being equal, movements in key invoicing currencies will impact Novo Nordisk’s operating profit in 2006 as illustrated on p 50.
     With the results achieved and the investments made in 2005, the Board of Directors and Executive Management are confident that this provides a strong platform for 2006, which will enable Novo Nordisk to deliver solid financial performance and to continue to invest in the future.

Forward-looking statement

The above sections contain forward-looking statements as the term is defined in the US Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of events such as new product introductions, product approvals and financial performance.
     Such forward-looking statements are subject to risks, uncertainties and inaccurate assumptions. This may cause actual results to differ materially from expectations. Factors that may affect future results include interest rate and currency exchange rate fluctuations, delay or failure of development projects, production problems, 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 both new and existing products, exposure to product liability and other lawsuits, changes in reimbursement rules and governmental laws and related interpretation thereof, 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, which was filed on 21 February 2005. Please also refer to pp 56–57. Novo Nordisk is under no duty to update any of the forward-looking statements or to conform such statements to actual results, unless required by law.