UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

________________

 

FORM 6-K

________________

 

REPORT OF FOREIGN PRIVATE ISSUER

 

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

 

August 9, 2017

________________

 

NOVO NORDISK A/S

 (Exact name of Registrant as specified in its charter)

 

 

Novo Allé 

DK- 2880, Bagsvaerd 

Denmark

(Address of principal executive offices)

________________

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F

 

Form 20-F [X]

Form 40-F [  ]

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes [  ]

No [X]

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g-32(b):82-________

 

 

 

 

  

Financial report for the period 1 January 2017 to 30 June 2017

9 August 2017

 

 

Novo Nordisk increased reported operating profit by 8% in the first six months of 2017

Sales increased by 4% measured in Danish kroner

 

Sales increased by 4% in Danish kroner and by 3% in local currencies to DKK 57.1 billion.

Ÿ

Sales of Tresiba® increased by 155% to DKK 3.7 billion (149% in local currencies).

Ÿ

Sales of Victoza® increased by 21% to DKK 11.5 billion (18% in local currencies).

Ÿ

Sales of Saxenda® increased by 98% to DKK 1.2 billion (90% in local currencies)

Ÿ

Sales in North America Operations increased by 5% (2% in local currencies).

Ÿ

Sales in International Operations increased by 4% (5% in local currencies).

 

Sales within diabetes and obesity care increased by 11% to DKK 47.5 billion (10% in local currencies). Sales within biopharmaceuticals declined by 19% to DKK 9.6 billion (20% in local currencies), primarily reflecting an impact from the introduction of a generic version of the hormone replacement therapy product Vagifem® and from rebate adjustments for human growth hormone in Q1 2016, both in the USA, whereas sales within haemophilia were broadly unchanged.

 

Operating profit increased by 8% reported in Danish kroner and by 6% in local currencies to DKK 26.9 billion.

 

Net profit increased by 4% to DKK 20.1 billion. Diluted earnings per share increased by 6% to DKK 8.07.

 

In June, Victoza® received a positive 17–2 vote from the FDA Advisory Committee acknowledging that clinical trial data provided substantial evidence of cardiovascular risk reduction. Furthermore, Novo Nordisk received EU approval for an update of both the Victoza® and Saxenda® labels reflecting the evidence of cardiovascular risk reduction.

 

The Board of Directors has approved an interim dividend for 2017 of DKK 3.00 per share of DKK 0.20 that will be paid in August 2017.

 

The financial outlook for 2017 has been updated and sales growth measured in local currencies is now expected to be in the range of 1% to 3% compared with the previous range of 0% to 3%. A negative currency impact of 3 percentage points is now expected, reflecting the recent and significant depreciation of the US dollar and most other key invoicing currencies versus the Euro and the Danish krone. Operating profit growth measured in local currencies is now expected to be in the range of 1% to 5% compared with the previous range of -1% to 3%. A negative currency impact of 4 percentage points is now expected.

 

For 2018, formulary negotiations with Pharmacy Benefit Managers and managed care organisations in the USA are progressing. Subject to the final outcome of these negotiations, average prices after rebates are expected to be lower compared with the levels in 2017, predominantly driven by the basal insulin segment. The market access for Novo Nordisk’s key products is, however, expected to remain broadly unchanged compared to 2017.

 

Lars Fruergaard Jørgensen, president and CEO: “We are well on track to deliver on our targets for 2017 based on sales growth driven by our new, innovative products within diabetes and obesity care and a continued focus on cost control. Although the formulary negotiations in the USA reflect the tough competitive environment, we remain confident that our long-term financial growth targets are achievable.”

 

 

Novo Nordisk A/S Investor Relations

Novo Allé 2880 Bagsværd Denmark

Telephone: +45 4444 8888 www.novonordisk.com

CVR no: 24 25 67 90

 

 

 

ABOUT NOVO NORDISK

Novo Nordisk is a global healthcare company with more than 90 years of innovation and leadership in diabetes care. This heritage has given us experience and capabilities that also enable us to help people defeat other serious chronic conditions: haemophilia, growth disorders and obesity. Headquartered in Denmark, Novo Nordisk employs approximately 41,400 people in 77 countries, and markets its products in more than 165 countries. Novo Nordisk’s B shares are listed on Nasdaq Copenhagen (Novo-B). Its ADRs are listed on the New York Stock Exchange (NVO). For more information, visit novonordisk.com.

 

CONFERENCE CALL DETAILS

On 9 August 2017 at 13.00 CEST, corresponding to 7.00 am EDT, a conference call will be held. Investors will be able to listen in via a link on novonordisk.com, which can be found under ‘Investors’. Presentation material for the conference call will be available approximately one hour before on the same page.

 

WEBCAST DETAILS

On 10 August 2017 at 14.15 CEST, corresponding to 8.15 am EDT, management will give a presentation to institutional investors and sell-side analysts in London. A webcast of the presentation can be followed via a link on novonordisk.com, which can be found under ‘Investors’. Presentation material for the webcast will be made available on the same page.

 

FINANCIAL CALENDAR

1 November 2017		Financial Statement for first nine months of 2017
1 February 2018		Financial Statement for 2017

 

CONTACTS FOR FURTHER INFORMATION

 

Media:
Katrine Sperling	+45 3079 6718	krsp@novonordisk.com
Ken Inchausti (US)	+1 267 809 7552	kiau@novonordisk.com
Investors:
Peter Hugreffe Ankersen	+45 3075 9085	phak@novonordisk.com
Hanna Ögren	+45 3079 8519	haoe@novonordisk.com
Anders Mikkelsen	+45 3079 4461	armk@novonordisk.com
Christina Jensen	+45 3079 3009	cnje@novonordisk.com
Kasper Veje (US)	+1 609 235 8567	kpvj@novonordisk.com

 

Further information about Novo Nordisk is available on novonordisk.com.

 

 

 

LIST OF CONTENTS
FINANCIAL PERFORMANCE			4
	Consolidated financial statement for the first six months of 2017		4
	Sales development		5
	Diabetes and obesity care, sales development		6
	Biopharmaceuticals, sales development		11
	Development in costs and operating profit		11
	Financial items (net)		12
	Capital expenditure and free cash flow		12
	Key developments in the second quarter of 2017		13
OUTLOOK			14
RESEARCH & DEVELOPMENT UPDATE			16
	Diabetes		16
	Obesity		18
	Biopharmaceuticals		19
SUSTAINABILITY UPDATE			20
EQUITY			21
LEGAL MATTERS			22
MANAGEMENT STATEMENT			24
FINANCIAL INFORMATION			25
	Appendix 1:	Quarterly numbers in DKK	25
	Appendix 2:	Income statement and statement of comprehensive income	26
	Appendix 3:	Balance sheet	27
	Appendix 4:	Statement of cash flows	28
	Appendix 5:	Statement of changes in equity	29
	Appendix 6:	Regional sales split	30
	Appendix 7:	Key currency assumptions	31
	Appendix 8:	Quarterly numbers in USD (additional information)	32
	Appendix 9:	Non-IFRS financial measures (additional information)	33

 

 

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

FINANCIAL PERFORMANCE

 

CONSOLIDATED FINANCIAL STATEMENT FOR THE FIRST SIX MONTHS OF 2017

These unaudited consolidated financial statements for the first six months of 2017 have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ and on the basis of the same accounting policies as were applied in the Annual Report 2016 of Novo Nordisk. Novo Nordisk has adopted all new, amended or revised accounting standards and interpretations (‘IFRSs’) as published by the IASB that are endorsed by the EU and effective for the accounting period beginning on 1 January 2017. These IFRSs have not had a significant impact on the consolidated financial statements for the first six months of 2017. The impact of the new standards IFRS 9, IFRS 15 and IFRS 16, which are issued, but have not yet come into effect, is described in the Annual Report 2016. The assessment of the impact is unchanged. Furthermore, the financial report including the consolidated financial statements for the first six months of 2017 and Management’s review have been prepared in accordance with additional Danish disclosure requirements for interim reports of listed companies.

 

Amounts in DKK million, except number of shares, earnings per share and full-time equivalent employees.

 

PROFIT AND LOSS     DKK million			H1 2017				H1 2016				% change H1 2016 to H1 2017
Net sales			57,090				54,671				4	%
Gross profit			48,430				46,392				4	%
Gross margin			84.8	%			84.9	%
Sales and distribution costs			13,548				13,608				(0	%)
Percent of sales			23.7	%			24.9	%
Research and development costs			6,703				6,635				1	%
Percent of sales			11.7	%			12.1	%
Administrative costs			1,770				1,781				(1	%)
Percent of sales			3.1	%			3.3	%
Other operating income, net			467				438				7	%
Operating profit			26,876				24,806				8	%
Operating margin			47.1	%			45.4	%
Financial items (net)			(1,229	)			(251	)			390	%
Profit before income taxes			25,647				24,555				4	%
Income taxes			5,540				5,132				8	%
Effective tax rate			21.6	%			20.9	%
Net profit			20,107				19,423				4	%
Net profit margin			35.2	%			35.5	%
OTHER KEY NUMBERS
Depreciation, amortisation and impairment losses			1,571				1,341				17	%
Capital expenditure (tangible assets)			3,538				2,775				27	%
Net cash generated from operating activities			22,215				21,972				1	%
Free cash flow			18,792				19,102				(2	%)
Total assets			97,825				88,269				11	%
Equity			48,436				42,585				14	%
Equity ratio			49.5	%			48.2	%
Average number of diluted shares outstanding (million)			2,492.0				2,545.4				(2	%)
Diluted earnings per share / ADR (in DKK)			8.07				7.63				6	%
Full-time equivalent employees end of period			41,385				42,265				(2	%)

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

 

SALES DEVELOPMENT

Sales increased by 4% measured in Danish kroner and by 3% in local currencies. Sales growth was realised within diabetes and obesity care with the majority of growth originating from Tresiba®, Victoza®, NovoRapid® and Saxenda®, partly offset by declining sales of Levemir®. Sales within biopharmaceuticals declined, reflecting lower sales of human growth disorder products, Vagifem® and NovoSeven®.

