UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
| o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
| OR | ||||||||
| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
| For the fiscal year ended December 31, | ||||||||
| OR | ||||||||
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
| OR | ||||||||
| o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
Commission File Number: 333-82318
NOVO NORDISK A/S
(Exact name of Registrant as specified in its charter)
| Not applicable | The Kingdom of Denmark | ||||
| (Translation of Registrant’s name into English) | (Jurisdiction of incorporation or organization) | ||||
Novo Allé 1
DK-2880 Bagsværd
Denmark
(Address of principal executive offices)
Karsten Munk Knudsen
Executive Vice President and Chief Financial Officer
Tel: +45 4444 8888
E-mail: kmkn@novonordisk.com
Novo Allé, DK-2880 Bagsværd, Denmark
(Name, Telephone, E-mail and Address of Company Contact Person)
| Securities registered or to be registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of each class: | Trading Symbol(s): | Name of each exchange on which registered: | ||||||
| B shares, nominal value DKK 0.20 each | New York Stock Exchange* | |||||||
| American Depositary Receipts, each representing one B Share | NVO | New York Stock Exchange | ||||||
* Not for trading, but only in connection with the registration of American Depositary Receipts, pursuant to the requirements of the Securities and Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report:
| A shares, nominal value DKK 0.20 each: | 537,436,000 | ||||
| B shares, nominal value DKK 0.20 each: | |||||
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x No o
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes o No x
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x Accelerated filer o Non-accelerated filer o Emerging growth company o
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.x
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filling:
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
U.S. GAAPo International Financial Reporting Standards as issued by the International Accounting Standards BoardxOthero
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
Item 17 o Item 18 o
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
| TABLE OF CONTENTS | ||
TABLE OF CONTENTS
1
| Novo Nordisk Form 20-F | |||||
| INTRODUCTION | ||
INTRODUCTION
In this Form 20-F the terms ‘the Company’, ‘Novo Nordisk’ and ‘the Group’ refer to the parent company Novo Nordisk A/S together with its consolidated subsidiaries. The term ‘Novo Nordisk A/S’ is used when addressing issues specifically related to this legal entity.
Pursuant to Rule 12b-23(a) of the Securities Exchange Act of 1934, as amended, certain information for the 20192020 Form 20-F of Novo Nordisk A/S set out herein is being incorporated by reference from the Company's statutory Annual Report 20192020 and Annual Report 2018,2019, including the consolidated financial statements of Novo Nordisk A/S (hereafter “Annual Report 2019”2020” and “Annual Report 2018”2019”, respectively) and the Company’s Remuneration Report 2020 (the “Remuneration Report”). Therefore, the information in this Form 20-F should be read in conjunction with our Annual Report 20192020 and Annual Report 2018,2019, which were furnished to the SEC on Form 6-K on February 5, 20203, 2021 and on February 4, 2019, respectively.5, 2020, respectively, and our Remuneration Report, which was furnished to the SEC on Form 6-K on February 3, 2021.
The Company publishes its financial statements in Danish kroner (DKK).
Forward-looking statements
The information set forth in this Form 20-F contains forward-looking statements as the term is defined in the U.S. Private Securities Litigation Reform Act of 1995.
Words such as ‘believe’, ‘expect’, ‘may’, ‘will’, ‘plan’, ‘strategy’, ‘prospect’, ‘foresee’, ‘estimate’, ‘project’, ‘anticipate’, ‘can’, ‘intend’, ‘target’ and other words and terms of similar meaning in connection with any discussion of future operating or financial performance identify forward-looking statements. Examples of such forward-looking statements include, but are not limited to:
•statements of targets, plans, objectives or goals for future operations, including those related to Novo Nordisk’s products, product research, product development, product introductions and product approvals as well as cooperation in relation thereto,
•statements containing projections of or targets for revenues, costs, income (or loss), earnings per share, capital expenditures, dividends, capital structure, net financials and other financial measures,
•statements regarding future economic performance, future actions and outcome of contingencies such as legal proceedings, and
•statements regarding the assumptions underlying or relating to such statements.
With reference to our Annual Report 20192020 and Annual Report 2018,2019, examples of forward-looking statements can be found under the headings 'Strategic aspirations' in our Annual Report 2020 and ‘2019 performance and 2020 outlook’ in our Annual Report 2019, and ‘2018 performance and 2019 outlook’ in our Annual Report 2018, and elsewhere.
These statements are based on current plans, estimates and projections. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific. Novo Nordisk cautions that a number of important factors, including those described in our Annual Report 20192020 and Annual Report 2018,2019, could cause actual results to differ materially from those contemplated in any forward-looking statements.
Factors that may affect future results include, but are not limited to, global as well as local political and economic conditions, including interest rate and currency exchange rate fluctuations, delay or failure of projects related to research and/or development, unplanned loss of patents, interruptions of supplies and production, product recalls, unexpected contract breaches or terminations, government-mandated or market-driven price decreases for Novo Nordisk’s products, introduction of competing products, reliance on information technology, Novo Nordisk’s ability to successfully market current and new products, exposure to product liability and legal proceedings and investigations, changes in governmental laws and related interpretation thereof, including on reimbursement, intellectual property protection and regulatory controls on testing, approval, manufacturing and marketing, perceived or actual failure to adhere to ethical marketing practices, investments in and divestitures of domestic and foreign companies, unexpected growth in costs and expenses, failure to recruit and retain the right employees, and failure to maintain a culture of compliance.compliance and epidemics, pandemics or other public health crises.
For an overview of some, but not all, of the risks that could adversely affect ourNovo Nordisk's results or the accuracy of forward-looking statements in this document, reference is made to the overview of risk factors in ‘Managing risks to protect value’‘Risk management’ on pages 29-3134-35 of our Annual Report 2019.2020.
Unless required by law, Novo Nordisk is under no duty and undertakes no obligation to update or revise any forward-looking statement after the date of this document, whether as a result of new information, future events or otherwise.
Enforceability of civil liabilities
The Company is a Danish corporation and a majority of its directors and officers, as well as certain experts named herein, are non-residents of the United States. A substantial portion of the assets of Novo Nordisk A/S, its subsidiaries and such persons are located outside the United States. As a result, it may be difficult for shareholders of the Company to effect service within the United States upon directors, officers and experts who are not residents of the United States or to enforce judgments in the United States. In addition, there can be no assurance as to the enforceability in Denmark against the Company or its respective directors, officers and experts who are not residents of the United States, or in actions for enforcement of judgments of United States courts, of liabilities predicated solely upon the federal securities laws of the United States.
2
| Novo Nordisk Form 20-F | |||||
| ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS | ||
PART I
ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
Not applicable.
ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3 KEY INFORMATION
A. SELECTED FINANCIAL DATA
| Selected financial data | ||||||||||||||
| IFRS figures in DKK millions, except share and American Depositary Receipts (‘ADR’) data | 2015 | 2016 | 2017 | 2018 | 2019 | |||||||||
| Income statement data | ||||||||||||||
| Net sales | 107,927 | 111,780 | 111,696 | 111,831 | 122,021 | |||||||||
| Operating profit* | 49,444 | 48,432 | 48,967 | 47,248 | 52,483 | |||||||||
| Net profit* | 34,860 | 37,925 | 38,130 | 38,628 | 38,951 | |||||||||
| Earnings per share | ||||||||||||||
| Earnings per share/ADR | 13.56 | 14.99 | 15.42 | 15.96 | 16.41 | |||||||||
| Diluted earnings per share/ADR | 13.52 | 14.96 | 15.39 | 15.93 | 16.38 | |||||||||
| Balance sheet data | ||||||||||||||
| Total assets* | 91,799 | 97,539 | 102,355 | 110,769 | 125,612 | |||||||||
| Net assets* | 46,969 | 45,269 | 49,815 | 51,839 | 57,593 | |||||||||
| Capital stock | 520 | 510 | 500 | 490 | 480 | |||||||||
| Treasury stock | (10 | ) | (9 | ) | (11 | ) | (11 | ) | (10 | ) | ||||
| Dividends per share/ADR** | 6.40 | 7.60 | 7.85 | 8.15 | 8.35 | |||||||||
| Dividends per share/ADR in USD** | 0.94 | 1.08 | 1.26 | 1.25 | 1.25 | |||||||||
| Number of shares | 2,600 | 2,550 | 2,500 | 2,450 | 2,400 | |||||||||
| Selected financial data | |||||||||||||||||||||||||||||
| IFRS figures in DKK millions, except share and American Depositary Receipts (‘ADR’) data | 2016 | 2017 | 2018 | 2019 | 2020 | ||||||||||||||||||||||||
| Balance sheet data | |||||||||||||||||||||||||||||
| Capital stock | 510 | 500 | 490 | 480 | 470 | ||||||||||||||||||||||||
| Treasury stock | (9) | (11) | (11) | (10) | (8) | ||||||||||||||||||||||||
| Dividends per share/ADR in USD* | 1.08 | 1.26 | 1.25 | 1.25 | 1.50 | ||||||||||||||||||||||||
Reference is made to the ‘Performance highlights’ on pages 9-10 and to ‘Consolidated financial statements 2019’2020’, pages 41-7647-77 in our Annual Report 20192020 for further data.
B. CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
D. RISK FACTORS
For information on risk factors, reference is made to our Annual Report 2019 ‘Managing risks to protect value’2020 ‘Risk management’ on pages 29-31.34-35. Outlined in greater details below, we are subject to cybersecurity risks, to the risks associated with the United Kingdom’s planned exit from the European Union and to the risk of epidemics, pandemics or other public health crises.
The potential risk on our business as a result of cybersecurity breaches
We rely on our IT systems to protect our intellectual property, business confidential information, and personal data. Therefore, disruption as a result of cybersecurity breaches could negatively impact the Company’s business and operations or financial results.
