NOVO NORDISK A/S Novo Nordisk
- a focused healthcare company
ESG conference call
30 November 2020
2 ESG conference call
Novo Nordisk®
Forward-looking statements
Novo Nordisk's reports filed with or furnished to the US Securities and Exchange Commission (SEC), including this presentationas well as the company's statutory Annual Report 2019 and Form 20-F, which are both expected to be filed with the SEC in February 2020 in continuation of the publication of the Annual Report 2019, and written information released, or oral statements made, to the public in the future by or on behalf of Novo Nordisk, may contain forward-looking statements. Words such as 'believe', 'expect', 'may', 'will', 'plan', 'strategy', 'prospect', 'foresee', 'estimate', 'project', 'anticipate', 'can', 'intend', 'target' and other words and terms of similar meaning in connection with any discussion of future operating or financial performance identify forward-looking statements. Examples of such forward-looking statements include, but are not limited to:
• Statements of targets, plans, objectives or goals for future operations, including those related to Novo Nordisk's products, product research, product development, product introductions and product approvals as well as cooperation in relation thereto,
• Statements containing projections of or targets for revenues, costs, income (or loss), earnings per share, capital expenditures, dividends, capital structure, net financials and other financial measures,
• Statements regarding future economic performance, future actions and outcome of contingencies such as legal proceedings, and
• Statements regarding the assumptions underlying or relating to such statements.
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 presentation, 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.
For an overview of some, but not all, of the risks that could adversely affect Novo Nordisk's results or the accuracy of forward-looking statements in this presentation, reference is made to the overview of risk factors in 'Managing risks to protect value' on pp 33-35 of the Annual Report 2019.
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 presentation, whether as a result of new information, future events or otherwise.
Important drug information
• Victoza® is approved for the management of type 2 diabetes only
• Saxenda® is approved in the USA and the EU for the treatment of obesity only
Strategic Aspirations 2025 with today's focus on Purpose and sustainability
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1 Based on reported sales in 2019
• Further raise the innovation-bar for diabetes treatment
• Develop a leading portfolio of superior treatment solutions for obesity
• Strengthen and progress the Biopharm pipeline
• Establish presence in Other serious chronic diseases focusing on CVD, NASH and CKD
• Deliver solid sales and operating profit growth
• Deliver 6-10% sales growth in IO
• Transform 70% of sales in the US2
• Drive operational efficiencies across the value chain to enable investments in future growth assets
• Deliver free cash flow to enable attractive capital allocation to shareholders
2 From 2015 to 2022. IO: International Operations; CVD: Cardiovascular disease; NASH: Non-alcoholic steatohepatitis; CKD: Chronic kidney disease.
Building upon extensive experience running a sustainable business
LDC: Least developed country; NCD: Non-communicable disease; TBL: Triple Bottom Line; AoAs: Articles of Association
Environmental
Social
Governance
Long-term value to society is driven by a strong sense of purpose and by being a responsible business
Foundation ownership allows for long-term strategies, while still supporting agile responses to changing circumstancesFinancial, environmental and social responsibility anchored in Articles of Association and NNWay guides behaviour
Novo Nordisk FoundationNovo Holdings A/SInstitutional and private investors
Novo Nordisk A/STriple Bottom Line anchored in the
Articles of Association in 2004
NN: Novo Nordisk
Decisions and actions are informed by evaluating where the largest impact can be obtained and guided by external standards
SoOcuiraallpyproeascphotnosEibSGleis our Triple Bottom Line principle
The approach is informed by external standards, yet no universal ESG standard existsAcknowledgement of approach is reflected across sustainability ranking agencies
GRI: Global Reporting Initiative; CDP: Carbon Disclosure Project; MSCI: Morgan Stanley Capital International
1 Score is Company score and Ranking is Percentile ranking; 2 Score is Risk score, where the sector ranking is the pharmaceuticals ranking and Level is Controversy level, where the sector ranking is the global ranking; 3 Industry leader ranking; 4 Up from 10 in 2016; 5 Novo Nordisk ranks among top 5% in the Industry Group 'Pharmaceuticals' with 38/780; 6 Novo Nordisk ranks in the top 30% in the 'Global Universe' of companies reviewed by Sustainalytics with 3,662/12,708
Agenda
Environmental responsibility - Circular for Zero
• Camilla Sylvest, EVP of Commercial Strategy & Corporate Affairs
• Henrik Wulff, EVP of Product Supply, Quality and IT
Followed by 10 minutes Q&A on environmental responsibility
Social responsibility - Defeat Diabetes and Sustainable Workplace
• Camilla Sylvest, EVP of Commercial Strategy & Corporate Affairs
• Monique Carter, EVP of People & Organisation
Followed by 10 minutes Q&A on social responsibility
Governance structure - Responsible business conduct
• Karsten Munk Knudsen, EVP and Chief Financial Officer
Followed by 15 minutes closing Q&A
With Circular for Zero, Novo Nordisk aspires to have zero environmental impact
Environmental aspirations
Circular products
Upgrade existing and design new products based on circular principles and solve the end-of-life product waste challenge to close the resource loop
Circular company
Eliminate environmental footprint from operations and drive a circular transition across the company aspiring for zero environmental impact
Circular supply
ESG conference call
SLIDE 8
Proactive collaboration with suppliers to embed circular thinking for reduced environmental impact across the value chain and switch towards circular sourcing and procurement
Circular mindset implemented in design of devices and in solving end-of-life challenge for products
Circularity in designing products
Today's challenge: Product offerings within pharma have a long life cycle and due to the regulatory environment changes are comprehensive and costly
Circularity in product offerings
• New product offerings are designed for reuse and recycling especially related to plastic to minimise impact from production and to address end-of-life challenge.