 

Sales split per therapy       The diabetes and obesity care segment			Sales H1 2017 DKK million				Growth as reported				Growth in local currencies				Share of growth in local currencies
New-generation insulin			4,185				160	%			155	%			144	%
-    Tresiba ®			3,689				155	%			149	%			125	%
-    Xultophy ®			284				219	%			219	%			11	%
-    Ryzodeg ®			196				172	%			164	%			7	%
Modern insulin			23,381				(1	%)			(1	%)			(20	%)
-    NovoRapid ®			10,403				9	%			8	%			45	%
-    Levemir ®			7,609				(12	%)			(13	%)			(68	%)
-    NovoMix ®			5,369				0	%			1	%			3	%
Human insulin			5,123				(5	%)			(4	%)			(13	%)
Total insulin			32,689				7	%			6	%			111	%
Victoza®			11,525				21	%			18	%			100	%
Other diabetes care 1)			2,092				(3	%)			(2	%)			(3	%)
Total diabetes care			46,306				10	%			9	%			208	%
Obesity (Saxenda®)			1,225				98	%			90	%			32	%
Diabetes and obesity care total			47,531				11	%			10	%			240	%
The biopharmaceuticals segment
Haemophilia 2)			5,315				(1	%)			(2	%)			(8	%)
-    NovoSeven ®			4,663				(5	%)			(6	%)			(18	%)
-    NovoEight ®			576				44	%			42	%			10	%
Human growth disorders			3,325				(27	%)			(28	%)			(74	%)
Other biopharmaceuticals 3)			919				(52	%)			(53	%)			(58	%)
Biopharmaceuticals total			9,559				(19	%)			(20	%)			(140	%)
Total sales			57,090				4	%			3	%			100	%

¹⁾ Primarily NovoNorm®and needles.

²⁾ Comprises NovoSeven®, NovoEight® and NovoThirteen®.

³⁾ Primarily Vagifem® and Activelle®.

 

Both International Operations and North America Operations contributed to sales growth with 68% and 32% respectively. Within International Operations, the main growth contributors were Region Europe, Region China and Region AAMEO (Africa, Asia, Middle East and Oceania). Sales growth in North America Operations was negatively impacted

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

by approximately 5 percentage points due to non-recurring adjustments to rebates in the Medicaid patient segment in the first quarter of 2016 predominantly related to Norditropin® and the negative impact from the launch of a generic version of Vagifem®, both in the USA.

 

Sales split per region			Sales H1 2017 DKK million				Growth as reported				Growth in local currencies				Share of growth in local currencies
North America Operations			30,043				5	%			2	%			32	%
- USA			28,985				5	%			2	%			28	%
International Operations			27,047				4	%			5	%			68	%
- Region Europe			10,581				3	%			4	%			24	%
- Region AAMEO			6,021				3	%			4	%			13	%
- Region China			5,668				5	%			7	%			22	%
- Region Japan & Korea			3,040				3	%			1	%			1	%
- Region Latin America			1,737				14	%			9	%			8	%
Total sales			57,090				4	%			3	%			100	%

Please refer to appendix 6 for further details on sales in the first six months of 2017.

 

In the following sections, unless otherwise noted, market data are based on moving annual total (MAT) from May 2017 and May 2016 provided by the independent data provider IMS Health.

 

DIABETES AND OBESITY CARE, SALES DEVELOPMENT

Sales of diabetes and obesity care products increased by 11% measured in Danish kroner and by 10% in local currencies to DKK 47,531 million. Novo Nordisk is the world leader in diabetes care with a global value market share of 27%.

 

Insulin

Sales of insulin increased by 7% measured in Danish kroner and 6% in local currencies to DKK 32,689 million. Measured in local currencies, sales growth was driven by both North America Operations and International Operations where Region AAMEO, Region Latin America, Region China and Region Europe contributed to growth. Novo Nordisk is the global leader with 46% of the total insulin market and 44% of the market for modern insulin and new-generation insulin, both measured in volume.

 

Sales of new-generation insulin (Tresiba®, Xultophy®, Ryzodeg® and Fiasp®) reached DKK 4,185 million compared with DKK 1,609 million in 2016.

 

Sales of Tresiba® (insulin degludec), the once-daily new-generation insulin, reached DKK 3,689 million compared with DKK 1,448 million in 2016. The roll-out of Tresiba® continues and the product has now been launched in 56 countries. In the USA where Tresiba® was launched broadly in January 2016, the product maintains wide commercial and Medicare Part D formulary coverage. In Japan where Tresiba® was launched in

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

March 2013 with similar reimbursement as insulin glargine U100, its share of the basal insulin market has grown steadily, and Tresiba® has now captured 41% of the basal insulin market measured in monthly value market share. Similarly, Tresiba® has shown solid penetration in other markets with reimbursement at a similar level to insulin glargine U100, whereas penetration remains modest in markets with restricted market access.

 

Sales of Xultophy® (IDegLira), a once-daily single-injection combination of insulin degludec (Tresiba®) and liraglutide (Victoza®), reached DKK 284 million compared with DKK 89 million in 2016. Sales growth was driven by both North America Operations and International Operations where predominantly Region Europe contributed to growth. Xultophy® has been launched in 15 countries; in the USA launched under the brand name Xultophy® 100/3.6 in May 2017.

 

Sales of Ryzodeg®, a soluble formulation of insulin degludec and insulin aspart, reached DKK 196 million compared with DKK 72 million in 2016. Sales growth was driven by International Operations, where Region Japan & Korea and Region AAMEO contributed to growth. Ryzodeg® has now been marketed in 14 countries, and feedback from patients and prescribers is encouraging.

 

The novel mealtime insulin Fiasp®, fast-acting insulin aspart, received marketing authorisation from the European Commission on 9 January 2017 and approvals were also received in Norway, Iceland and Canada. Fiasp® has now been launched in four countries including recent launches in the UK and Germany.

 

Sales of modern insulin decreased by 1% in both Danish kroner and in local currencies to DKK 23,381 million. The declining sales were driven by North America Operations reflecting the lower sales of Levemir® following the introduction of the new-generation insulin Tresiba® partly offset by sales growth in International Operations, where Region China and Region AAMEO were the main contributors to growth. Sales of modern insulin and new-generation insulin in total constitute 84% of Novo Nordisk’s sales of insulin measured in value.

 

INSULIN MARKET SHARES (volume, MAT)	Novo Nordisk’s share of total insulin market		Novo Nordisk’s share of the modern insulin and new-generation insulin market
	May 2017	May 2016	May 2017	May 2016
Global	46%	47%	44%	45%
North America Operations	37%	38%	38%	38%
USA	37%	37%	38%	38%
International Operations	50%	51%	48%	49%
Region Europe	45%	46%	44%	46%
Region China*	59%	60%	61%	61%
Region AAMEO**	57%	57%	51%	52%
Region Japan & Korea	49%	49%	49%	48%
Region Latin America***	42%	40%	40%	41%

Source: IMS, May 2017 data. * Data for mainland China, excluding Hong Kong and Taiwan. ** Data for 11 selected private markets representing approximately 70% of total Novo Nordisk’s diabetes care sales in the region. *** Data for three selected private markets representing approximately 70% of total Novo Nordisk’s diabetes care sales in the region.

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

North America Operations

Sales of insulin in North America Operations increased by 10% in Danish kroner and by 7% in local currencies. Sales growth was driven by higher sales of Tresiba® and NovoLog® due to underlying volume growth of both the basal and short-acting insulin market and market share gain in the basal insulin segment. Sales growth was partly countered by lower Levemir® sales due to the introduction of Tresiba® as well as lower realised prices for basal insulin. 56% of Novo Nordisk’s volume of the new-generation insulin and modern insulin in the USA is used in the prefilled devices FlexPen® and FlexTouch®.

 

International Operations

Sales of insulin in International Operations increased by 5% in Danish kroner and by 6% in local currencies. Sales growth was driven by both new-generation insulin and modern insulin, partly offset by declining human insulin sales.

 

Region Europe

Sales of insulin in Region Europe increased by 2% in Danish kroner and by 4% in local currencies. Sales were driven by the penetration of Tresiba® as well as a positive contribution from Xultophy® and NovoRapid® across the region, partly offset by contracting Levemir® sales reflecting the continued roll-out of Tresiba® as well as declining human insulin and NovoMix® sales.

 

Region China

Sales of insulin in Region China increased by 6% in Danish kroner and by 8% in local currencies. The sales growth is driven by continued growth in the modern insulin products, where Novo Nordisk has improved its market share in each insulin segment, partly offset by declining human insulin sales.

 

Region AAMEO

Sales of insulin in Region AAMEO increased by 7% in Danish kroner and by 9% in local currencies. The sales growth is driven by growth of the overall diabetes care market with solid contribution from NovoRapid®, NovoMix® and the new-generation insulin Tresiba® and Ryzodeg®. Currently, 63% of Novo Nordisk’s insulin volume in the major private markets in Region AAMEO is used in devices.

 

Region Japan & Korea

Sales of insulin in Region Japan & Korea increased by 1% in Danish kroner and decreased by 1% in local currencies. The sales development in local currencies reflects lower modern insulin and human insulin sales in the region reflecting the declining insulin volume market in Japan which is offset by continued uptake of Ryzodeg® and Tresiba® in Japan.

 

Region Latin America

Sales of insulin in Region Latin America increased by 14% in Danish kroner and by 11% in local currencies. The sales development reflects strong uptake of Tresiba® in selected countries and continued growth of both modern and human insulin. Currently, 46% of Novo Nordisk’s insulin volume in the major private markets in Region Latin America is used in devices, primarily FlexPen® and FlexTouch®.

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

Victoza® (GLP-1 therapy for type 2 diabetes)

Victoza® sales increased by 21% in Danish kroner and by 18% in local currencies to DKK 11,525 million. Sales growth is predominantly driven by North America Operations comprising 91% share of growth. The GLP-1 segment’s value share of the total diabetes care market has increased to 10.7% compared with 8.8% 12 months ago. Victoza® is the market leader in the GLP-1 segment with a 54% value market share.

 

GLP-1 MARKET SHARES (value, MAT)	GLP-1 share of total diabetes care market		Victoza® share of GLP-1 market
	May 2017	May 2016	May 2017	May 2016
Global	10.7%	8.8%	54%	62%
North America Operations	12.6%	10.1%	52%	60%
USA	12.7%	10.2%	52%	59%
International Operations	6.1%	5.5%	61%	70%
Region Europe	10.0%	9.2%	61%	70%
Region China*	0.9%	0.8%	61%	53%
Region AAMEO**	2.5%	2.1%	51%	58%
Region Japan & Korea	4.0%	2.8%	50%	67%
Region Latin America***	4.9%	3.9%	83%	92%

Source: IMS, May 2017 data. * Data for mainland China, excluding Hong Kong and Taiwan. ** Data for 11 selected private markets representing approximately 70% of Novo Nordisk’s total diabetes care sales in the region. *** Data for three selected private markets representing approximately 70% of Novo Nordisk’s total diabetes care sales in the region.

 

North America Operations

Sales of Victoza® in North America Operations increased by 26% in Danish kroner and by 23% in local currencies. Sales growth is driven by an underlying prescription volume growth of the GLP-1 class of more than 25% in the USA, a positive impact from higher realised prices and inventory build-up. The growth of the GLP-1 market continues to be driven by competing once-weekly products and Victoza®. The value share of the GLP-1 class of the total North American diabetes care market has increased to 12.6%. Despite intensified competition, Victoza® is still the market leader with a 52% value market share.