IT systems act as a backbone for the Company. They support processes in research & development, manufacturing, sales and supply, and business administration. As we are a global company, the size and complexity of our IT systems are significant, and our IT infrastructure and networks are spread across the geographic regions in which we operate. The Company has made, and expects to continue to make, significant hardware, software and resourcing investments in our IT security and personal data protection programmes. Despite these investments, the dedicated cybersecurity teams who operate our global IT security infrastructure may be unable to respond sufficiently to the multitude of threats facing us or may fail to prevent service interruptions or security breaches resulting from attacks by malicious third parties. The cyber threat landscape continues to change and evolve over time, and includes threats ranging from IT-based malware of varying sophistication, to social engineering attacks, to the unintended or inadvertent click by an employee on a malicious website. Many of these cyber threats have the potential to cause significant
downtime of critical IT systems or the unintended disclosure of confidential information and personal data. From time to time, we experience IT security and personal data breaches, including incidents as a result of malware and third party vendor actions. Although we have not previously experienced material losses as a result of such incidents, we cannot guarantee that we will be able to prevent similar incidents from recurring or adversely affecting our business in the future.
We are subject to data privacy regulation in the EU (including the General Data Protection Regulation) and to privacy laws in many other jurisdictions where we do business that impose obligations and restrictions on the collection and use of personal data. In the ordinary course of the Company’s business, it collects and stores sensitive data, including personal data and personally identifiable information of customers, employees and other third parties.
Many third party vendors provide support services in relation to our business processes and require access to sensitive information in the course of their work. Such vendors could themselves be susceptible to cybersecurity or personal data breaches. Any unauthorized
3
| Novo Nordisk Form 20-F 2020 | |||||
| ITEM 3 KEY INFORMATION | ||
access, disclosure, or other loss of personal data could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and significant regulatory penalties, disrupt the Company’s operations and damage the Company’s reputation.
The extent of the impact on our business as a result of the United Kingdom’s decision to end its membership in the European Union remains uncertain
Our financial and operating performance may be adversely affected by epidemics, pandemics or other public health crises
In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The COVID-19 virus has spread from China to many other countries including the United States, Denmark and other EU countries, with the number of reported cases and related deaths still increasing in many countries. Many governments have imposed stringent restrictions to seek to mitigate, or slow down, the spread of COVID-19, including restrictions on international and local travel, public gatherings and participation in business meetings, as well as closures of workplaces, schools, and other sites, and are requesting “social distancing”. The duration of such measures is highly uncertain, but could be prolonged, and stricter measures may be put in place (or, re-imposed, where previously lifted). The COVID-19 pandemic has resulted and is expected to continue to result in a significant deterioration in economic conditions globally, including reduced productivity, increased unemployment levels, inflationary pressures, increased tax rates and/or disruptions to credit and capital markets.
COVID-19 and other epidemics, pandemics or public health crises pose risks to employee health and safety, and we may experience reduced sales due to fewer patient visits to doctors, less healthcare spending on chronic diseases as resources are diverted to epidemiology management, a slowdown or temporary suspension in production and disruptions in our supply chain, and may be otherwise adversely affected by the impact on international trade and business activities. Any of the factors above could have a material adverse effect on our business, financial condition, rating and results of operations. The magnitude of the impact of the COVID-19 pandemic on the company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak and counter-measures, among others.
In addition to the risks identified above, we may be subject to other material risks that as of the date of this report are not currently known to us or that we deem less material at this point in time.
ITEM 4 INFORMATION ON THE COMPANY
A. HISTORY AND DEVELOPMENT OF THE COMPANY
Novo Nordisk A/S was formed in 1989 by a merger of two Danish companies, Nordisk Gentofte A/S and Novo Industri A/S. Novo Industri A/S was the continuing company and its name was changed to Novo Nordisk A/S. The business activities of Nordisk Gentofte were established in 1923 by August Krogh, H. C. Hagedorn and A. Kongsted, and the business activities of Novo Industri A/S were established in 1925 by Harald and Thorvald Pedersen. From the beginning, the business of both companies was production and sale of insulin for the treatment of diabetes.
Novo Nordisk’s B shares are listed on Nasdaq Copenhagen (NOVO-B). Its American Depositary Receipts (ADR) are listed on the New York Stock Exchange (NVO).
4
| Novo Nordisk Form 20-F 2020 | |||||
| ITEM 4 INFORMATION ON THE COMPANY | ||
| Legal name: | Novo Nordisk A/S | |||||||
| Commercial name: | Novo Nordisk | |||||||
| Date of incorporation: | 28 November | |||||||
| Legal form of the Company: | A Danish public limited liability company | |||||||
| Legislation under which | ||||||||
| the Company operates: | Danish law | |||||||
| Country of incorporation: | Denmark | |||||||
Reference is made to ´Introducing Novo Nordisk`‘Additional information', pages 1-7 and ´2019 performance and 2020 outlook`, pages 20-28on page 93 in our Annual Report 20192020 for information on domicile.
Important events in 2020
Reference is made to ‘Introducing Novo Nordisk’, pages 3-10 and ‘2020 performance and 2021 outlook’, pages 29-33 in our Annual Report 2020 for a description of important events in 2019.
2020.
Capital expenditure in 2020, 2019 2018 and 20172018
Public takeover offers in respect of the Company’s shares
No such offers occurred during 20192020 or 20202021 to date.
B. BUSINESS OVERVIEW
Novo Nordisk is a global healthcare company and a world leader in Diabetes care. The Company has one of the broadest diabetes product portfolios in the industry, including new generation insulin, a full portfolio of modern insulin and human insulin as well as a portfolio of GLP-1 receptor agonists administered both via subcutaneous injection and as a tablet. In addition, Novo Nordisk also has a leading position within haemophilia carehemophilia and growth hormone therapy, and Novo Nordisk’s first product to treat obesity, Saxenda®Saxenda®, was launched in the United States in April 2015 and has now been launched in an additional 4554 countries. Novo Nordisk manufactures and markets pharmaceutical products and services that make a significant difference to patients, the medical profession and society. Headquartered in Denmark, Novo Nordisk employs approximately 43,30045,000 employees in 80 countries and markets its products in approximately 170 countries.
Reference is made to the section ‘Our business’sections 'Novo Nordisk at a glance' and ‘Strategic aspirations’ on pages 8-287-28 in our Annual Report 2019.2020.
Segment information
Novo Nordisk is engaged in the discovery, development, manufacturing and marketing of pharmaceutical products and has two business segments: (i) Diabetes and Obesity care and (ii) Biopharm. The Diabetes and Obesity care segment covers insulin, GLP-1 and related delivery systems, oral antidiabetic products (OAD), obesity and other serious chroninc diseases. The Biopharm segment covers the therapy areas of haemophilia, growth disorders and hormone replacement therapy.Reference is made to Note 2.2 ‘Segment information’ in our Annual Report 2020.
Seasonality
Sales of individual products in individual markets may be subject to fluctuations from quarter to quarter. However, the Company’s consolidated operating results have not been subject to significant seasonality.
Raw materials
The impact on the overall profitability of Novo Nordisk from variations in raw material pricesprices is unlikely to be significant. There is no raw material supply shortage that is expected to significantly impact the Company’s ability to supply any significant market. The Company’s production is largely based on common and readily available raw materials with relatively low price volatility. Certain specific raw materials are, however, less available. For these raw materials, it is the policy of Novo Nordisk to develop close and long-term relationships with key suppliers as well as to secure at least dual sourcing whenever possible and, when relevant, operate with a predefined minimum safety level of raw material inventories.
Market and competition
Novo Nordisk’s insulin and other pharmaceutical products are marketed and distributed through subsidiaries, distributors and independent agents with responsibilityeach responsible for specific geographical areas. In 2019, Novo Nordisk reported based on a regional structure comprisingAs of April 1, 2020, the Company’s financial reporting has been divided into: EMEA (covering Europe, the Middle East and Africa), Region China (covering Mainland China, Hong Kong and Taiwan), Rest of World (covering all other countries except for North America) and North America Operations (the(covering the United States and Canada) and International Operations. International Operations covers all countries except those within North America and is organized in. For 2020, the following five regions: Region Europe; Region Latin America; Region AAMEO (Africa, Asia, Middle East & Oceania); Region Japan & Korea; and Region China. For 2019, theCompany's most important markets in terms of sales were the United States, China, Japan, the major European countries and Canada.
5
| Novo Nordisk Form 20-F 2020 | |||||
| ITEM 4 INFORMATION ON THE COMPANY | ||
Market conditions within the pharmaceutical industry continue to change, including efforts by both private and governmental entities to reduce or control costs generally and in specific therapeutic areas. Most of the countries in which Novo Nordisk sells insulin subsidize or control pricing and in most markets insulin and GLP-1 products are prescription drugs.
In recent years, there has been a general trend in the United States of payers managing the cost of diabetes care by exertingto exert pressure on the price of Novo Nordisk’s and competitors' products. As the population of people with diabetes has increased, competition in the diabetes care area has also intensified, with additional competitors entering the market. In spite of this external pressure, Novo Nordisk has maintained thea leading position in the overall diabetes care market through the quality and innovativeinnovation-driven value of the Company’s diabetes care products. In the United States, pharmacy benefit managers and managed care organizations have continued to leverage their increasing size and control to demand higher rebates which has impacted the price level and overall value of the market.net realised prices. Furthermore, competition has intensified and contributed to thea downward pressure on manufactures' net prices, especially in the basal insulin segment following the launch of a biosimilar glargine in December 2016.prices.
Due to the increasing number of people with diabetes, the global pharmaceutical market for treatment of diabetes continues to grow. Several of the major international pharmaceutical companies have entered the diabetes market, specifically in the area of oral products for the treatment of type 2 diabetes. In the global insulin market, Novo Nordisk, Eli Lilly and Sanofi are the most significant companies measured by market share.
Tresiba®, the Company's latest generation of basal insulin, was launched broadly in the United States in January 2016 and maintains wide commercial and Medicare Part D formulary coverage. In 2018, Tresiba® obtained approval to update its labelling in the United States to include data from the DEVOTE study which showed a 40% reduction in the risk of severe hypoglycaemia vs. glargine U100. In countries outside the United States, Tresiba® has shown solid penetration in markets with reimbursement at a similar level to insulin glargine U100, whereas penetration remains modest in markets with restricted market access. In September 2017, Novo Nordisk obtained the approval of Tresiba® in China and the product was launched in China, without reimbursement and with limited market access, however, it was added to the country’s National Reimbursement Drug List (NRDL) in 2019 with effect from January 2020. Tresiba® has been launchedis commercially available in 8691 countries.