 

International Operations

Sales of Victoza® in International Operations increased by 6% in both Danish kroner and in local currencies. Sales growth is driven by growth in Region AAMEO, Region Latin America and Region China, partly offset by declining sales in Region Europe. The value share of the GLP-1 class of the total International Operations diabetes care market has increased to 6.1% from 5.5% in 2016. Victoza® is the market leader with a 61% value market share.

 

Region Europe

Sales in Region Europe decreased by 2% in Danish kroner and by 1% in local currencies. The sales development reflects intensified competition from a recently introduced once-weekly, partly offset by growth in Germany and the Nordic countries. In Region Europe, the share of the GLP-1 class of the total diabetes care market in value has increased to 10.0%. Despite intensified competition, Victoza® remains the market leader in Region Europe with a 61% value market share.

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

Region China

Sales in Region China increased by 29% in Danish kroner and by 28% in local currencies. In China, the GLP-1 class represents a modest 0.9% of the total diabetes care market measured in value, and Victoza® holds a GLP-1 value market share of 61%. In July 2017, Victoza® was the first GLP-1 to be listed on the Chinese National Reimbursement Drug List, and reimbursement is expected to be obtained across China as the provincial drug reimbursement lists are updated accordingly.

 

Region AAMEO

Sales in Region AAMEO increased by 32% in Danish kroner and by 31% in local currencies. Sales growth is primarily driven by a number of countries in the Middle East. The value share of the GLP-1 class of the total diabetes care market increased to 2.5%. Victoza® is the GLP-1 market leader across Region AAMEO with a value market share of 51%.

 

Region Japan & Korea

Sales in Region Japan & Korea increased by 1% in Danish kroner and decreased by 1% in local currencies. The sales development measured in local currencies reflects the intensified competition partly offset by continued expansion of the GLP-1 market in Japan. In Region Japan & Korea, the GLP-1 class represents 4.0% of the total diabetes care market value compared with 2.8% in 2016. Victoza® remains the leader in the class with a value market share of 50%.

 

Region Latin America

Sales in Region Latin America increased by 32% in Danish kroner and by 18% in local currencies. The sales growth reflects the continued expansion of the GLP-1 markets across the region. In Region Latin America, the GLP-1 class represents 4.9% of the total diabetes care market value compared with 3.9% in 2016. Victoza® remains the leader in the class with a value market share of 83%.

 

Other diabetes care

Sales of other diabetes care products, which predominantly consist of oral antidiabetic products and needles, declined by 3% in Danish kroner and by 2% in local currencies to DKK 2,092 million. Declining sales were seen in International Operations, where all regions apart from Region Latin America experienced lower sales, partly offset by increased sales in North America Operations.

 

Saxenda® (obesity care)

Sales of Saxenda®, liraglutide 3 mg for weight management, increased by 98% in Danish kroner and by 90% in local currencies to DKK 1,225 million. Sales growth was driven by both North America Operations and International Operations, where Region Latin America, Region AAMEO and Region Europe contributed to growth. Saxenda® was launched in May 2015 in the USA and has obtained broad commercial formulary market access. Saxenda® has now been launched in 19 countries.

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

BIOPHARMACEUTICALS, SALES DEVELOPMENT

Sales of biopharmaceutical products declined by 19% measured in Danish kroner and by 20% in local currencies to DKK 9,559 million. Declining sales were observed in both North America Operations and International Operations.

 

Haemophilia

Sales of haemophilia products decreased by 1% measured in Danish kroner and by 2% in local currencies to DKK 5,315 million. The sales decline was primarily driven by lower NovoSeven® sales in Region AAMEO, Region Latin America and Region Japan & Korea as well as North America Operations. This was partly offset by a positive contribution from NovoSeven® and the roll-out of NovoEight® in Region Europe.

 

Human growth disorders

Sales of human growth disorder products decreased by 27% measured in Danish kroner and by 28% in local currencies to DKK 3,325 million. The sales decline reflects the significant positive non-recurring adjustment in the USA in the first quarter of 2016, related to rebates in the Medicaid patient segment for the period 2010-2015, as well as an impact from intensified competition impacting realised prices and to some extent volumes in the USA. The sales decline has been partly offset by a positive impact from International Operations driven by Region Japan & Korea and Region Latin America.

 

Novo Nordisk is the leading company in the global human growth disorder market with a 29% market share measured in volume.

 

Other biopharmaceuticals

Sales of other products within biopharmaceuticals, which predominantly consist of hormone replacement therapy-related (HRT) products, declined by 52% measured in Danish kroner and by 53% in local currencies to DKK 919 million. The sales decline reflects a negative impact from the launch of a generic version of Vagifem® in the USA in the fourth quarter of 2016.

 

DEVELOPMENT IN COSTS AND OPERATING PROFIT

The cost of goods sold increased by 5% both in Danish kroner and local currencies to DKK 8,660 million, resulting in a gross margin of 84.8% measured in Danish kroner and 84.5% in local currencies, compared with 84.9% in 2016. The gross margin was negatively impacted by lower prices primarily reflecting intensified competition in the insulin segment and lower prices following the non-recurring Medicaid rebate adjustments in 2016, both in the USA, as well as slightly lower capacity utilisation for certain products. The gross margin was impacted by positive contribution from product mix due to higher Tresiba® and Victoza® sales, partly countered by lower sales of Vagifem® following the launch of a generic version in the USA.

 

Sales and distribution costs were broadly unchanged in Danish kroner and declined by 1% in local currencies to DKK 13,548 million. The decline in sales and distribution costs measured in local currencies reflects lower promotional activities in the USA following the Tresiba® launch in 2016 and broad cost control initiatives, partly offset by higher

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

costs for legal cases and increased sales and distribution costs in International Operations across all regions.

 

Research and development costs increased by 1% in both Danish kroner and local currencies to DKK 6,703 million. The increase in costs reflects higher development costs due to the initiation of the PIONEER programme for oral semaglutide, where all 10 planned trials have been initiated and a large part of patients are enrolled, partly countered by lower costs related to the completion of the cardiovascular outcomes trial DEVOTE and by lower biopharmaceuticals development costs. The increase in development costs were partially offset by lower research costs following the updated R&D strategy announced in October 2016 leading to the discontinuation of a number of research projects.

 

Administration costs decreased by 1% in Danish kroner and by 2% in local currencies to DKK 1,770 million. The lower administrative costs are mainly related to general cost control initiatives.

 

Other operating income (net) was DKK 467 million compared with DKK 438 million in 2016.

 

Operating profit increased by 8% in Danish kroner and by 6% in local currencies to DKK 26,876 million.

 

FINANCIAL ITEMS (NET)

Financial items (net) showed a net loss of DKK 1,229 million compared with a net loss of DKK 251 million in 2016.

 

In line with Novo Nordisk’s treasury policy, the most significant foreign exchange risks for the group have been hedged, primarily through foreign exchange forward contracts. The foreign exchange result was a loss of DKK 1,161 million compared with a loss of DKK 222 million in 2016. The development in the first half of 2017 reflects loss on foreign exchange hedging involving especially the US dollar and Chinese yuan versus the Danish krone.

 

The result of net financial items as per 30 June 2017 is reflecting that deferred gains on financial contracts of approximately DKK 1.6 billion, hereof approximately DKK 600 million related to the second half of 2017 and approximately DKK 1 billion related to 2018, have been deferred for later income recognition as the hedged cash flow materialises.

 

CAPITAL EXPENDITURE AND FREE CASH FLOW

Net capital expenditure for property, plant and equipment was DKK 3.5 billion compared with DKK 2.8 billion in 2016. Net capital expenditure was primarily related to investments in a new production facility for a range of diabetes active pharmaceutical ingredients in Clayton, North Carolina, USA, a new diabetes care filling capacity in

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

Hillerød, Denmark and an expansion of the manufacturing capacity for biopharmaceutical products in Kalundborg, Denmark.

 

Free cash flow was DKK 18.8 billion compared with DKK 19.1 billion in 2016. The decrease of 2% compared with 2016 primarily reflects a negative impact from higher income taxes paid.

 

KEY DEVELOPMENTS IN THE SECOND QUARTER OF 2017

Please refer to appendix 1 for an overview of the quarterly numbers in DKK and to appendix 6 for details on sales in the second quarter of 2017.

 

Sales in the second quarter of 2017 increased by 4% in Danish kroner and by 3% in local currencies compared with the same period in 2016. The growth was driven by new-generation insulin, Victoza® and Saxenda® partly offset by Vagifem®, modern insulin and human growth disorders. From a geographic perspective, sales growth in local currencies was driven by both International Operations and North America Operations, growing by 5% and 2%, respectively.

 

The gross margin was 84.6% in the second quarter of 2017 compared with 85.3% in the same period last year. The decline of 0.7 percentage point of the gross margin reflects a negative price effect in the USA as well as slightly lower capacity utilisation for certain products, partly offset by a positive impact from product mix.

 

Sales and distribution costs decreased by 2% in both Danish kroner and local currencies compared with the same period in 2016 reflecting lower promotional activities in the USA following the Tresiba® launch in 2016 and broad cost control initiatives, partly offset by increased sales and distribution costs in International Operations, mainly in Region AAMEO.

 

Research and development costs increased by 2% in both Danish kroner and local currencies compared with the same period in 2016. The increase in costs is driven by increased research costs for the early diabetes and obesity portfolio as well as increased development costs for oral semaglutide and other diabetes care development programmes partly offset by lower costs related to the completion of the cardiovascular outcomes trial DEVOTE.

 

Administrative costs decreased by 2% in Danish kroner and by 3% in local currencies compared with the same period in 2016 mainly related to general cost control initiatives.

 

Other operating income (net) was DKK 189 million in the second quarter of 2017 compared with DKK 154 million in the same period last year.

 

Operating profit increased by 7% in Danish kroner and by 6% in local currencies compared with the same period in 2016.

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

OUTLOOK

 

OUTLOOK 2017

 

The current expectations for 2017 are summarised in the table below:

 

Expectations are as reported, if not otherwise stated	Expectations 9 August 2017	Expectations 3 May 2017
Sales growth
in local currencies	1% to 3%	0% to 3%
as reported	Around 3 percentage points lower	Around 1 percentage point higher
Operating profit growth
in local currencies	1% to 5%	-1% to 3%
as reported	Around 4 percentage points lower	Around 1 percentage point higher
Financial items (net)	Loss of around DKK 0.2 billion	Loss of around DKK 1.8 billion
Effective tax rate	21% to 22%	21% to 23%
Capital expenditure	Around DKK 9.5 billion	Around DKK 10.0 billion
Depreciation, amortisation and impairment losses	Around DKK 3.0 billion	Around DKK 3.0 billion
Free cash flow	DKK 29-33 billion	DKK 29-33 billion

 

For 2017, sales growth is now expected to be in the range of 1% to 3% growth, measured in local currencies. This reflects expectations for continued robust performance for Victoza® and Tresiba® as well as a contribution from Saxenda® and Xultophy®. This is expected to be partly countered by an impact from lower realised prices in the USA, especially in the basal insulin and growth hormone segments, the loss of exclusivity for Vagifem® in the USA, further intensifying competition within diabetes and biopharmaceuticals especially in the USA, as well as adverse macroeconomic conditions in several markets in International Operations. Given the significant 8% depreciation of the US dollar and most other key invoicing currencies versus the Euro and the Danish krone since the report for the first three months of 2017, growth reported in DKK is now expected to be around 3 percentage points lower than the local currency level.

 

For 2018, formulary negotiations with Pharmacy Benefit Managers and managed care organisations in the USA are progressing. Subject to the final outcome of these negotiations, average prices after rebates are expected to be lower compared with the levels in 2017, predominantly driven by the basal insulin segment. The market access for Novo Nordisk’s key products is, however, expected to remain broadly unchanged compared to 2017.

 

For 2017, operating profit growth is now expected to be in the range of 1% to 5% growth, measured in local currencies. The expectation for operating profit growth primarily reflects the modest outlook for sales growth. The outlook also reflects an increase in second half of 2017 in the sales and distribution cost ratio to support commercialisation efforts for key products as well as in the research and development cost ratio to support the progress of Novo Nordisk’s pipeline. Given the current

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

exchange rates versus the Danish krone, growth reported in DKK is now expected to be around 4 percentage points lower than the local currency level.

 

For 2017, Novo Nordisk now expects financial items (net) to amount to a loss of around DKK 0.2 billion. The current expectation reflects losses on non-hedged currencies partly offset by gains associated with foreign exchange hedging contracts, mainly related to the US dollar and Japanese yen versus the Danish krone.

 

The effective tax rate for 2017 is now expected to be in the range of 21-22%, a level broadly similar to the statutory corporate tax rate in Denmark of 22%.

 

Capital expenditure is now expected to be around DKK 9.5 billion in 2017, primarily related to investments in additional capacity for active pharmaceutical ingredient production within diabetes care, a capacity expansion of the diabetes care filling and an expansion of the manufacturing capacity for biopharmaceutical products. Depreciation, amortisation and impairment losses are still expected to be around DKK 3.0 billion. Free cash flow is still expected to be DKK 29-33 billion.

 

All of the above expectations are based on the assumptions that the global economic and political environment will not significantly change business conditions for Novo Nordisk during 2017, and that currency exchange rates, especially the US dollar, will remain at the current level versus the Danish krone. Please refer to appendix 7 for key currency assumptions.

 

Novo Nordisk has hedged expected net cash flows in a number of invoicing currencies and, all other things being equal, movements in key invoicing currencies will impact Novo Nordisk’s operating profit as outlined in the table below.

 

 

Key invoicing currencies	Annual impact on Novo Nordisk’s operating profit of a 5% movement in currency	Hedging period (months)
USD	DKK 1,900 million	12
CNY	DKK 305 million	6*
JPY	DKK 185 million	12
GBP	DKK 85 million	13
CAD	DKK 80 million	11

* Chinese yuan traded offshore (CNH) used as proxy when hedging Novo Nordisk’s CNY currency exposure

 

The financial impact from foreign exchange hedging is included in Financial items (net).

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

RESEARCH & DEVELOPMENT UPDATE

 

DIABETES

 

Novo Nordisk submits applications in the USA and the EU for including data from the DEVOTE trial in the Tresiba® (NN1250) label

In May 2017, Novo Nordisk announced the submission of a supplemental application to the US Food and Drug Administration (FDA) for including data in the label for Tresiba® (insulin degludec) from the DEVOTE trial, a long-term, randomised, double-blinded and event-driven trial conducted to confirm the cardiovascular safety of Tresiba® compared to insulin glargine U100 when added to standard of care, in people with type 2 diabetes. Furthermore, in June 2017 Novo Nordisk announced the submission of a Type II variation application to the European Medicines Agency (EMA) for including data from the DEVOTE trial in the label for Tresiba®.

 

In the DEVOTE trial, the primary endpoint was achieved by demonstrating non- inferiority of major adverse cardiovascular events (MACE) with Tresiba® compared to insulin glargine U100. The trial thereby confirmed the results of the DEVOTE interim analysis submitted to the FDA in March 2015, on the basis of which Tresiba® and Ryzodeg® 70/30 were approved in the US in September 2015.

 

The primary endpoint of the DEVOTE study was defined as the composite MACE outcome of the first occurrence of cardiovascular death, non-fatal myocardial infarction or non-fatal stroke and showed a hazard ratio of 0.91 in favour of Tresiba® relative to insulin glargine U100, with no statistically significant difference between the two treatments.

 

From a mean HbA1c baseline of 8.4%, the trial showed a similar blood sugar reduction with Tresiba® compared to insulin glargine U100 with an end-of-trial treatment difference of 0.01 percentage point between the two treatment arms, thus fulfilling the requirements for objectively comparing hypoglycaemia rates between the two treatments.

 

In the trial, Tresiba® demonstrated superiority on the secondary confirmatory endpoint of severe hypoglycaemia: 27% fewer patients in the group treated with Tresiba® experienced an episode of severe hypoglycaemia, resulting in a 40% overall rate reduction of total episodes of adjudicated severe hypoglycaemia. Furthermore, patients in the group treated with Tresiba® experienced a 53% relative reduction in the rate of nocturnal severe hypoglycaemia. These differences were all statistically significant.

 

Tresiba® appeared to have a safe and well-tolerated profile consistent with previous clinical studies conducted with Tresiba®.

 

Review of Novo Nordisk’s application in the USA for including data from the two SWITCH trials and the DEVOTE trial in the Tresiba® (NN1250) label continues

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

In September 2016, Novo Nordisk announced the submission of a supplemental application to the FDA for including data from the two SWITCH phase 3b trials in the label for Tresiba®. In the SWITCH trials, the safety profile and efficacy of Tresiba® was compared with insulin glargine U100. FDA is continuing the review of the SWITCH application and it is Novo Nordisk’s assessment that FDA now plans to review the SWITCH studies in the context of the data from the recently submitted DEVOTE trial.

 

Victoza® (NN2211) approved in the EU as the only GLP-1 with a label to include prevention of cardiovascular events

In July 2017, the European Commission approved an update to the Victoza® (liraglutide) EU label that expands the indication to reflect both improving blood sugar and cardiovascular (CV) events as integral parts of type 2 diabetes treatment. Victoza® is the only GLP-1 that is proven to prevent CV events in people with type 2 diabetes and high CV risk. The update of the label was based on the results from the LEADER trial. The trial investigated the long-term effects of Victoza® in more than 9,300 people with type 2 diabetes, at high risk of major CV events.

 

In the LEADER trial, Victoza® (liraglutide up to 1.8 mg) statistically significantly reduced the risk of CV death, non-fatal myocardial infarction (heart attack) or non-fatal stroke by 13% versus placebo, when added to standard of care. The overall risk reduction was driven by a statistically significant 22% reduction in CV death with Victoza® treatment versus placebo and non-significant reductions in non-fatal myocardial infarction and non-fatal stroke.

 

Novo Nordisk received positive 17-2 vote from FDA Advisory Committee that Victoza® (NN2211) provides substantial evidence of cardiovascular risk reduction in patients with type 2 diabetes

In June 2017, Novo Nordisk announced that the Endocrinologic and Metabolic Drugs Advisory Committee (EMDAC) of the FDA had completed its meeting regarding the supplemental New Drug Application (sNDA) for inclusion of the data from the cardiovascular outcomes trial LEADER in the label for Victoza®.

 

The Advisory Committee voted 19-0 in favour of Victoza® on the question: "Do the results of LEADER establish that use of Victoza® in patients with type 2 diabetes is not associated with excess cardiovascular risk?"

 

The Advisory Committee voted 17-2 in favour of Victoza® on the question: "Does the LEADER trial provide the substantial evidence needed to establish that Victoza® (liraglutide 1.8 mg) reduces cardiovascular risk in patients with type 2 diabetes?"

 

The sNDA for Victoza® was submitted to the FDA in October 2016 and regulatory feedback in the US is expected in Q3 2017.

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

American Diabetes Association (ADA) meeting 9-13 June 2017 in San Diego, California, USA

At the 77th annual meeting of the ADA held in San Diego, California, USA results from Novo Nordisk’s research and development activities were presented in 60 accepted abstracts. Among the key presentations was an ADA-hosted symposium where detailed data from the DEVOTE study were presented. DEVOTE is the first randomised, double- blind, treat-to-target, event-driven trial comparing two basal insulins, Tresiba® and insulin glargine U100, in adults with type 2 diabetes at high risk of CV disease.

 

The results presented at ADA also comprised additional results from the LEADER trial with Victoza® and a cross-trial comparison of the SUSTAIN 1 to 5 with the once-weekly GLP-1 analogue semaglutide. In addition, the phase 3b results from the DUAL VII trial were presented, demonstrating that Xultophy® 100/3.6 reduced the risk of hypoglycaemic events and lowered body weight compared with a basal-bolus treatment in people with type 2 diabetes.

 

OBESITY

 

CHMP endorses EU label update of Saxenda® (NN8022) based on the LEADER trial In June 2017, Novo Nordisk announced that CHMP, under the EMA, had endorsed an update of the EU label for Saxenda®. The update was based on the results from the LEADER trial which investigated the long-term effects of Victoza® in people with type 2 diabetes and established cardiovascular disease.

 

The CHMP has previously concluded that, although the Saxenda® dosing of liraglutide 3.0 mg was not investigated in the LEADER trial, the results would also be supportive for the assessment of Saxenda® for any potential cardiovascular risk. The Saxenda® label has been updated with immediate effect to reflect the primary outcome of the LEADER trial.

 

Novo Nordisk reports up to 13.8% weight loss in people with obesity receiving semaglutide (NN9536) in phase 2 trial

In June 2017, Novo Nordisk announced the headline results from a 52-week double- blind phase 2 clinical trial with once-daily subcutaneous semaglutide investigating safety and potential for inducing and maintaining weight loss in people with obesity.

 

In the trial, 957 people with obesity were randomised to treatment with doses of semaglutide between 0.05 to 0.4 mg/day or placebo. Liraglutide 3.0 mg/day was included for comparison. Approximately 100 people were included in each active treatment arm in combination with diet and exercise. All people in the trial were treated for 52 weeks followed by a 7-week follow-up period.

 

From a mean baseline weight of around 111 kg and a body mass index of approximately 39 kg/m2, a weight loss up to 17.8 kg was observed after 52 weeks of treatment with semaglutide. This corresponded to an estimated 13.8% weight loss compared to the weight loss of 2.3% achieved by diet, exercise and placebo alone, with all treatment

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

arms adjusted for people discontinuing treatment in the study. The results from the liraglutide 3.0 mg treatment arm were broadly in line with previously reported data.