Xultophy® (IDegLira), a once-daily single-injection combination of insulin degludec (Tresiba®) and liraglutide (Victoza®), has now been launchedis commercially available in 37 42 countries, including the United States. Xultophy® has delivered strong growth in markets with a preference for fixed-dose combination products.
Ryzodeg®, a soluble formulation of insulin degludec and insulin aspart, has now been launchedis commercially available in 3037 countries. In markets where the premix insulin segment is preferred, the uptake of Ryzodeg® has been very positive.solid.
The novel mealtime insulin Fiasp®, fast-acting insulin aspart, received marketing authorization from the European Commission in 2017 and approvals were also received in Norway, Iceland and Canada. In September 2017, Novo Nordisk received approval for Fiasp® in the United States and the product was launched there in February 2018.2017. Globally, Fiasp® has now been launchedis commercially available in 33 countries.41 countries.
Moreover, the use of glucagon-like peptide-1 (GLP-1) as a treatment option for people with Type 2 diabetes has continued to increase resulting in significant growth of the GLP-1 market. Novo Nordisk, Eli Lilly and Astra Zeneca are the most significant companies in the global GLP-1 market measured by market share. Novo Nordisk is the global market leader in the GLP-1 segment with a 47.5% value50% volume market share as at December 31, 20192020 (Source: IQVIA, November 20192020 data MAT).
In February 2018, Novo Nordisk launched the once-weekly GLP-1 product, Ozempic®, for the treatment of adults with Type 2 diabetes in the United States and Canada. Ozempic® has also been marketed in 24 50 countries in International Operations, predominantly in Europe and the roll-out will continue in 2020.Latin America. Ozempic®has achieved a 37%34% NBRx (New-to-Brand Prescriptions) market share in the United States as at December 31, 2019,2020, and global sales in 20192020 of DKK 11.2 21.2 billion.
In September 2019, the FDA approved Rybelsus®, the first and only GLP-1 analog in a tablet for the treatment of adults with Type 2 diabetes in the United States. Novo Nordisk is launchinglaunched Rybelsus® broadly in the United States duringin 2020. In April 2020, the European Commission approved Rybelsus® for the treatment of adults with insufficiently-controlled type 2 diabetes to improve glycemic control as accessan adjunct to diet and exercise. In June 2020, the Japanese Ministry of Health, Labour and Welfare approved Rybelsus® for the treatment of adults with type 2 diabetes. Rybelsus is expected to be built gradually and outsidecurrently commercially available in 9 countries including the United States after regulatory approval has been achieved.and Canada.
Patents
To maintain and expand competitiveness, Novo Nordisk strives for the strongest possible protection for those inventions that are created during the development of new products. Novo Nordisk anticipates that the expiration of certain patents could impact sales within the coming years. However, through continued investments in research and development, Novo Nordisk strives to bring novel and innovative products to the market and thereby sustain strong patent protection in the future, as new generations of products replace currently marketed products.
6
| Novo Nordisk Form 20-F 2020 | |||||
| ITEM 4 INFORMATION ON THE COMPANY | ||
For patent information on all Novo Nordisk’s marketed products, reference is made to the section ‘Pipeline overview’‘Product overview' on pages 14-15page 93 in our Annual Report 2019.2020.
In addition to the compound patents discussed in ‘Pipeline overview’'Patent status for marketed products' on pages 14-15page 25 in our Annual Report 2019,2020, the patent protection of our key products within each business segment is considered in the following section. For key products with recent patent expiration or with patent expiration occurring within the coming years, geographical sales splits are provided and factors that may influence the potential impact of competitive product launches are discussed.
Sales of key products with recent or upcoming patent expiration:
Total sales in 2019 (in DKK million) | International Operations | Hereof | North America Operations | Hereof | Total sales in 2020 (in DKK million) | International Operations | Hereof | North America Operations | Hereof | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Product | Region Europe | Region AAMEO | Region China | Region Japan & Korea | Region Latin America | USA | Product | EMEA | Region China | Rest of World | USA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NovoLog®/NovoRapid® | 18,060 | 54 | % | 23 | % | 15 | % | 10 | % | 4 | % | 2 | % | 46 | % | 44 | % | NovoLog®/NovoRapid® | 16,928 | 59 | % | 35 | % | 12 | % | 12 | % | 41 | % | 39 | % | ||||||||||||||||||||||||||||||||||||||||
NovoLog® Mix /NovoMix® | 9,585 | 91 | % | 16 | % | 26 | % | 45 | % | 3 | % | 1 | % | 9 | % | 9 | % | NovoLog® Mix /NovoMix® | 9,634 | 93 | % | 27 | % | 50 | % | 16 | % | 7 | % | 7 | % | ||||||||||||||||||||||||||||||||||||||||
Levemir® | 9,307 | 44 | % | 19 | % | 11 | % | 10 | % | 1 | % | 3 | % | 56 | % | 54 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
NovoSeven® | 8,119 | 55 | % | 22 | % | 14 | % | 3 | % | 4 | % | 12 | % | 45 | % | 43 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Norditropin® | 7,275 | 58 | % | 20 | % | 10 | % | 0 | % | 24 | % | 4 | % | 42 | % | 42 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Victoza® | Victoza® | 18,747 | 38 | % | 23 | % | 5 | % | 10 | % | 62 | % | 60 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Saxenda® | Saxenda® | 5,608 | 38 | % | 20 | % | — | 18 | % | 62 | % | 58 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patent situation of key Diabetes and Obesity care products
The total sales of NovoLog®/NovoRapid® were DKK 16,928 million in 2020 (DKK 18,060 million in 2019 (DKK 18,763 million in 2018)2019). The compound patent for NovoLog®/NovoRapid® has expired. The patent in Japan expired in December 2010 and the European patent expired in August 2011. In the United States NovoLog®/NovoRapid® was patent protected until December 2014. In addition to the compound patent, Novo Nordisk held a formulation patent on NovoLog®/NovoRapid®, which expired in December 2017 in the United States and in June 2017 in all other markets.
The total sales of NovoLog® Mix/NovoMix® were DKK 9,634 million in 2020 (DKK 9,585 million in 2019 (DKK 9,480 million in 2018)2019). The compound patent for NovoLog® Mix /NovoMix® has expired. In Japan the compound patent expired in June 2014, in the United States the compound patent expired in December 2014 and in Europe the compound patent expired on a country-by-country basis throughout 2014 and into 2015. In addition, Novo Nordisk held a formulation patent on NovoLog® Mix /NovoMix® in the United States, which provided coverage until December 2017.all markets.
Today, biosimilar versions of insulin can be approved in the United States via the 505(b)(2) pathway, and in the future the 351(k) pathway in the Public Health Service Act is anticipated to be applicable.pathway. In the EU, a biosimilar pathway and guidelines are available for insulins, and the guideline for biosimilar products issued in Japan is also relevant for insulins. At present, ainsulin. A biosimilar to NovoRapid®/NovoLog®produced by a competitor is completing phase 3 clinical trials and could bewas launched in 2020. Furthermore, biosimilars to Levemir®, Tresiba®, NovoRapid® and NovoMix® have been filed for regulatory approvalare being developed in China by a local competitorcompetitors.
The total sales of Victoza® were DKK 18,747 million in 2020 (DKK 21,934 million in 2019). Victoza® is protected by patents in the U.S., Japan and Europe. In Japan the drug compound patent expires in 2022; in the U.S. and Europe the drug compound patent expires in 2023. The drug compound patent has expired in China.
In February 2017, TEVATeva Pharmaceutical Industries Ltd. filed an Abbreviated New Drug Application (ANDA) for liraglutide, the active pharmaceutical molecule in Victoza® for the treatment of type 2 diabetes, and Saxenda® for the treatment of obesity, to the U.S. Food and Drug Administration. Following a settlement between Novo Nordisk and Teva announced in March 2019 and the subsequent approval of Victoza® for children and adolescents usage in the US,U.S., Teva is not expected to launch a generic version of Victoza® until June 2024. In August 2019 it was announced that Mylan had also filed an ANDA for liraglutide in the USA,U.S., and in December 2019, Mylan filed a petition for Inter Partes Review against a formulation patent covering Victoza®Victoza® until February 2026. In July 2020, Pfizer joined this Inter Parties Review. In April 2020 Sandoz provided notice that they had also filed an ANDA for liraglutide in the U.S.. Novo Nordisk will continue to defend its intellectual property associated with Victoza® and is pursuing this legal approach against Mylan..
The total sales of NovoSevenSaxenda® were DKK 8,1195,608 million in 20192020 (DKK 7,8815,679 million in 2018)2019). WhileLiraglutide is protected by patents in the U.S. and Europe. In the U.S. and Europe the drug compound patent for NovoSeven®expires in 2023. The drug compound patent has expired in all major markets, Novo Nordisk holds two formulation patents on the room temperature stable preparation of NovoSeven®, which provides coverage of this formulation until 2023 and 2025, respectively, in all major markets.
Impact of regulation
As a pharmaceutical company, Novo Nordisk depends on government approvals related to production, development, marketing and reimbursement of its products. Important regulatory bodies include the U.S. Food and Drug Administration, the European Medicines Agency, Chinese Food and Drug Administration and the Japanese Ministry of Health, Labour and Welfare and the Chinese Food and Drug Administration.Welfare. Treatment guidelines from non-governmental organizations such as the European Association for the Study of Diabetes and the American Diabetes Association may also impact the Company.