 

In the trial, once-daily semaglutide appeared to have a well-tolerated safety profile, with the most common adverse events being gastrointestinal side effects.

 

Novo Nordisk is now preparing the phase 3 programme with semaglutide with the objective to confirm the results, and the phase 3 programme is expected to begin in 2018

 

BIOPHARMACEUTICALS

 

Novo Nordisk received US FDA approval of REBINYN® (nonacog beta pegol; N9-GP; NN7999)

In May 2017, Novo Nordisk announced that the FDA had approved the Biologics License Application for REBINYN® for the treatment of adults and children with haemophilia B.

 

REBINYN® is the brand name for nonacog beta pegol, N9-GP, in the USA. REBINYN® is indicated for on-demand treatment and control of bleeding episodes and the perioperative management of bleeding around the time of surgery in adults and children with haemophilia B. The efficacy and safety evaluation was based on 115 patients across the five paradigm clinical trials, and the approval follows the Blood Products Advisory Committee meeting held 4 April 2017.

 

Novo Nordisk received EU approval of Refixia® (nonacog beta pegol; N9-GP; NN7999) In June 2017, Novo Nordisk announced that the European Commission had granted marketing authorisation for Refixia® for the treatment of adolescents and adults with haemophilia B. The authorisation covers all 28 European Union member states.

 

Refixia® is the brand name for nonacog beta pegol, N9-GP, in the EU. Refixia® is indicated for prophylaxis, on-demand treatment of bleeding and surgical procedures in adolescent (>12 years of age) and adult patients with haemophilia B (congenital factor IX deficiency). The efficacy and safety evaluation was based on 115 patients across the five paradigm clinical trials, and the marketing authorisation follows the positive opinion from the CHMP, under the EMA, provided 24 March 2017.

 

Novo Nordisk submits New Drug Application for nonacog beta pegol (N9-GP; N7999) in Japan

In July 2017, Novo Nordisk submitted the New Drug Application (NDA) to the Japanese Ministry of Health, Labour and Welfare for nonacog beta pegol (N9-GP). The filing of nonacog beta pegol is based on the results from the paradigm clinical trial programme, which involved 115 patients with severe or moderately severe haemophilia B. Nonacog beta pegol was found to be efficacious in routine prophylaxis, treatment of bleeding episodes and surgery for adults, adolescents and children. Furthermore, nonacog beta pegol appeared to be well-tolerated and no safety concerns were identified.

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

Positive results from phase 3 trial with long-acting growth hormone somapacitan (NN8640) for treatment of Adult Growth Hormone Deficiency (AGHD).

In August 2017, Novo Nordisk completed the main phase of REAL 1, the pivotal phase 3 trial with the long-acting recombinant growth hormone, somapacitan. REAL 1 was a 34- week trial that enrolled 301 treatment-naïve adults with growth hormone deficiency. The trial was a placebo-controlled efficacy trial with the primary endpoint being change in truncal fat percentage from baseline to 34 weeks. At the end of the trial, there was a statistically significant difference between somapacitan and placebo, with the somapacitan-treated patients showing a greater reduction in truncal fat percentage.

 

Somapacitan also demonstrated significant beneficial effects on other body composition measures such as lean body mass (LBM) and visceral fat tissue. The safety profile observed in this study was consistent with that known for Norditropin®.

 

Novo Nordisk will soon finalise recruitment in REAL 3, a phase 2 study in prepubertal growth hormone deficient (GHD) children evaluating weekly treatment with once-weekly somapacitan versus daily injections of Norditropin®. In addition, Novo Nordisk is planning for the pivotal phase 3 somapacitan programs in GHD children as well as in children born small for gestational age (SGA).

 

SUSTAINABILITY UPDATE

 

The number of employees in Novo Nordisk decreased by 2.2%

The number of full-time equivalent employees at the end of the first six months of 2017 decreased by 2.2% compared with 12 months ago. The total number of employees was 41,833, corresponding to 41,385 full-time positions. The decrease is the result of workforce reductions, effectuated in the last quarter of 2016, in North America Operations, Region Europe and R&D, and the transfer of the activities and employees of the Steno Diabetes Center to the Capital Region of Denmark. Areas in which there was notable growth include Region AAMEO and the Global Service Centre in Bangalore.

 

Novo Nordisk replaces cartridge holders for insulin pens to protect patient safety

In June 2017, Novo Nordisk detected a potential safety issue with some batches of NovoPen Echo® and NovoPen® 5, used for insulin treatment by people with diabetes. The insulin cartridge holder may crack or break if exposed to certain chemicals in for example cleaning agents, and as a result the pen may give a slightly smaller dose of insulin than expected. The risk that a patient will experience high blood sugar over the lifetime of an affected pen is less than 0.1%. The affected pens had been distributed in 38 countries. In the interest of patient safety, Novo Nordisk immediately put in place measures by which cartridge holders distributed to patients could be replaced. Affected pens in stock at wholesalers and pharmacies have been recalled. The issue has thereby been mitigated.

 

Novo Nordisk signs agreement that secures CO2 neutral steam and heating for the company’s largest production facility

In June 2017, Novo Nordisk signed a 20-year contract with the Danish energy company, DONG Energy, to secure stable supplies of CO2 neutral steam and heating to the

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

company’s largest production facility in Kalundborg, Denmark. Based on this agreement DONG Energy will rebuild its Asnæs Power Station, which supplies Novo Nordisk’s site in Kalundborg, so that by 2020 coal is replaced with sustainable wood chips as the primary source for producing steam and heating. As a result, the Novo Nordisk site will by then be CO2 neutral, and total CO2 emissions from the company’s global production will be reduced by 45%.

 

EQUITY

 

Total equity was DKK 48,436 million at the end of the first six months of 2017, equivalent to 49.5% of total assets, compared with 48.2% at the end of the first six months of 2016. Please refer to appendix 5 for further elaboration of changes in equity.

 

Interim dividend

The Board of Directors has decided to pay out interim dividend for 2017 of DKK 3.00 for each Novo Nordisk A and B share of DKK 0.20, which will be paid in August 2017. The ex-dividend date for the interim dividend will be 18 August 2017. The record date will be 21 August 2017 for the A and B shares as well as ADRs. The payment date for the A and B shares will be 22 August 2017, while the payment date for the ADRs will be 29 August 2017. No dividend will be paid on the company’s holding of B shares.

 

2017 share repurchase programme

On 3 May 2017, Novo Nordisk announced a share repurchase programme of up to DKK 4.3 billion to be executed from 3 May to 7 August 2017, as part of an overall 2017 programme of up to DKK 16 billion to be executed during a 12-month period. The purpose of the programme was to reduce the company’s share capital and to meet obligations arising from share-based incentive programmes. Under the programme, Novo Nordisk has repurchased 15,465,578 B shares for an amount of DKK 4.3 billion in the period from 3 May to 7 August 2017. The programme was concluded on 7 August 2017.

 

As of 7 August 2017, Novo Nordisk A/S and its wholly-owned affiliates owned 33,054,841 of its own B shares, corresponding to 1.3% of the total share capital.

 

The execution of Novo Nordisk’s 2017 share repurchase programme of up to DKK 16 billion to be executed during a 12-month period beginning 2 February 2017 continues, and a new share repurchase programme has been initiated in accordance with Article 5 of Regulation No 596/2014 of the European Parliament and Council of 16 April 2014 (MAR). For that purpose, Novo Nordisk has appointed Nordea Danmark, filial af Nordea Bank AB (publ) as lead manager to execute the programme independently and without influence from Novo Nordisk. The purpose of the programme is to reduce the company's share capital and to meet obligations arising from share-based incentive programmes.

 

Under the agreement, Nordea Danmark, filial af Nordea Bank AB (publ) will repurchase shares on behalf of Novo Nordisk for an amount of DKK 3.9 billion during the trading period starting today, 9 August and ending on 30 October 2017. A maximum of 462,106 shares can be bought during one single trading day, equal to 20% of the average daily

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

trading volume of Novo Nordisk B shares on Nasdaq Copenhagen during the month of July 2017, and a maximum of 27,264,254 shares in total can be bought during the trading period. At least once every seven trading days, Novo Nordisk will issue an announcement in respect of the transactions made under the repurchase programme.

 

LEGAL MATTERS

 

Novo Nordisk involved in seven class action lawsuits relating to drug prices in the USA Since 12 May 2017, three additional class action lawsuits have been brought against Novo Nordisk, Eli Lilly, and/or certain Pharmacy Benefit Managers (PBMs) on behalf of classes of US purchasers of diabetes products. One of the class action lawsuits was filed as an add-on action in the US District Court for the District of New Jersey, resulting in five pending actions in New Jersey. The remaining two lawsuits are filed in the US District Court for the Central District of California and the US District Court for the Western District of Washington. All pending matters allege that the manufacturers and PBMs colluded to artificially inflate list prices paid by consumers for diabetes products, while offering reduced prices to PBMs through rebates used to secure formulary access. Novo Nordisk does not expect the lawsuits to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow.

 

 

 

 

 

 

 

 

 

 

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

FORWARD-LOOKING STATEMENTS

Novo Nordisk’s reports filed with or furnished to the US Securities and Exchange Commission (SEC), including this document as well as the company’s Annual Report 2016 and Form 20-F, both filed with the SEC in February 2017, and written information released, or oral statements made, to the public in the future by or on behalf of Novo Nordisk, may contain forward-looking statements. Words such as ‘believe’, ‘expect’, ‘may’, ‘will’, ‘plan’, ‘strategy’, ‘prospect’, ‘foresee’, ‘estimate’, ‘project’, ‘anticipate’, ‘can’, ‘intend’, ‘target’ and other words and terms of similar meaning in connection with any discussion of future operating or financial performance identify forward-looking statements. Examples of such forward-looking statements include, but are not limited to:

Ÿ

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

Ÿ

statements containing projections of or targets for revenues, costs, income (or loss), earnings per share, capital expenditures, dividends, capital structure, financial items (net) and other financial measures

Ÿ

statements regarding future economic performance, future actions and outcome of contingencies such as legal proceedings

Ÿ

statements regarding the assumptions underlying or relating to such statements.

 

In this document, examples of forward-looking statements can be found under the headings ‘Outlook’, ‘Research and Development update’, Equity’ and ‘Legal matters’.

 

These statements are based on current plans, estimates and projections. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific. Novo Nordisk cautions that a number of important factors, including those described in this document, could cause actual results to differ materially from those contemplated in any forward-looking statements.

 

Factors that may affect future results include, but are not limited to, global as well as local political and economic conditions, including interest rate and currency exchange rate fluctuations, delay or failure of projects related to research and/or development, unplanned loss of patents, interruptions of supplies and production, product 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.

 

Please also refer to the overview of risk factors in ‘Risk management’ on pp 40-43 of the Annual Report 2016 available on novonordisk.com.

 

Unless required by law, Novo Nordisk is under no duty and undertakes no obligation to update or revise any forward-looking statement after the distribution of this document, whether as a result of new information, future events or otherwise.

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

MANAGEMENT STATEMENT

 

The Board of Directors and Executive Management have reviewed and approved the financial report of Novo Nordisk A/S for the first six months of 2017. The financial report has not been audited or reviewed by the company’s independent auditors.

 

The financial report for the first six months of 2017 has been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ and accounting policies set out in the Annual Report 2016 of Novo Nordisk, amended with accounting policy regarding associated companies. Furthermore, the financial report for the first six months of 2017 and Management’s Review are prepared in accordance with additional Danish disclosure requirements for interim reports of listed companies.

 

In our opinion, the accounting policies used are appropriate and the overall presentation of the financial report for the first six months of 2017 is adequate. Furthermore, in our opinion, Management’s Review includes a true and fair account of the development in the operations and financial circumstances, of the results for the period and of the financial position of the Group as well as a description of the most significant risks and elements of uncertainty facing the Group in accordance with Danish disclosure requirements for listed companies.

 

Besides what has been disclosed in the quarterly financial report, no changes in the Group’s most significant risks and uncertainties have occurred relative to what was disclosed in the consolidated annual report for 2016.

 

Bagsværd, 9 August 2017

 

 

Executive Management:
Lars Fruergaard Jørgensen	Jesper Brandgaard	Lars Green
President and CEO	CFO
Mads Krogsgaard Thomsen	Henrik Wulff
Board of Directors:
Göran Ando	Jeppe Christiansen	Brian Daniels
Chairman	Vice chairman
Sylvie Grégoire	Liz Hewitt	Liselotte Hyveled
Kasim Kutay	Anne Marie Kverneland	Helge Lund
Søren Thuesen Pedersen	Stig Strøbæk

 

 

 

 

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

FINANCIAL INFORMATION

 

APPENDIX 1: QUARTERLY NUMBERS IN DKK

 

(Amounts in DKK million, except number of full-time equivalent employees, earnings per share and number of shares outstanding).

 

																										% change
		2017								2016																Q2 2017 vs
		Q2				Q1				Q4				Q3				Q2				Q1				Q2 2016
Net sales			28,638				28,452				29,572				27,537				27,459				27,212				4	%
Gross profit			24,229				24,201				24,654				23,551				23,414				22,978				3	%
Gross margin			84.6	%			85.1	%			83.4	%			85.5	%			85.3	%			84.4	%
Sales and distribution costs			6,761				6,787				7,909				6,860				6,867				6,741				(2	%)
Percentage of sales			23.6	%			23.9	%			26.7	%			24.9	%			25.0	%			24.8	%
Research and development costs			3,414				3,289				4,470				3,458				3,331				3,304				2	%
Percentage of sales			11.9	%			11.6	%			15.1	%			12.6	%			12.1	%			12.1	%
Administrative costs			857				913				1,166				1,015				873				908				(2	%)
Percentage of sales			3.0	%			3.2	%			3.9	%			3.7	%			3.2	%			3.3	%
Other operating income, net			189				278				97				202				154				284				23	%
Operating profit			13,386				13,490				11,206				12,420				12,497				12,309				7	%
Operating margin			46.7	%			47.4	%			37.9	%			45.1	%			45.5	%			45.2	%
Financial income			421				258				(21	)			(3	)			93				23				353	%
Financial expenses			1,164				744				243				116				(12	)			379				N/A
Financial items (net)			(743	)			(486	)			(264	)			(119	)			105				(356	)			N/A
Profit before income taxes			12,643				13,004				10,942				12,301				12,602				11,953				0	%
Income taxes			2,692				2,848				2,243				2,498				2,634				2,498				2	%
Net profit			9,951				10,156				8,699				9,803				9,968				9,455				0	%
Depreciation, amortisation and impairment losses			863				708				1,116				736				717				624				20	%
Capital expenditure (net)			1,934				1,604				2,502				1,784				1,684				1,091				15	%
Net cash generated from operating activities			10,117				12,098				11,153				15,189				14,497				7,475				(30	%)
Free cash flow			8,392				10,400				8,388				12,501				12,743				6,359				(34	%)
Total assets			97,825				94,213				97,539				87,340				88,269				82,368				11	%
Total equity			48,436				40,301				45,269				41,327				42,585				37,284				14	%
Equity ratio			49.5	%			42.8	%			46.4	%			47.3	%			48.2	%			45.3	%
Full-time equivalent employees end of period			41,385				41,636				41,971				42,605				42,265				41,571				(2	%)
Basic earnings per share/ADR (in DKK)			4.01				4.07				3.46				3.88				3.93				3.72				2	%
Diluted earnings per share/ADR (in DKK)			4.01				4.06				3.46				3.87				3.92				3.71				2	%
Average number of shares outstanding (million)			2,480.2				2,495.8				2,512.6				2,526.5				2,536.3				2,544.3				(2	%)
Average number of diluted shares
outstanding (million)			2,484.1				2,500.0				2,517.1				2,530.9				2,540.8				2,550.1				(2	%)
Sales by business segment:
New-generation insulin			2,493				1,692				1,707				1,143				983				626				154	%
Modern insulin			11,289				12,092				12,219				11,770				11,806				11,715				(4	%)
Human insulin			2,521				2,602				2,938				2,760				2,667				2,725				(5	%)
Total insulin			16,303				16,386				16,864				15,673				15,456				15,066				5	%
Victoza®			5,775				5,750				5,397				5,106				4,952				4,591				17	%
Other diabetes care			1,006				1,086				1,026				1,095				1,015				1,131				(1	%)
Total diabetes care			23,084				23,222				23,287				21,874				21,423				20,788				8	%
Obesity (Saxenda®)			686				539				540				418				376				243				82	%
Diabetes and obesity care total			23,770				23,761				23,827				22,292				21,799				21,031				9	%
Haemophilia			2,739				2,576				2,821				2,285				2,530				2,836				8	%
Human growth disorders			1,679				1,646				2,202				2,003				2,158				2,407				(22	%)
Other biopharmaceuticals			450				469				722				957				972				938				(54	%)
Biopharmaceuticals total			4,868				4,691				5,745				5,245				5,660				6,181				(14	%)
Sales by geographic segment:
North America Operations			15,103				14,940				15,873				14,719				14,453				14,197				4	%
- USA			14,583				14,402				15,343				14,174				13,947				13,730				5	%
International Operations			13,535				13,512				13,699				12,818				13,006				13,015				4	%
- Region Europe			5,355				5,226				5,275				5,093				5,298				5,016				1	%
- Region AAMEO			3,057				2,964				2,937				2,790				2,842				3,011				8	%
- Region China			2,608				3,060				2,540				2,534				2,509				2,875				4	%
- Region Japan & Korea			1,573				1,467				1,691				1,588				1,611				1,335				(2	%)
- Region Latin America			942				795				1,256				813				746				778				26	%
Segment operating profit:
Diabetes and obesity care			10,735				10,631				8,575				9,874				9,229				8,424				16	%
Biopharmaceuticals			2,651				2,859				2,631				2,546				3,268				3,885				(19	%)

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

APPENDIX 2: INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

 

 

			H1				H1				Q2				Q2
DKK million			2017				2016				2017				2016
Income statement
Net sales			57,090				54,671				28,638				27,459
Cost of goods sold			8,660				8,279				4,409				4,045
Gross profit			48,430				46,392				24,229				23,414
Sales and distribution costs			13,548				13,608				6,761				6,867
Research and development costs			6,703				6,635				3,414				3,331
Administrative costs			1,770				1,781				857				873
Other operating income, net			467				438				189				154
Operating profit			26,876				24,806				13,386				12,497
Financial income			679				116				421				93
Financial expenses			1,908				367				1,164				(12	)
Profit before income taxes			25,647				24,555				12,643				12,602
Income taxes			5,540				5,132				2,692				2,634
NET PROFIT			20,107				19,423				9,951				9,968
Basic earnings per share (DKK)			8.08				7.65				4.01				3.93
Diluted earnings per share (DKK)			8.07				7.63				4.01				3.92
Segment Information
Segment sales:
Diabetes and obesity care			47,531				42,830				23,770				21,799
Biopharmaceuticals			9,559				11,841				4,868				5,660
Segment operating profit:
Diabetes and obesity care			21,366				17,653				10,735				9,229
Operating margin			45.0	%			41.2	%			45.2	%			42.3	%
Biopharmaceuticals			5,510				7,153				2,651				3,268
Operating margin			57.6	%			60.4	%			54.5	%			57.7	%
Total segment operating profit			26,876				24,806				13,386				12,497
Statement of comprehensive income
Net profit for the Period			20,107				19,423				9,951				9,968
Other comprehensive income
Items that will not subsequently be reclassified to the Income statement
Remeasurements on defined benefit plans			85				(138	)			-				(43	)
Items that will be reclassified subsequently to the Income statement
Exchange rate adjustments of investments in subsidiaries			(357	)			(3	)			(301	)			(18	)
Cash flow hedges, realisation of previously deferred (gains)/losses			1,236				497				647				133
Cash flow hedges, deferred gains/(losses) incurred during the period			2,276				(248	)			2,282				(1,582	)
Other items			(152	)			(261	)			(14	)			(95	)
Tax on other comprehensive income, income/(expense)			(733	)			(59	)			(752	)			425
Other comprehensive income for the Period, net of tax			2,355				(212	)			1,862				(1,180	)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD			22,462				19,211				11,813				8,788

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

APPENDIX 3: BALANCE SHEET

 

 

DKK million			30 Jun 2017				31 Dec 2016
ASSETS
Intangible assets			2,647				2,714
Property, plant and equipment			31,888				30,179
Investment in associated company			789				809
Deferred income tax assets			2,314				2,683
Other financial assets			1,213				1,388
TOTAL NON-CURRENT ASSETS			38,851				37,773
Inventories			15,028				14,341
Trade receivables			17,366				20,234
Tax receivables			659				1,552
Other receivables and prepayments			2,830				2,411
Marketable securities			3				2,009
Derivative financial instruments			1,761				529
Cash at bank			21,327				18,690
TOTAL CURRENT ASSETS			58,974				59,766
TOTAL ASSETS			97,825				97,539
EQUITY AND LIABILITIES
Share capital			500				510
Treasury shares			(5	)			(9	)
Retained earnings			47,014				46,111
Other reserves			927				(1,343	)
TOTAL EQUITY			48,436				45,269
Deferred income tax liabilities			569				13
Retirement benefit obligations			1,359				1,451
Provisions			3,637				3,370
Total non-current liabilities			5,565				4,834
Current debt			1,683				229
Trade payables			4,257				6,011
Tax payables			3,706				3,976
Other liabilities			13,787				14,181
Derivative financial instruments			521				2,578
Provisions			19,870				20,461
Total current liabilities			43,824				47,436
TOTAL LIABILITIES			49,389				52,270
TOTAL EQUITY AND LIABILITIES			97,825				97,539