7
| Novo Nordisk Form 20-F 2020 | |||||
| ITEM 4 INFORMATION ON THE COMPANY | ||
Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012
Pursuant to Section 13(r) of the Securities Exchange Act of 1934, ("Section 13(r)"), Novo Nordisk is obliged to provide disclosuredisclose if, during 2019,2020, it or any of its affiliates have engaged in certain Iran-related activities or transactions with persons designated under Executive Order 13224 or Executive Order 13382.13382 dealt with the Government of Iran (“GOI”). Novo Nordisk conducts limited business relating to pharmaceutical products and devices within the Diabetes care and Biopharm business segments in Iran, which is permitted under the U.S. sanctions against Iran. Set forth below is a description of the activities and transactions by Novo Nordisk’s subsidiaries that are required to be disclosed pursuant to Section 13(r). Novo Nordisk’s U.S. subsidiaries and U.S. person employees are not involved in any of Novo Nordisk’s activities in Iran. However, the United States maintains broad exceptions that permit the commercial sale and export of medicine and medical devices to Iran or the Government of Iran. Similar exceptions, like those encompassed in section 11 of Executive Order 13902, are also in place for the manufacturing of medicine and medical devices for use in Iran.
Novo Nordisk Pars (“NN Pars”), a wholly-owned subsidiary of Novo Nordisk A/S located in Iran, contracts with five companies that may be owned or controlled by the Government of Iran ("GOI")GOI to distribute its products. NN Pars also sponsors educational programs and congresses organized by GOI-controlled medical universities, and hosts and/or engages as scientific delegates or lecturers/speakers health care professionals employed by these medical universities at similar programs in Iran and other locations. Additionally, NN Pars makes donations to GOI-controlled public health organizations focusing on diabetes awareness and policy. NN Pars receives payments from, and makes payments to, Iranian banks (some of which may be GOI-controlled)GOI-owned or controlled) relating to the sales of pharmaceutical products and devices. NN Pars makes payments incidental to its ordinary business activities to Iranian government entities and entities that are or may be GOI-controlled,GOI-owned or controlled, such as taxes, customs fees, insurance, product registration fees and telecommunications services expenses.
In 2018, NN Pars contracted with a GOI-controlled company to serve as a contract manufacturer for biopharm products. However, no transactions took place under the contract and it was terminated. Currently only a Memorandum of Understanding remains in effect, and no activity is currently expected with respect thereto.
The German subsidiary of NNE A/S, a wholly-owned subsidiary of Novo Nordisk A/S, previously sold raw materials and spare parts for production of dialysis filters and leucocyte filters and syringes to a GOI-controlled company. This business relationship, however, was wound down during 2018. NNE A/S currently holds an open receivable from such GOI-controlled entity related to such sales. In 2018, the Iranian customer tried to pay the amounts due, but the payment, which was routed through a GOI-owned bank in Europe, was never received by NNE A/S’s subsidiary. It was held up in transit after the United States imposed sanctions on the bank, and the payment was ultimately returned in 2019 to a GOI-owned bank in Iran. Each of those two GOI-owned banks was designated by the U.S. Government in 2018 under Executive Order 13224. It is uncertain when NNE A/S will receive payment from the Iranian customer with respect to the outstanding receivable.
NNE A/S is a party to a contract with an Iranian blood fractionation company that Novo Nordisk has learned may be GOI-owned or controlled for the provision of certain engineering services to the Iranian customer. There were no activities conducted under this contract in 2019 or 2020, but unpaid amounts remain due from the Iranian customer for services performed in prior years by NNE A/S’sS’ affiliate. It is uncertain when NNE A/S will receive payment from the Iranian customer with respect to these unpaid amounts.
Novo Nordisk’s gross revenue related to transactions with GOI-owned or controlled entities in 20192020 was not in excess of DKK 1,000 million.1% of Group sales. Novo Nordisk does not allocate its net profit on a country-by-country or activity-by-activity basis, other than as set forth in Novo Nordisk’s consolidated financial statements prepared in accordance with IFRS as issued by the IASB; however, Novo Nordisk estimates that its net profit attributable to the transactions with the GOI discussed above would not exceed a de minimis percentage of the Group’s total net profit in 2019.2020.
The purpose of Novo Nordisk’s Iran-related activities is to provide access to important and life-saving pharmaceutical products such as insulin and haemophiliahemophilia products to patients in Iran, and to improve the healthcare of the Iranian people in accordance with Novo Nordisk’s access to care strategy. For that purpose, and because Novo Nordisk has determined that its activities comply with all applicable laws,Novo Nordisk intends to continue these activities.activities (including local production of these products in Iran).
C. ORGANIZATIONAL STRUCTURE
For information regarding the organizational structure and securities exchange listings of Novo Nordisk A/S, the main shareholder Novo Holdings A/S (formerly Novo A/S) and the Novo Nordisk Foundation and the ownership structure of Novo Nordisk A/S, reference is made to the sections ‘Shares and capital structure’ on pages 32-3336-37 and ‘Corporate governance’ on pages 34-3738-41 in our Annual Report 2019.2020.
Companies in the Novo Nordisk Group are listed in the Company’s Annual Report 20192020 on page 75,77, ‘Companies in the Novo Nordisk Group.’
D. PROPERTY, PLANT AND EQUIPMENT
The Company has its headquarters in Bagsværd, Denmark, where it occupies a number of buildings.
8
| Novo Nordisk Form 20-F 2020 | |||||
| ITEM 4 INFORMATION ON THE COMPANY | ||
The Company believes that its current production facilities, including facilities under construction and planned for construction, are sufficient to meet its capacity requirements, including the capacity for meeting growing demand in the future for the products NovoLog®/ NovoRapid®, NovoLog Mix®/ NovoMix®, Levemir®, Victoza®, Tresiba®, Ryzodeg®, Xultophy®, Fiasp®, Ozempic®, Saxenda®, Rybelsus®, Glucagen®,NovoSeven®, NovoEight®, Rebinyn®/ Refixia®, NovoThirteen®/ Tretten®, Norditropin®, Esperoct®, Sogroya® and devices. Reference is made to the sections ‘Capital expenditures in 2020, 2019 2018 and 2017’2018’ under Item 4 for more information about the current expansion programs. For the nature of the Company’s property, plant and equipment, as of December 31, 20192020 and 2018,2019, reference is made to Note 3.2 ‘Property, plant and equipment’ in our Annual Report 2019.2020.
The major production facilities owned by the Company are located at a number of sites in Denmark, and internationally in the United States, France, China and Brazil. There are no material encumbrances on the properties; however, the facilities in Tianjin, China are constructed on land where the remaining term of the lease is 3130 and 3635 years.
Active pharmaceutical ingredient (API) production is located in Denmark, primarily in Kalundborg and with secondary locations in Hillerød and Gentofte, both in Denmark, as well as in New Hampshire, United States, although a new API production site in Clayton, North Carolina in the United States is being established.
The following table sets forth certain information regarding our major production sites.
| MAJOR PRODUCTION FACILITIES | Size of production area (square meters) | Major Production Activities | |||||||||||||||
| Kalundborg, Denmark | 166,500 | Active pharmaceutical ingredients for diabetes and obesity as well as products for diabetes care | |||||||||||||||
| Active pharmaceutical ingredients for | |||||||||||||||||
| Products for biopharm | |||||||||||||||||
| Hillerød, Denmark | 156,700 | Durable devices and components for disposable devices | |||||||||||||||
| Products for diabetes and obesity | |||||||||||||||||
| Active pharmaceutical ingredients for | |||||||||||||||||
| Bagsværd, Denmark | 111,200 | Products for diabetes and obesity | |||||||||||||||
| Gentofte, Denmark | 70,800 | Active pharmaceutical ingredients for glucagon and growth hormone therapy | |||||||||||||||
| Products for growth hormone therapy, glucagon and | |||||||||||||||||
| Tianjin, China | Products for diabetes | ||||||||||||||||
| Production of durable devices | |||||||||||||||||
| Montes Claros, Brazil | Products for diabetes | ||||||||||||||||
| Gel production for active pharmaceutical ingredients | |||||||||||||||||
| Måløv, Denmark | 54,800 | Products for hormone replacement therapy | |||||||||||||||
| Products for oral antidiabetes treatment | |||||||||||||||||
| Products for oral diabetes treatment | |||||||||||||||||
Clayton, North Carolina, United States | Products for diabetes and obesity | ||||||||||||||||
| Chartres, France | Products for diabetes | ||||||||||||||||
New Hampshire, United States | 14,800 | Active pharmaceutical ingredients for | |||||||||||||||
In January 2019, Novo Nordisk initiated the expansion of its production facility in Chartres, France for assembly and packaging of diabetes finished products. The facility is expected to be ready for use by the end of 2021. The production area of the facility is expected to be 9,250 square meters. The expected expenditure for this facility is approximately EUR 81 million. The expansion will be financed by cash flow from operating activities.
In August 2019, Novo Nordisk acquired an existing tablet facility in Durham, North Carolina, United States to strengthen the establishment of the Company’s local U.S. supply chain for Rybelsus® and other potential future oral products. The facility is expected to be operational during the second half of 2021. The expected amount of expenditures for this facility including acquisition value and rebuilding work is approximately USD 70 million. The facility will be financed by cash flow from operating activities.
In August 2020, Novo Nordisk announced plans to invest DKK 850 million in expanding its production facilities in Kalundborg, Denmark in 2020 and 2021. This new investment brings Novo Nordisk’s total investments in site Kalundborg to approximately DKK 1.5 billion in 2020. The expansion is expected to be financed by cash flow from operating activities.
| ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS | ||
ITEM 4A UNRESOLVED STAFF COMMENTS
None.
ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Critical accounting estimates
Reference is made to Note 1.1 ‘Principal accounting policies and key accounting estimates’ in our Annual Report 2019.2020.
New accounting pronouncements
Reference is made to Note 1.2 ‘Changes in accounting policies and disclosures’ in our Annual Report 2019.2020.
A. OPERATING RESULTS
Reference is made to the section ‘Forward-looking statements’ contained on page 2 and the discussion under the caption ‘Risk factors’ contained under Item 3. Reference is further made to our Annual Report 2019 ‘Managing risks to protect value’2020 ‘Risk management’ on pages 29-31.34-35.
The financial condition of the Group and its development are described in our Annual Report 20192020 and our Annual Report 2018.2019. The information in this section is based on these reports and should be read in conjunction with the annual reports. The analysis and discussions included in the annual reports are primarily based on the consolidated financial statements which are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
2020 compared with 2019
The following portions of our Annual Report 2020 constitute the Board of Directors’ and Executive Management’s discussion and analysis of results of operations (incorporated herein by reference): ‘Introducing Novo Nordisk’ (pages 3-10) and ‘2020 performance and 2021 outlook’ (pages 29-33).
2019 compared with 2018
The following portions of our Annual Report 2019 constitute the Board of Directors’ and Executive Management’s discussion and analysis of results of operations (incorporated herein by reference):
.
Segment information
Reference is made to Note 2.2 ‘Segment information’ in our Annual Report 20192020 for details on segmented results.
Inflation
Inflation for the three most recent fiscal years has not had a material impact on the Group’s Net sales or Net profit.
Foreign currencies
The majority of Novo Nordisk’s sales are in foreign currencies, mainly USD, EUR, CNY, JPY, GBP and CAD, while a significant proportion of production, research and development costs are carried in DKK. Consequently, Novo Nordisk has significant exposure to foreign exchange risks and engages in significant hedging activities where the most significant exposure and hedging are related to USD, CNY, JPY, GBP and CAD, while the EUR exchange rate risk is regarded as low due to the Danish fixed-rate policy towards EUR. Thus, Novo Nordisk does not hedge the EUR exchange rate risk. For further description of foreign currency exposure, reference is made to the disclosure in Note 4.3 ‘Financial risks’ in our Annual Report 20192020 and for further description of foreign currency exposure and hedging activities, reference is made to the description of financial instruments in Note 4.4 ‘Derivative financial instruments’ in our Annual Report 2019.2020.
Governmental policies
Please refer to pages 8-28 ‘Our business’11-28 ‘Strategic aspirations’ in our Annual Report 20192020 and Item 4.4 hereof.
B. LIQUIDITY AND CAPITAL RESOURCES
Novo Nordisk maintains a centralized approach to the management of the Group’s financial risks. The overall objectives and policies for Novo Nordisk’s financial risk management are outlined in the Novo Nordisk Treasury Policy, which is approved by the Board of Directors. The Treasury Policy governs the Group’s use of financial instruments. For further information, reference is made to Item 11.
Financial resources
Reference is made to page 4348 ‘Cash flow statement for the year ended 31 December’statement’ and page 4449 ‘Balance sheet’ in our Annual Report 2019.2020. In addition, Novo Nordisk has obtained a credit rating from two independent external rating agencies.
10
| Novo Nordisk Form 20-F 2020 | |||||
| ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS | ||
Novo Nordisk believes its financial resources are sufficient to meet its requirements for at least the next 12 months.
Cash flow in 2020, 2019 2018 and 20172018
Reference is made to page 4348 ’Cash flow statement' for the year ended 31 December’ in our Annual Report 2019.2020.
The most significant source of cash flow from operating activities is sales of Diabetes and Obesity care and Biopharm products. Generally, other factors that affect operating earnings, such as pricing, volume, product mix, costs and exchange rates, also have an impact on realized cash flow from operating activities.
Except as disclosed in note 4.5 'Cash and cash equivalents, financial resourcesreserves and free cash flow' in our Annual Report 2019,2020, there are no material restrictions on the ability of subsidiaries with material cash amounts to transfer funds to the parent company, Novo Nordisk A/S.
Trade receivable program
Trade receivable program, as of December 31, 2020, 2019 2018 and 2017,2018, respectively, are shown in Note 4.34.2 ‘Financial risks’ in our Annual Report 2019.2020.
Debt financing
Derivative financial instruments
Novo Nordisk only hedges commercial exposures and consequently does not enter into derivative transactions for trading or speculative purposes. Currency hedging is done with foreign exchange forwards and foreign exchange options. Reference is made to Note 4.34.2 ‘Financial risks’ and Note 4.44.3 ‘Derivative financial instruments’ in our Annual Report 20192020 for further information on financial instruments including currency exposure.
Commitments for capital expenditure etc.
Contractual obligations for capital expenditure and other contingent liabilities as of December 31, 20192020 and 2018,2019, respectively, are shown in Note 5.2 ‘Commitments’ in our Annual Report 2019.2020.
The Executive Management of the Group believes that the obligations are covered by the Group’s financial resources as well as expected future cash flows from operating activities.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
The primary focus of Novo Nordisk’s research and development is on therapeutic proteins within diabetes, obesity, haemophilia,hemophilia, growth disorders and other serious chronic diseases such as NASH (non-alcoholic steatohepatitis) and, atherosclerosis cardiovascular diseases.diseases, chronic kidney disease and Alzheimers.
Reference is made to Note 2.3 ‘Research and development costs’ in our Annual Report 20192020 for research and development costs in 2020, 2019 2018 and 2017,2018, respectively. Novo Nordisk’s research and development organization comprised approximately 8,000 employees as of December 31, 2019.2020.
Research costs comprise the very early stages of the drug development cycle from the initial drug discovery until the drug is ready for administration to humans. The activities initially focus on identifying a single drug candidate with a profile that will support a decision to initiate development activities. Before selection of the final drug candidate, it is tested in animals to gather efficacy, toxicity and pharmacokinetic information.
Development costs are incurred from the start of phase 1, when the drug is administered to humans for the first time; these are the projects captured in the ’Pipeline overview’ (unaudited) (page 24 of the Annual Report 2020). The final product is developed, and subsequent clinical trials (phases 2 and 3) are conducted to further test the drug in humans, using the results from these trials to attempt to obtain marketing authorization, permitting Novo Nordisk to market and sell the developed products. Historically Novo Nordisk has spent approximately 70-80% of total research and development expenditures on clinical development activities, and approximately 20-30% on research activities. The split between research and development will fluctuate in individual years depending on the composition of the clinical development portfolio.
In general, Novo Nordisk expects that growth in research and development spending will follow a trend in line with or slightly above sales growth indicating that the research and development cost to sales ratio is expected to be broadly unchanged to slightly increasing in the foreseeable future. Thus, Novo Nordisk currently expects to continue an expenditure level of around 12-13% of sales in research and development activities going forward. Development costs in 2020 were driven by significant investments late-stage trials with oral semaglutide in diabetes care, semaglutide in obesity as well as investments in CV outcome trials. In addition, Novo Nordisk initiated the phase 3 clinical development of icodec, a once-weekly long-acting insulin for the treatment of diabetes, in the last quarter of 2020.
11
| Novo Nordisk Form 20-F | |||||
| ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS | ||
The following Novo Nordisk compounds are currently in phase 3 development or have recently been filed for regulatory approval:
| COMPOUND / BRAND NAME / INDICATION | Year entered into phase 3 or filed with the regulatory authorities | Patent expiration | ||||||
| Somapacitan (NN8640) Once-weekly human growth hormone / Growth disorder | Adult GHD has been approved in the US and Japan and received positive opinion in the EU. The GHD in children trial initiated in 2019 and is still on-going. | 20341 | ||||||
| Semaglutide 2.4 mg obesity (NN9536) / Obesity | Phase 3 | |||||||
Semaglutide | Phase 3 completed in 2020 and submitted for regulatory review in 2020 in the EU and 2021 in the U.S. | 20312 | ||||||
| Semaglutide (oral) 25 mg and 50 mg diabetes (NN9924) / Diabetes | Phase 3 initiated in | 20312 | ||||||
| Concizumab (NN7415) / Haemophilia A and B with or without inhibitors | Phase 3 initiated in 2019 | 20333 | ||||||
| Insulin Icodec (NN1436) / Once-weekly basal insulin analogue | Phase 3 initiated in 2020 | 20364 | ||||||
1 Current estimate United States. Key EU markets estimate 2035, Japan expiry 20352036
2 Current estimate United States. excluding paediatric extension
3 Current estimate United States. Key EU markets estimate 2034, Japan expiry 2034
4. Current estimate United States. Key EU markets and Japan estimate 2034
During 20192020 Novo Nordisk has not discontinued any development projects in phase 3.
In determining whether or not any project or group of related projects is significant, we consider the following qualitative and quantitative criteria:
•Assessment of the unmet medical need targeted with the specific project;
•The inherent project risk including the risk of safety issues, unsatisfactory tolerability profile, limitations on the efficacy of the compound;
•Timeline for completing the clinical testing and submitting an application for approval to regulatory authorities;
•Regulatory authorities’ position towards approval and drug label;
•Changes in competitive landscape during the development and approval cycle including competing drugs being developed by others;
•Changes in medical practice during the development period;
•Position of payers, the medical society and patients towards treatment with drug and price of drug;
•Expected uptake in market following launch; and
•Expected net present value of the project.
In assessing the criteria listed above, and as described in ‘Managing riskswe refer to protect value’‘Risk management’ on pages 29-3134-35 in ourthe Annual Report 2019, it2020. It is important to note that at all stages of the development, due to the risks and uncertainties inherent to clinicalinvolved in progressing through pre-clinical development and clinical trials, and the time and cost involved in obtaining regulatory approval process, there is a significant degreeapprovals, we cannot reasonably estimate the nature, timing, completion dates and costs of uncertainty and risk that the project will not be successful.efforts necessary to complete the development. The nature of ourNovo Nordisk’s development activities is such that a compound must first be proven to work by means of multiple clinical trials, which may require treatment of thousands of patients and could take years to complete. Even if initial results of preclinical studies or clinical trial results are promising, wethe Company may obtain different results that fail to show the desired levels of safety and efficacy, or weNovo Nordisk may not obtain applicable regulatory approval for a variety of other reasons. The compound must be accepted by either the FDA, the European Medicines Agency or similar agencies around the world, each of which may have differing requirements. During each stage, there is a substantial risk that weNovo Nordisk will encounter serious obstacles which will further delay us, or that wethe Company will not achieve ourits goals and, accordingly, may abandon a product in which we haveit has invested substantial resources. Furthermore, the commercial potential of a project is dependent on the label granted by the regulatory authority upon approval. The label specifies for which indications a product can be used, major and minor safety concerns associated with drug treatment as well as if the drug can be combined with other types of medication. Thus a label can restrict usage substantially.