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

APPENDIX 4: STATEMENT OF CASH FLOWS

 

 

DKK million			H1 2017				H1 2016
Net profit			20,107				19,423
Adjustment for non-cash items:
Income taxes in the Income Statement			5,540				5,132
Depreciation, amortisation and impairment losses			1,571				1,341
Other non-cash items			1,463				214
Change in working capital			(1,683	)			(1,117	)
Interest received			69				96
Interest paid			(41	)			(30	)
Income taxes paid			(4,811	)			(3,087	)
Net cash generated from operating activities			22,215				21,972
Purchase of intangible assets			(255	)			(121	)
Proceeds from sale of property, plant and equipment			6				1
Purchase of property, plant and equipment			(3,159	)			(2,776	)
Proceeds from other financial assets			11				1
Purchase of other financial assets			(40	)			-
Sale of marketable securities			2,006				2,019
Purchase of marketable securities			-				(531	)
Dividend received from associated company			14				25
Net cash used in investing activities			(1,417	)			(1,382	)
Purchase of treasury shares, net			(8,005	)			(7,363	)
Dividends paid			(11,448	)			(16,230	)
Net cash used in financing activities			(19,453	)			(23,593	)
NET CASH GENERATED FROM ACTIVITIES			1,345				(3,003	)
Cash and cash equivalents at the beginning of the year			18,461				15,850
Exchange gain/(loss) on cash and cash equivalents			(162	)			(86	)
Cash and cash equivalents at the end of the period			19,644				12,761

  

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

APPENDIX 5: STATEMENT OF CHANGES IN EQUITY

 

															Other reserves
DKK million		Share capital				Treasury shares				Retained earnings				Exchange rate adjust- ments				Cash flow hedges				Tax and other adjust- ments				Total other reserves				Total
H1 2017
Balance at the beginning of the period			510				(9	)			46,111				(924	)			(1,915	)			1,496				(1,343	)			45,269
Net profit for the period											20,107																				20,107
Other comprehensive income for the period											85				(357	)			3,512				(885	)			2,270				2,355
Total comprehensive income for the period											20,192				(357	)			3,512				(885	)			2,270				22,462
Transactions with owners:
Dividends											(11,448	)																			(11,448	)
Share-based payments											158																				158
Tax credit related to restricted stock units											-																				-
Purchase of treasury shares							(6	)			(7,999	)																			(8,005	)
Reduction of the B share capital			(10	)			10																								-
Balance at the end of the period			500				(5	)			47,014				(1,281	)			1,597				611				927				48,436

 

 

															Other reserves
DKK million		Share capital				Treasury shares				Retained earnings				Exchange rate adjust- ments				Cash flow hedges				Tax and other adjust- ments				Total other reserves					Total
H1 2016
Balance at the beginning of the period			520				(10	)			46,816				(917	)			(686	)			1,246				(357	)			46,969
Net profit for the period											19,423																				19,423
Other comprehensive income for the period											(138	)			(3	)			249				(320	)			(74	)			(212	)
Total comprehensive income for the period											19,285				(3	)			249				(320	)			(74	)			19,211
Transactions with owners:
Dividends											(16,230	)																			(16,230	)
Share-based payments											209																				209
Tax credit related to restricted stock units											(211	)																			(211	)
Purchase of treasury shares							(4	)			(7,359	)																			(7,363	)
Reduction of the B share capital			(10	)			10																								-
Balance at the end of the period			510				(4	)			42,510				(920	)			(437	)			926				(431	)			42,585

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

APPENDIX 6: REGIONAL SALES SPLIT

 

 

Q2 2017 sales split per region

 

DKK million		Total				North America Operations				USA				Inter- national Operations				Region Europe				Region AAMEO				Region China				Region Japan & Korea				Region Latin America
The diabetes and obesity care segment
New-generation insulin			2,493				1,641				1,639				852				412				87				1				249				103
% change in local currencies			149	%			246	%			246	%			63	%			102	%			37	%			-				30	%			59	%
Tresiba®			2,198				1,603				1,603				595				251				62				1				186				95
% change in local currencies			139	%			238	%			238	%			35	%			60	%			41	%			-				2	%			62	%
Modern insulin			11,289				5,666				5,490				5,623				2,138				1,519				1,357				409				200
% change in local currencies			(5	%)			(14	%)			(15	%)			7	%			(3	%)			22	%			15	%			(13	%)			16	%
NovoRapid®			5,089				2,773				2,677				2,316				1,073				597				310				249				87
% change in local currencies			3	%			(3	%)			(3	%)			12	%			3	%			32	%			21	%			(3	%)			37	%
Levemir®			3,597				2,464				2,394				1,133				591				247				172				38				85
% change in local currencies			(17	%)			(23	%)			(23	%)			0	%			(9	%)			10	%			35	%			(22	%)			2	%
NovoMix®			2,603				429				418				2,174				474				675				875				122				28
% change in local currencies			(1	%)			(24	%)			(24	%)			5	%			(8	%)			20	%			10	%			(27	%)			7	%
Human insulin			2,521				503				461				2,018				442				578				713				62				223
% change in local currencies			(5	%)			21	%			25	%			(9	%)			(13	%)			(8	%)			(10	%)			(23	%)			4	%
Total insulin			16,303				7,810				7,589				8,493				2,992				2,184				2,071				720				526
% change in local currencies			5	%			4	%			4	%			6	%			2	%			13	%			5	%			(3	%)			16	%
Victoza®			5,775				4,318				4,185				1,457				867				238				84				155				113
% change in local currencies			15	%			18	%			18	%			6	%			(1	%)			34	%			40	%			(4	%)			20	%
Other diabetes care			1,006				219				179				787				146				128				393				108				12
% change in local currencies			0	%			(2	%)			(4	%)			0	%			(6	%)			6	%			2	%			(4	%)			18	%
Total diabetes care			23,084				12,347				11,953				10,737				4,005				2,550				2,548				983				651
% change in local currencies			7	%			8	%			9	%			5	%			1	%			14	%			5	%			(3	%)			17	%
Obesity (Saxenda®)			686				576				536				110				23				30				-				-				57
% change in local currencies			77	%			57	%			54	%			478	%			300	%			263	%			-				-				1175	%
Diabetes and obesity care total			23,770				12,923				12,489				10,847				4,028				2,580				2,548				983				708
% change in local currencies			8	%			10	%			10	%			6	%			2	%			15	%			5	%			(3	%)			25	%
The biopharmaceuticals segment
Haemophilia			2,739				1,380				1,354				1,359				729				248				56				166				160
% change in local currencies			7	%			7	%			9	%			6	%			12	%			0	%			34	%			(15	%)			14	%
NovoSeven®			2,352				1,221				1,197				1,131				567				232				55				119				158
% change in local currencies			2	%			2	%			3	%			1	%			4	%			(4	%)			34	%			(23	%)			12	%
NovoEight®			347				137				137				210				153				10				1				44				2
% change in local currencies			60	%			84	%			84	%			47	%			58	%			125	%			-				7	%			-
Human growth disorders			1,679				618				616				1,061				418				172				4				394				73
% change in local currencies			(23	%)			(42	%)			(42	%)			(5	%)			(3	%)			(32	%)			(25	%)			3	%			47	%
Other biopharmaceuticals			450				182				124				268				180				57				-				30				1
% change in local currencies			(54	%)			(75	%)			(81	%)			(1	%)			(3	%)			(2	%)			(100	%)			15	%			-
Biopharmaceuticals total			4,868				2,180				2,094				2,688				1,327				477				60				590				234
% change in local currencies			(15	%)			(29	%)			(29	%)			1	%			5	%			(15	%)			26	%			(2	%)			23	%
Total sales			28,638				15,103				14,583				13,535				5,355				3,057				2,608				1,573				942
% change in local currencies			3	%			2	%			2	%			5	%			2	%			9	%			6	%			(3	%)			25	%
% change as reported			4	%			4	%			5	%			4	%			1	%			8	%			4	%			(2	%)			26	%
Share of growth			100	%			30	%			27	%			70	%			13	%			27	%			15	%			(5	%)			20	%

 

H1 2017 sales split per region

 

DKK million		Total				North America Operations				USA				Inter- national Operations				Region Europe				Region AAMEO				Region China				Region Japan & Korea				Region Latin America
The diabetes and obesity care segment
New-generation insulin			4,185				2,605				2,603				1,580				747				182				2				466				183
% change in local currencies			155	%			283	%			283	%			65	%			101	%			46	%			-				36	%			50	%
Tresiba®			3,689				2,567				2,567				1,122				475				117				2				358				170
% change in local currencies			149	%			277	%			277	%			41	%			73	%			44	%			-				9	%			52	%
Modern insulin			23,381				12,226				11,864				11,155				4,285				2,851				2,857				777				385
% change in local currencies			(1	%)			(8	%)			(8	%)			6	%			(1	%)			13	%			17	%			(12	%)			14	%
NovoRapid®			10,403				5,910				5,716				4,493				2,105				1,109				645				472				162
% change in local currencies			8	%			6	%			6	%			11	%			5	%			19	%			25	%			(2	%)			30	%
Levemir®			7,609				5,320				5,175				2,289				1,237				463				350				71				168
% change in local currencies			(13	%)			(19	%)			(19	%)			1	%			(5	%)			2	%			33	%			(21	%)			5	%
NovoMix®			5,369				996				972				4,373				943				1,279				1,862				234				55
% change in local currencies			1	%			(14	%)			(14	%)			5	%			(6	%)			13	%			11	%			(26	%)			6	%
Human insulin			5,123				927				840				4,196				878				1,157				1,648				120				393
% change in local currencies			(4	%)			8	%			10	%			(7	%)			(13	%)			(4	%)			(4	%)			(20	%)			(4	%)
Total insulin			32,689				15,758				15,306				16,931				5,910				4,190				4,507				1,363				961
% change in local currencies			6	%			7	%			7	%			6	%			4	%			9	%			8	%			(1	%)			11	%
Victoza®			11,525				8,684				8,421				2,841				1,683				472				161				289				236
% change in local currencies			18	%			23	%			23	%			6	%			(1	%)			31	%			28	%			(1	%)			18	%
Other diabetes care			2,092				456				376				1,636				298				237				877				197				27
% change in local currencies			(2	%)			(2	%)			(3	%)			(2	%)			(4	%)			0	%			(1	%)			(8	%)			13	%
Total diabetes care			46,306				24,898				24,102				21,408				7,891				4,899				5,545				1,849				1,224
% change in local currencies			9	%			12	%			12	%			5	%			2	%			10	%			7	%			(2	%)			12	%
Obesity (Saxenda®)			1,225				985				910				240				39				74				-				-				127
% change in local currencies			90	%			62	%			57	%			682	%			344	%			438	%			-				-				1717	%
Diabetes and obesity care total			47,531				25,883				25,013				21,648				7,930				4,973				5,545				1,849				1,351
% change in local currencies			10	%			13	%			13	%			6	%			3	%			11	%			7	%			(2	%)			22	%
The biopharmaceuticals segment
Haemophilia			5,315				2,601				2,530				2,714				1,478				552				112				325				247
% change in local currencies			(2	%)			1	%			2	%			(6	%)			16	%			(28	%)			11	%			(9	%)			(33	%)
NovoSeven®			4,663				2,356				2,290				2,307				1,188				529				111				236				243
% change in local currencies			(6	%)			(2	%)			(1	%)			(11	%)			10	%			(30	%)			11	%			(15	%)			(34	%)
NovoEight®			576				200				200				376				274				14				1				83				4
% change in local currencies			42	%			51	%			51	%			38	%			44	%			117	%			-				8	%			-
Human growth disorders			3,325				1,187				1,184				2,138				810				377				8				805				138
% change in local currencies			(28	%)			(53	%)			(53	%)			1	%			(3	%)			(15	%)			(13	%)			11	%			35	%
Other biopharmaceuticals			919				372				259				547				363				119				3				61				1
% change in local currencies			(53	%)			(74	%)			(81	%)			7	%			7	%			0	%			50	%			23	%			(50	%)
Biopharmaceuticals total			9,559				4,160				3,972				5,399				2,651				1,048				123				1,191				386
% change in local currencies			(20	%)			(36	%)			(37	%)			(2	%)			8	%			(22	%)			10	%			5	%			(18	%)
Total sales			57,090				30,043				28,985				27,047				10,581				6,021				5,668				3,040				1,737
% change in local currencies			3	%			2	%			2	%			5	%			4	%			4	%			7	%			1	%			9	%
% change as reported			4	%			5	%			5	%			4	%			3	%			3	%			5	%			3	%			14	%
Share of growth			100	%			32	%			28	%			68	%			24	%			13	%			22	%			1	%			8	%