Given the uncertainties related to the process of product development, during the periods presented in our 20192020 Form 20-F no single project in product development was significant based on the qualitative and quantitative criteria. However, during the periods presented two groups of projects were considered significant; the Diabetes and Obesity care group and the Biopharm group.
12
| Novo Nordisk Form 20-F 2020 | |||||
| ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS | ||
D. TREND INFORMATION
The key drivers behind Novo Nordisk’s performance continue to be the changes in demographics globally reflecting a continuous growth in the proportion of people who live in cities (urbanization), an increasing proportion of elderly people and a growing problem of obesity. These trends have contributed to the significant increase in the number of people with diabetes worldwide. According to the International Diabetes Federation, the number of people with diabetes is expectedprojected to increase to around 700 million by 2045 from 463 million today to 700 million in 2019.2045. Diabetes and Obesity care is Novo Nordisk’s largest segment comprising more than 84% of sales. The epidemic growth in the number of people with diabetes, continuing transition from older to newer insulin generations, increasing use of GLP-1, new delivery devices and market share gains are all driving Novo Nordisk’s growth within the Diabetes and Obesity care segment. Further, the roll-out of a number of new products within Diabetes and Obesity care (Ozempic®, Rybelsus®, Tresiba®, Ryzodeg®, Xultophy®, Fiasp® and Saxenda®) are expected drivers of sales growth drivers.
In the United States, significant sales rebates are paid in connection with public healthcare insurance programs, such as Medicare and Medicaid, as well as rebates to pharmacy benefit managers (PBMs) and managed care organizations. Key customers in the segment.United States include private payers, PBMs and government payers. Increasingly, PBMs and managed care organizations play a key role in negotiating price concessions with drug manufacturers on behalf of payers for both the commercial and government channels and determining the list of drugs covered in the health plan’s formulary. Specifically, there are four primary drivers:
•Competitive pressure from other manufacturers' diabetes products
•Payer pressure to reduce the overall drug costs has resulted in continued focus on negotiating higher rebates from drug manufacturers. Private payers remain keen to adopt narrow formularies that exclude certain drugs, while securing increased rebates from the preferred brands.
•Recent changes to the U.S. regulatory pathway for insulin to achieve the status of interchangeability.
In 2020, payers continued to leverage their size and control to demand higher rebates, particularly in the basal insulin segment. As a result, average prices after rebates for the Novo Nordisk portfolio in 2020 in the United States declined. In addition, legislative changes to Medicare Part D resulted in further lower realized prices.
For 2021, average prices after rebates are expected to decline further compared with 2020 prices, predominantly driven by the insulin class. Importantly, market access for Novo Nordisk’s products is expected to remain at a level similar to that experienced in 2020. In addition, Novo Nordisk expanded its insulin affordability offerings from January 2020 in the U.S. to help people with diabetes who need alternative solutions as well as offering free insulin for up to three months to people who have lost their job and thereby health insurance due to COVID-19.
For further information on trends, reference is made to the section ‘2020 performance and 2021 outlook’ on pages 29-33 in our Annual Report 2020. Information about expectations for the financial year 2021 can be found on pages 32-33 in the subsection ‘Outlook 2021’.
E. OFF-BALANCE SHEET ARRANGEMENTS
Reference is made to Note 4.2 ‘Financial risks’ and Note 5.2 ‘Commitments’ in our Annual Report 2020.
F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
Reference is made to Note 5.2 ‘Commitments’ in our Annual Report 2020.
ITEM 6 DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES
A. DIRECTORS AND EXECUTIVE MANAGEMENT
Reference is made to pages 38-3942-44 in our Annual Report 20192020 for name, position and period of service as director for the members of the Board of Directors.
Reference is made to page 4045 in our Annual Report 20192020 for name, position, age and other management duties for the members of Executive Management. Business experience, year of appointment and year of joining Novo Nordisk for each member of Executive Management are included below:
13
| Novo Nordisk Form 20-F 2020 | |||||
| ITEM 6 DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES | ||
Lars Fruergaard Jørgensen President and chief executive officer (CEO) Mr Jørgensen joined Novo Nordisk in 1991 as an economist in Health Care, Economy & Planning and has over the years completed overseas postings in the Netherlands, the | |||
Monique Carter Executive vice president and head of People & Organisation Ms Carter joined Novo Nordisk in November 2018 as SVP for Global People and Organization and was promoted to executive vice president in August 2019. Prior to joining Novo Nordisk Ms Carter was Group HR Director and member of the Executive committee at GKN plc, UK. Ms Carter was at GKN plc from 2014 to 2018. Ms Carter worked in the chemicals industry from 2005 to 2014 starting with ICI plc, UK (which later became part of Akzo Nobel, the Netherlands). Ms Carter later moved to Singapore to head up the APAC Regional HR while in the Decorative paints division of ICI plc. In 2010 Ms Carter became | |||
Maziar Mike Doustdar Executive vice president and head of International Operations Mr Doustdar joined Novo Nordisk in 1992 as an office clerk in Vienna, Austria. From 1993 through 2007 he took up various positions in finance, IT, logistics, operations and marketing, within various parts of Novo Nordisk’s emerging markets, first in Vienna and subsequently in Athens and Zurich before he was appointed general manager of Novo Nordisk Near East, based in Turkey, in 2007. In 2010 Mr Doustdar was promoted to vice president of Business Area Near East and in 2012 he re-located to Malaysia to head the Business Area Oceania South East Asia. In 2013 he was promoted to senior vice president of Novo Nordisk’s International Operations, and in April 2015 Mr Doustdar was promoted to executive vice president, continuing his responsibility for Novo Nordisk’s International Operations. In September 2016 Mike Doustdar assumed additional geographical responsibility and was promoted to executive vice president for an expanded International Operations, leading all commercial units globally, except for | |||
Ludovic Helfgott Executive vice president and head of Biopharm Mr Helfgott joined Novo Nordisk in April 2019 as executive vice president and head of Biopharm. Mr Helfgott joined Novo Nordisk from AstraZeneca, UK, where he was global vice president in charge of the company's Cardiovascular, Metabolism and Renal global franchise, supervising both assets in development and on the market. He joined AstraZeneca in 2005 in an international sales effectiveness role and has since held operational leadership roles with increasing responsibilities in Italy, Spain and at corporate headquarters. Prior to this, Mr Helfgott was with McKinsey & Company in Paris, Moscow and Brussels from 1998 to 2005. | |||
Karsten Munk Knudsen Executive vice president and chief financial officer (CFO) Mr Knudsen joined Novo Nordisk in 1999 as a business analyst in NNIT A/S, previously a subsidiary of Novo Nordisk, and has since held finance positions of growing size and complexity throughout the Novo Nordisk value chain. From 2010 to 2014 Mr Knudsen was corporate vice president for Finance & IT at Novo Nordisk Inc. in the | |||
Doug Langa Executive vice president and head of North America Operations Mr Langa joined Novo Nordisk in 2011 as senior director of Managed Markets. In 2015 Mr Langa was promoted to corporate vice president of Market Access in the Mr Langa joined Novo Nordisk from GlaxoSmithKline, where he was the Senior Director of Payer Marketing. Prior to GlaxoSmithKline Mr Langa spent the majority of his career at Johnson and Johnson, where he held various roles of increasing responsibility within Managed Markets, Sales Leadership and Marketing. | |||
Camilla Sylvest Executive vice president and head of Commercial Strategy & Corporate Affairs Ms Sylvest joined Novo Nordisk in 1996 as a trainee. From 1997 to 2008 Ms Sylvest had roles in headquarters and regions within pricing, health economics, marketing and sales effectiveness. In 2003, she was appointed vice president of sales and marketing effectiveness in Region Europe. From 2008 to 2015 Ms Sylvest headed up affiliates and business areas of growing size and complexity in Europe and Asia and in 2013 she was also appointed corporate vice president. In August 2015 Ms Sylvest was appointed senior vice president and general manager of Novo Nordisk’s Region China. In this role she was responsible for the company’s activities in China, Taiwan and Hong Kong. In October 2017 Ms Sylvest was promoted to executive vice president. | |||
Mads Krogsgaard Thomsen Executive vice president and chief science officer (CSO) | |||
Henrik Wulff Executive vice president and head of Product Supply, Quality & IT Mr Wulff joined Novo Nordisk in 1998 in the logistic and planning function. From 2001 to 2008 he held different managerial roles within Novo Nordisk’s manufacturing organisation, Product Supply, before being appointed senior vice president of Diabetes API in Product Supply, Denmark. In 2012 Mr Wulff was appointed senior vice president of the worldwide division Diabetes Finished Products. In 2013 he was promoted senior vice president of Product Supply globally. In April 2015 Mr Wulff was promoted executive vice president and in 2019 | |||
The Board of Directors has the overall responsibility for the affairs of the Company. Reference is made to pages 34-3738-41 in our Annual Report 2019.2020.
The activities of the members of Board of Directors and members of Executive Management outside the Company are included in our Annual Report 20192020 on pages 38-40.42-45.
14
| Novo Nordisk Form 20-F 2020 | |||||
| ITEM 6 DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES | ||
There are no family relationships between the Board of Directors, Executive Management or between any of the members of the Board of Directors and any member of Executive Management. No director or member of Executive Management has been elected according to an arrangement or understanding with shareholders, customers, suppliers or others. As required by the Danish Companies Act, directors are elected at General Meetings by simple majority vote. In addition, four employee representatives are elected for a statutory four-year term by the employees of Novo Nordisk A/S.
B. COMPENSATION
 | |
 | |
| |
| |
 | |
 | |
 | |
| |
| |
| |
 | |
| Board | Audit Committee | Nomination Committee | Remuneration Committee | R&D Committee | ||||||||||||||||
| Multiplier | DKK | Multiplier | DKK | Multiplier | DKK | Multiplier | DKK | Multiplier | DKK | |||||||||||
| Chair | 3.00 | 2,100,000 | 1.00 | 700,000 | 0.50 | 350,000 | 0.50 | 350,000 | 0.50 | 350,000 | ||||||||||
| Vice chair | 2.00 | 1,400,000 | - | - | - | - | - | - | - | - | ||||||||||
| Member | 1.00 | 700,000 | 0.50 | 350,000 | 0.25 | 175,000 | 0.25 | 175,000 | 0.25 | 175,000 | ||||||||||
2020' and section 2.5 'Board remuneration 2020' in our Remuneration Report 2020.
| DKK million | Fixed base fee | Fee for ad hoc tasks and committee work | Travel allowance | Total4 | ||||||
Helge Lund2 (BC and NC) | 2.1 | 0.4 | 0.6 | 3.1 | ||||||
| Jeppe Christiansen (BV and RC) | 1.4 | 0.4 | 0.1 | 1.9 | ||||||
| Brian Daniels (RDM and RM) | 0.7 | 0.4 | 0.4 | 1.5 | ||||||
Laurence Debroux3 (AM) | 0.5 | 0.3 | 0.3 | 1.1 | ||||||
| Andreas Fibig (AM) | 0.7 | 0.4 | 0.3 | 1.4 | ||||||
| Sylvie Grégoire (AM, NM and RDM) | 0.7 | 0.7 | 0.3 | 1.7 | ||||||
| Liz Hewitt (AC and RM) | 0.7 | 0.9 | 0.5 | 2.1 | ||||||
| Mette Bøjer Jensen (NM) | 0.7 | 0.2 | 0.1 | 1.0 | ||||||
| Kasim Kutay (NM) | 0.7 | 0.2 | 0.1 | 1.0 | ||||||
| Anne Marie Kverneland (RM) | 0.7 | 0.2 | 0.1 | 1.0 | ||||||
| Martin Mackay (RDC) | 0.7 | 0.4 | 0.3 | 1.4 | ||||||
| Thomas Rantzau (RDM) | 0.7 | 0.2 | 0.1 | 1.0 | ||||||
| Stig Strøbæk (AM) | 0.7 | 0.4 | 0.1 | 1.2 | ||||||
| Total | 11.0 | 5.1 | 3.3 | 19.4 | ||||||
 | ||
 | ||
 | ||
| ||
| ||
 | ||
| ||
| ||
 | ||
| ||
 | ||
| DKK million | Base salary | Short- term incentive | Pension | Benefits | Total6 | Long-term incentive7 | Total | Fixed | Variable | Total | ||||||||||||||||
| Executive Management | ||||||||||||||||||||||||||
| Lars Fruergaard Jørgensen - President and CEO | 13.9 | 13.9 | 7.0 | 0.3 | 35.1 | 19.7 | 54.8 | 17.7 | 37.1 | 54.8 | ||||||||||||||||
Monique Carter1 - People & Organisation | 1.3 | 1.3 | 0.6 | 0.7 | 3.9 | 2.1 | 6.0 | 2.3 | 3.7 | 6.0 | ||||||||||||||||
| Karsten Munk Knudsen - Finance, Legal & Procurement | 5.1 | 3.9 | 2.3 | 0.3 | 11.6 | 5.6 | 17.2 | 6.7 | 10.5 | 17.2 | ||||||||||||||||
| Camilla Sylvest - Commercial Strategy & Corporate Affairs | 5.2 | 3.9 | 2.3 | 0.3 | 11.7 | 5.6 | 17.3 | 6.8 | 10.5 | 17.3 | ||||||||||||||||
| Mads Krogsgaard Thomsen - Research & Developement | 7.2 | 5.4 | 3.2 | 0.3 | 16.1 | 7.7 | 23.8 | 9.3 | 14.5 | 23.8 | ||||||||||||||||
| Henrik Wulff - Product Supply, Quality & IT | 5.9 | 4.6 | 2.6 | 0.3 | 13.4 | 6.2 | 19.6 | 7.7 | 11.9 | 19.6 | ||||||||||||||||
Non-registered executives4, 5 | 17.2 | 19.0 | 5.7 | 1.2 | 43.1 | 17.9 | 61.0 | 21.7 | 39.3 | 61.0 | ||||||||||||||||
| Former executives: | ||||||||||||||||||||||||||
Jesper Brandgaard2 | 2.1 | 1.3 | 0.8 | 0.1 | 4.3 | 2.2 | 6.5 | 2.7 | 3.8 | 6.5 | ||||||||||||||||
Lars Green3 | 3.5 | 2.2 | 1.4 | 0.2 | 7.3 | — | 7.3 | 4.6 | 2.7 | 7.3 | ||||||||||||||||
| Executive Management in total | 61.4 | 55.5 | 25.9 | 3.7 | 146.5 | 67.0 | 213.5 | 79.5 | 134.0 | 213.5 | ||||||||||||||||
2020.
| Months of base salary equivalent | |||||||||||||
| KPI | KPI weight | Measure | Achievement | Outcome | Performance | CEO | EVP | ||||||
| Economic value creation | |||||||||||||
| Long-term incentive target basis (100%) | 4.5 | 3.4 | |||||||||||
| Financial targets | 2019 economic value creation | 50 | % | Degree of target achievement index 90-110 | | 106 | % | 158 | % | 7.1 | 5.3 | ||
| Sales growth | |||||||||||||
| Long-term incentive target basis (100%) | 4.5 | 3.4 | |||||||||||
| 2019 sales growth | 50 | % | Degree of target achievement index 97-103 | | 102 | % | 169 | % | 7.6 | 5.7 | |||
| Total financial targets | 100 | % | 104 | % | 163 | % | 14.7 | 11.0 | |||||
| Non- financial targets | R&D: Achievement of marketing authorisation for specific product | 20 | % | Target achievement below 85% results in a reduction | | 100 | % | ||||||
| R&D: Successful achievement of milestones in clinical trial | 10 | % | | 100 | % | ||||||||
| R&D: Successful achievement of milestones in clinical trial | 10 | % | | 100 | % | ||||||||
| R&D: Progress in the pipeline within other chronic diseases | 10 | % | | 100 | % | ||||||||
| R&D: Submission of product files to the regulatory authorities in the US and Europe of a certain product | 10 | % | | 100 | % | ||||||||
| R&D: Achievement of marketing authorisation in the EU and the US for specific product | 10 | % | | 100 | % | ||||||||
| Environmental: Contracts in place to increase use of renewable energy | 10 | % | | 100 | % | ||||||||
| Societal: Progress in societal activities | 10 | % | | 100 | % | ||||||||
| Efficiency: Progress in organisational development | 10 | % | | 100 | % | ||||||||
| Total non-financial targets | 100 | % | 100 | % | No reduction | No reduction | |||||||
| Total months allocated | 14.7 | 11.0 | |||||||||||
| Maximum allocation, months | 18.0 | 13.5 | |||||||||||
| Performance as percentage of maximum | 82 | % | 82 | % | |||||||||
| Performance as percentage of target | 163 | % | 163 | % | |||||||||
| Grant date | Vesting date | Number of shares allocated1 | Value per share at grant date | Total market value at launch (DKK million)2 | Months of base salary at year-end equivalent | |||||||||
| Lars Fruergaard Jørgensen | ||||||||||||||
| 2017 Shares allocated | February 2017 | February 2021 | 43,850 | 237 | 9.4 | 8.2 | ||||||||
| 2018 Shares allocated | February 2018 | February 2022 | 58,938 | 304 | 16.5 | 12.6 | ||||||||
| 2019 Shares allocated | February 2019 | February 2023 | 66,218 | 322 | 19.7 | 14.7 | ||||||||
| Monique Carter | ||||||||||||||
| 2019 Shares allocated | February 2019 | February 2023 | 6,895 | 322 | 2.1 | 8.2 | ||||||||
| Karsten Munk Knudsen | ||||||||||||||
| 2018 Shares allocated | February 2018 | February 2022 | 16,578 | 304 | 4.6 | 9.4 | ||||||||
| 2019 Shares allocated | February 2019 | February 2023 | 18,682 | 322 | 5.6 | 11.0 | ||||||||
| Camilla Sylvest | ||||||||||||||
| 2017 Shares allocated | February 2017 | February 2021 | 6,037 | 237 | 1.3 | 5.5 | ||||||||
| 2018 Shares allocated | February 2018 | February 2022 | 16,578 | 304 | 4.6 | 9.4 | ||||||||
| 2019 Shares allocated | February 2019 | February 2023 | 18,682 | 322 | 5.6 | 11.0 | ||||||||
| Mads Krogsgaard Thomsen | ||||||||||||||
| 2017 Shares allocated | February 2017 | February 2021 | 16,962 | 237 | 3.6 | 6.2 | ||||||||
| 2018 Shares allocated | February 2018 | February 2022 | 22,885 | 304 | 6.4 | 9.4 | ||||||||
| 2019 Shares allocated | February 2019 | February 2023 | 25,788 | 322 | 7.7 | 11.0 | ||||||||
| Henrik Wulff | ||||||||||||||
| 2017 Shares allocated | February 2017 | February 2021 | 13,751 | 237 | 2.9 | 6.2 | ||||||||
| 2018 Shares allocated | February 2018 | February 2022 | 18,421 | 304 | 5.2 | 9.4 | ||||||||
| 2019 Shares allocated | February 2019 | February 2023 | 20,757 | 322 | 6.2 | 11.0 | ||||||||
| Non-registered executives | ||||||||||||||
| 2017 Shares allocated | February 2017 | February 2021 | 23,496 | 237 | 5.0 | 5.5 to 6.2 | ||||||||
| 2018 Shares allocated | February 2018 | February 2022 | 36,842 | 304 | 10.4 | 9.4 | ||||||||
| 2019 Shares allocated | February 2019 | February 2023 | 60,196 | 322 | 17.9 | 11.0 | ||||||||
Former registered executives - Jesper Brandgaard3 | ||||||||||||||
| 2017 Shares allocated | February 2017 | February 2021 | 16,962 | 237 | 3.6 | 6.2 | ||||||||
| 2018 Shares allocated | February 2018 | February 2022 | 22,885 | 304 | 6.4 | 9.4 | ||||||||
| 2019 Shares allocated | February 2019 | February 2023 | 7,522 | 322 | 2.2 | 3.2 | ||||||||
C. BOARD PRACTICES
Reference is made to ‘Corporate governance’ on pages 34-3738-41 in our Annual Report 20192020 regarding board practices. The year of election for each member of the Board of Directors is included in our Annual Report 20192020 on pages 38-39.42-44. The year of appointment for each member of Executive Management is included in Item 6A.