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

APPENDIX 7: KEY CURRENCY ASSUMPTIONS

 

 

DKK per 100			2015 average exchange rates				2016 average exchange rates				YTD 2017 average exchange rates as of 4 August 2017				Current exchange rates as of 4 August 2017
USD			673				673				680				626
CNY			107.0				101.3				99.2				93.2
JPY			5.56				6.21				6.05				5.69
GBP			1,028				911				860				823
CAD			527				508				514				498

 

 

 

 

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

APPENDIX 8: QUARTERLY NUMBERS IN USD (ADDITIONAL INFORMATION)

 

 

Key figures are translated into USD as additional information - the translation is based on the average exchange rate for income statement and the exchange rate at the balance sheet date for balance sheet items. The specified percent changes in DKK are based on the changes in the 'Quarterly numbers in DKK', see appendix 1. The specified percentage changes in USD is calculated as a development in USD numbers in this appendix.

(Amounts in USD million, except full-time equivalent employees, earnings per share and number of shares outstanding).

 

		2017								2016																Q2 2017 vs Q2 2016				Q2 2017 vs Q2 2016
		Q2				Q1				Q4				Q3				Q2				Q1				in USD				in DKK
Net sales			4,230				4,073				4,290				4,130				4,165				4,017				2	%			4	%
Gross profit			3,579				3,465				3,575				3,532				3,551				3,392				1	%			3	%
Gross margin			84.6	%			85.1	%			83.4	%			85.5	%			85.3	%			84.4	%
Sales and distribution costs			999				972				1,150				1,028				1,042				995				(4	%)			(2	%)
Percentage of sales			23.6	%			23.9	%			26.7	%			24.9	%			25.0	%			24.8	%
Research and development costs			504				471				651				519				505				488				0	%			2	%
Percentage of sales			11.9	%			11.6	%			15.1	%			12.6	%			12.1	%			12.1	%
Administrative costs			126				131				169				152				133				134				(5	%)			(2	%)
Percentage of sales			3.0	%			3.2	%			3.9	%			3.7	%			3.2	%			3.3	%
Other operating income, net			28				40				13				30				24				42				17	%			23	%
Operating profit			1,978				1,931				1,618				1,863				1,895				1,817				4	%			7	%
Operating margin			46.7	%			47.4	%			37.9	%			45.1	%			45.5	%			45.2	%
Financial income			62				37				(3	)			(1	)			15				3				313	%			353	%
Financial expenses			172				106				36				17				0				55				N/A				N/A
Financial items (net)			(110	)			(69	)			(39	)			(18	)			15				(52	)			N/A				N/A
Profit before income taxes			1,868				1,862				1,579				1,845				1,910				1,765				(2	%)			0	%
Income taxes			398				408				323				375				399				369				0	%			2	%
Net profit			1,470				1,454				1,256				1,470				1,511				1,396				(3	%)			0	%
Depreciation, amortisation and impairment losses			127				101				163				110				109				92				17	%			20	%
Capital expenditure (net)			285				230				366				268				254				161				12	%			15	%
Net cash generated from operating activities			1,499				1,732				1,611				2,277				2,184				1,104				(31	%)			(30	%)
Free cash flow			1,244				1,489				1,207				1,874				1,920				939				(35	%)			(34	%)
Total assets			15,004				13,532				13,826				13,082				13,173				12,585				14	%			11	%
Total equity			7,429				5,789				6,417				6,190				6,355				5,697				17	%			14	%
Equity ratio			49.5	%			42.8	%			46.4	%			47.3	%			48.2	%			45.3	%
Full-time equivalent employees end of period			41,385				41,636				41,971				42,605				42,265				41,571				(2	%)			(2	%)
Basic earnings per share/ADR (in USD)			0.60				0.58				0.50				0.59				0.59				0.55				2	%			2	%
Diluted earnings per share/ADR (in USD)			0.59				0.58				0.50				0.58				0.59				0.55				0	%			2	%
Average number of shares outstanding (million)			2,480.2				2,495.8				2,512.6				2,526.5				2,536.3				2,544.3				(2	%)			(2	%)
Average number of diluted shares
outstanding (million)			2,484.1				2,500.0				2,517.1				2,530.9				2,540.8				2,550.1				(2	%)			(2	%)
Sales by business segment:
New-generation insulin			367				242				250				171				149				92				146	%			154	%
Modern insulin			1,670				1,731				1,772				1,765				1,790				1,730				(7	%)			(4	%)
Human insulin			372				373				426				414				405				402				(8	%)			(5	%)
Total insulin			2,409				2,346				2,448				2,350				2,344				2,224				3	%			5	%
Victoza®			853				823				783				766				750				678				14	%			17	%
Other diabetes care			149				155				148				165				154				167				(3	%)			(1	%)
Total diabetes care			3,411				3,324				3,379				3,281				3,248				3,069				5	%			8	%
Obesity (Saxenda®)			101				77				79				62				57				36				77	%			82	%
Diabetes and obesity care total			3,512				3,401				3,458				3,343				3,305				3,105				6	%			9	%
Haemophilia			403				369				409				343				384				419				5	%			8	%
Human growth disorders			248				236				319				301				328				355				(24	%)			(22	%)
Other biopharmaceuticals			67				67				104				143				148				138				(55	%)			(54	%)
Biopharmaceuticals total			718				672				832				787				860				912				(17	%)			(14	%)
Sales by geographic segment:
North America Operations			2,230				2,139				2,304				2,207				2,192				2,096				2	%			4	%
- USA			2,154				2,062				2,226				2,127				2,114				2,027				2	%			5	%
International Operations			2,000				1,934				1,986				1,923				1,973				1,921				1	%			4	%
- Region Europe			791				748				765				763				803				741				(1	%)			1	%
- Region AAMEO			452				424				424				420				431				444				5	%			8	%
- Region China			386				438				367				380				382				424				1	%			4	%
- Region Japan & Korea			232				210				246				238				244				197				(5	%)			(2	%)
- Region Latin America			139				114				184				122				113				115				23	%			26	%
Segment operating profit:
Diabetes and obesity care			1,586				1,522				1,240				1,480				1,399				1,243				13	%			16	%
Biopharmaceuticals			392				409				378				383				496				574				(21	%)			(19	%)

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

 

APPENDIX 9: NON-IFRS FINANCIAL MEASURES (ADDITIONAL INFORMATION)

 

In this Company Announcement, Novo Nordisk discloses certain financial measures of the Group’s financial performance, financial position and cash flows that reflect adjustments to the directly comparable measures calculated and presented in accordance with IFRS. These non-IFRS financial measures may not be defined and calculated by other companies in the same manner and may thus not be comparable with such measures.

 

The non-IFRS financial measures presented in the Company Announcement are:

·

Sales growth in local currencies

·

Operating profit growth in local currencies

·

Free cash flow

 

Sales and operating profit growth in local currencies

When referred to ‘growth in local currencies’ it means that the effect of changes in exchange rates is excluded. It is defined as sales/operating profit for the period measured at prior period average exchange rates compared with realised sales/operating profit for the prior period. Management believes that growth in local currencies is relevant information for investors in order to understand the underlying development in sales and operating profit by adjusting for the impact of currency fluctuations.

 

Sales in local currencies

			H1				H1				Q2				Q2
DKK million			2017				2016				2017				2016
Net sales			57,090				54,671				28,638				27,459
Effect of exchange rate			(692	)			1,337				(242	)			1,141
Sales in local currencies			56,398				56,008				28,396				28,600

 

Operating profit in local currencies

			H1				H1				Q2				Q2
DKK million			2017				2016				2017				2016
Operating profit			26,876				24,806				13,386				12,497
Effect of exchange rate			(562	)			703				(104	)			607
Operating profit in local currencies			26,314				25,509				13,282				13,104

 

Free cash flow

Novo Nordisk defines free cash flow as ’net cash generated from operating activities’ less ‘net cash used in investing activities’ excluding net change of marketable securities. A positive free cash flow shows that the Group is able to finance its activities and that external financing is thus not necessary for the Group’s operating activities. Therefore, management believes that this non-IFRS liquidity measure provides useful information to investors in addition to the most directly comparable IFRS financial measure ‘Net cash generated from operating activities’.

 

Free cash flow

			H1				H1				Q2				Q2
DKK million			2017				2016				2017				2016
Net cash generated from operating activites			22,215				21,972				10,117				14,497
Net cash used in investing activites			(1,417	)			(1,382	)			(725	)			224
Net purchase of marketable securities			(2,006	)			(1,488	)			(1,000	)			(1,978	)
Free cash flow			18,792				19,102				8,392				12,743

 

 

Financial Performance

Outlook

R&D

Sustainability

Equity

Legal

Financial Information

 

Company announcement No 60 / 2017       

SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized.

 

Date: August 9, 2017

NOVO NORDISK A/S   Lars Fruergaard Jørgensen Chief Executive Officer