D. EMPLOYEES
Reference is made to the section entitledsections ‘Employees’ on page 26pages 15-16 and ‘Performance highlights’ on pages 6-7note 2.4 'Employee costs' in our Annual Report 20192020 regarding the total number of full-time employees in Novo Nordisk at year-end for the years 2015–2019.2016–2020. Employees outside Denmark as a percentage of the total number of employees for 2020 was 61% (2019: 61% and 2018; 60%).
| EMPLOYEES | 2019 | 2018 | 2017 | |||||
| Employees outside Denmark as a percentage of total number of employees | 61 | % | 60 | % | 59 | % | ||
Executive Management believes that the Company has a good relationship with its employees in general and with the labor unions of the Novo Nordisk employees.
E. SHARE OWNERSHIP
Board' and section 3.10 'Shareholdings by Executive Management' in our Remuneration Report 2020 and note 5.1 'Share-based payment schemes' in our Annual Report 2020. As of 31 December 2019,February 2, 2021, the Board held shares in Novo Nordisk as follows:
At the beginning of the year1 | Additions during the year | Sold/transferred during the year | At the end of the year | Market value2 DKK million | |||||||||
Helge Lund3 | 3,000 | — | — | 3,000 | 1.2 | ||||||||
| Jeppe Christiansen | 23,779 | — | — | 23,779 | 9.2 | ||||||||
| Brian Daniels | 2,100 | — | — | 2,100 | 0.8 | ||||||||
| Laurence Debroux | — | — | — | — | — | ||||||||
| Andreas Fibig | — | — | — | — | — | ||||||||
| Sylvie Grégoire | 1,875 | — | — | 1,875 | 0.7 | ||||||||
| Liz Hewitt | 3,350 | — | — | 3,350 | 1.3 | ||||||||
| Mette Bøjer Jensen | 1,340 | 50 | — | 1,390 | 0.5 | ||||||||
| Kasim Kutay | — | — | — | — | — | ||||||||
| Anne Marie Kverneland | 9,720 | 50 | (154 | ) | 9,616 | 3.7 | |||||||
| Martin Mackay | 2,000 | — | — | 2,000 | 0.8 | ||||||||
| Thomas Rantzau | 632 | 50 | — | 682 | 0.3 | ||||||||
| Stig Strøbæk | 2,050 | 50 | — | 2,100 | 0.8 | ||||||||
| Board of Directors in total | 49,846 | 200 | (154 | ) | 49,892 | 19.3 | |||||||
At the beginning of the year1 | Additions during the year | Sold/transferred during the year | At the end of the year | Market value1 DKK million | Minimum shareholding requirement met3 | ||||||||
| Lars Fruergaard Jørgensen | 132,628 | 17,700 | — | 150,328 | 58.1 | Yes | |||||||
| Monique Carter | — | 3,025 | — | 3,025 | 1.2 | N/A | |||||||
| Karsten Munk Knudsen | 47,002 | 7,813 | (7,813 | ) | 47,002 | 18.2 | Yes | ||||||
| Camilla Sylvest | 2,133 | 2,550 | — | 4,683 | 1.8 | Yes | |||||||
| Mads Krogsgaard Thomsen | 223,135 | 21,818 | (40,178 | ) | 204,775 | 79.2 | Yes | ||||||
| Henrik Wulff | 57,575 | 11,737 | — | 69,312 | 26.8 | Yes | |||||||
| Non-registered executives | 17,304 | 23,379 | (10,910 | ) | 29,773 | 11.5 | Yes | ||||||
| Executive Management in total | 479,777 | 88,022 | (58,901 | ) | 508,898 | 196.8 | |||||||
In the period from January 1, 20202021 until February 4, 2020,3, 2021, no B shares were sold or purchased by the members of the Board of Directors or Executive Management. The internal rules on trading in Novo Nordisk securities by members of the Board of Directors and Executive Management only permit trading in the 15 calendar day period following each quarterly earnings announcement. For information on vested shares for Executive Management on February 3, 2021, reference is made to section 3.8 'Long-term incentive programme 2017 – vested shares’ in our Remuneration Report 2020.
For further information, reference is made to note 5.1 'Share-based payment schemes' in our Annual Report 2020.
| Number of shares | Market value1 (DKK million) | |||
| Executive Management | ||||
| Lars Fruergaard Jørgensen | 4,729 | 1.8 | ||
| Monique Carter | — | — | ||
| Karsten Munk Knudsen | 2,058 | 0.8 | ||
| Camilla Sylvest | 1,842 | 0.7 | ||
| Mads Krogsgaard Thomsen | 5,246 | 2.0 | ||
| Henrik Wulff | 4,253 | 1.7 | ||
| Non-registered executives | 4,170 | 1.6 | ||
| Executive Management in total | 22,298 | 8.6 | ||
ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. MAJOR SHAREHOLDERS
The purpose of Novo Holdings A/S in relation to Novo Nordisk A/S is to administer its portfolio of securities and minority capital interests and to administer and vote on the A shares and B shares in Novo Nordisk A/S, thereby creating a satisfactory financial return for its sole shareholder, the Foundation.Novo Nordisk Foundation (the 'Foundation').
Under itsthe Foundation’s statutes, the Foundation is governed by a Board of Directors, which must be comprised of at least six and not more thanto 12 members and(of whom at least two members must have a medical or scientific background.background, and at least one of these two members must have a medical background). Members of the Foundation’s Board of Directors are typically nominated by the Foundation’s nomination
15
| Novo Nordisk Form 20-F 2020 | |||||
| ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | ||
committee and elected by a two-thirds vote of the Board members who have themselves been previously elected pursuant to the Foundation’s statutes. Any Board member can be removed as provided for in the Danish Act on Foundations (‘lov om erhvervsdrivende fonde’). In addition, employee representatives
employee-elected Board members are elected for a statutory four-year termsterm by the employees of the Foundation and of the subsidiaries of the Foundation, in accordance with Danish law.Foundation. No person or entity exercises any kind of formal influence over the Foundation’s Board. The Foundation’s Board currently consists of nine persons, one of whom is also being an employee electedemployee-elected Board member of the Board of Directors of Novo Nordisk A/S (Anne Marie Kverneland).
Under itsNovo Holding A/S’ statutes, Novo Holdings A/S is governed by a Board of Directors, which must be comprised of at least three and not more thanto nine members who are elected annually by shareholder vote.the shareholders. According to the Foundation’s statutes, its Board of Directors can and shall provide for members of its own Board of Directors to be elected to Novo Holdings A/S’sS’ Board of Directors. Novo Holdings A/S’sS’ Board of Directors is currently has sixcomprised of seven members, with two directors whoof whom are also members of the Foundation’s Board of the FoundationDirectors (Steen Risgaard and Lars Rebien Sørensen) and one director whoof whom is also a member of the Board of Directors of Novo Nordisk A/S (Jeppe Christiansen). Moreover, the chief executive officer of Novo
Holdings A/S (Kasim Kutay) is also a member of the Board of Directors of Novo Nordisk A/S. The Chair of the Foundation’s Board of Directors (Lars Rebien Sørensen) serves as the Chair of Novo Holdings A/S’sS’ Board of Directors.
A shares held by Novo Holdings A/S cannot be sold or be subject to any disposition so long as the Foundation exists. The dissolution of the Foundation or any change in its objectives requires thea unanimous vote of the Foundation’s Board of Directors. Other changes in the Foundation’s statutes require the approval of two-thirds of the members of the Foundation’s Board of Directors. In addition, changes in the Foundation’s statutes requiremembers and approval ofby the Danish foundation authorities. According to its statutes, the Foundation is required to maintain material influence over Novo Nordisk A/S and its majority vote in Novo Holdings A/S.
For further information reference is made to ‘Shares and capital structure’ on pages 32-3336-37 in our Annual Report 20192020 and to ‘Shares and capital structure’ on pages 44-4532-33 in our Annual Report 2018.2019.
The B shares of Novo Nordisk A/S are registered with VP Securities A/S (‘VP Securities’) and are not represented by certificates. Generally, VP Securities does not provide the Company with information with respect to registration. However, set forth below is information as of January 31, 2020February 1, 2021 with respect to (a) any shareholder who is known to the Company to be the owner of more than 5% of any class of Novo Nordisk A/S' securities and (b) the total amount of any class owned by Novo Nordisk A/S and its subsidiaries (treasury shares) and by the Board of Directors and Executive Management as a group:
| Title of class | Identity of person or group | Shares owned | Percent of class | Percent of total votes | Title of class | Identity of person or group | Shares owned | Percent of class | Percent of total votes | ||||||||||||||||||||||||||
| A shares | Novo Holdings A/S | 537,436,000 | * | 100.00 | 74.26 | A shares | Novo Holdings A/S | 537,436,000 | 100.00 | 74.80 | |||||||||||||||||||||||||
| B shares | Novo Holdings A/S | 135,764,000 | 7.29 | 1.88 | B shares | Novo Holdings A/S | 121,739,000 | 6.70 | 1.70 | ||||||||||||||||||||||||||
| B shares | Novo Nordisk A/S and subsidiaries (treasury shares) | 48,140,199 | ** | 2.58 | 0.00 | B shares | Novo Nordisk A/S and subsidiaries (treasury shares) | 39,892,308 | * | 2.20 | 0.60 | ||||||||||||||||||||||||
| B shares | Board of Directors and Executive Management | 558,790 | 0.03 | 0.01 | B shares | Board of Directors and Executive Management | 563,186 | 0.03 | 0.02 | ||||||||||||||||||||||||||