• The parameters guiding sustainable decision making for new R&D devices are:
1. Carbon footprint (kg/patient/year)
2. Sustainable materials (% by weight fraction)
3. Recyclability (% by weight fraction)
1 More information on the pilot called "ReturpenTM" can be found here:Returpen.dk
Collect learnings to solve end-of-life waste challenge
Today's challenge: ~500 million prefilled plastic pens produced yearly and increasing volumes underscore the need for reuse or recycling
The programme and next stepsBroad range of key stakeholders
• Return products, allowing for plastic and other components to be reused or recycled
• Danish take-back pilot1 expected to run until mid-2021
• Learnings to be used for improvement and expected roll-out in additional countries
Novo Nordisk
Municipalities and public bodies Distributors and wholesalers Patient organisations Pharmacies
Environmental Protection Agency
Optimisations support and enable investments in sustainable production
Novo Nordisk sales and consumption development in production
Index 600
500
400
300
200
100
53
0 2001
1 Based on 2015 data.
SalesCO2
EnergyWasteWater
522
2004
2007
2010
2013
2016
2019
Note: RE100 is launched by Climate Group and members commit to 100% renewable electricity. API: Active pharmaceutical ingredients
Investing in sustainable production facilities is key to drive efficiencies and competitive financial results
Optimisation priorities
• Optimisation of yeast strings to ensure improved API yield
• Standardised platforms utilised across product portfolio
• Prioritisation and investment in multipurpose production lines support broadened pipeline
• Rybelsus®-related investment of more than USD 2 billion yields 3-4x production capacity vs initial expectation
Partnerships support key achievements
• Partnerships have helped in the achievement of our RE100 commitment in 2020 with using 100% renewable power at all production sites
• The largest global production site based in Kalundborg (DK) is part of the private-public symbiosis with 11 other businesses
Progressing towards zero CO2 emissions by addressing emissions in and beyond production
Mapping CO2 emissions is the first step in finding solutions
Operations & transport1Suppliers
Total CO2 emissions were ~1.3
million tons in 2019
Addressing the ~20% CO2 emissions in operations & transport
Tons (1,000) 100
80
60
40
20
0
Offices & laboratories
Company cars
Business flights
1 In 2019, CO2 emissions from operations & transport totalled 306,000 tons and business flights CO2 emissions are included in suppliers.
2 Achieved 100% renewable power across production sites in 2020.
Product distributionProduction
Activities to meet zero CO2 from operations and transportation by 2030 target
Offices & laboratories
• Local action plans are made to switch to renewable power
Company cars
• Committing to EV100 to support use of electric transport
Business flights and product distribution
• Utilisation of digital solutions
• Encourage suppliers to commit to renewable power targets
Production
• Addressing thermal energy2 to ensure renewable solutions
Note: Offices & laboratories includes affiliates, R&D and Global Shared Service Centre; EV100 is launching by Climate Group and members aim at making electric vehicles the new normal by 2030; data is based on 2019 numbers
Ambition is to have all direct suppliers using 100% renewable power when supplying Novo Nordisk by 2030
Driving change with suppliers start with assessing the largest direct impact
Tier 1 suppliersOther suppliersOperations & transport1
1 Scope 3 for CO2 emissions entails suppliers out to material origin.
Note: Tier 1 is direct suppliers, tier 2 is direct suppliers' suppliers, etc.; data is based on 2019 numbers
Tier 1 suppliers totals ~60,000 and accounts for ~300,000 tons CO2
Suppliers are estimated to account for ~1 million tons CO2 in 2019
Actions required to meet 2030 target for suppliers
• Scope is 60,000 suppliers with an estimated saving of 300,000 tons CO2 emissions
• Aim is to reducing environmental impact by reduction of supplier footprint through
o Contracting
o Knowledge sharing
o Signed commitments with annual reviews
Environment-keytake-aways
• Design products for circularity
• Learn from take-back programme how to solve end-of-life challenge
• Aim is for zero CO2 from operations & transportation by 2030
• Ambition is to have all direct suppliers using 100% renewable power when supplying Novo Nordisk by 2030
Agenda
Environmental responsibility - Circular for Zero
• Camilla Sylvest, EVP of Commercial Strategy & Corporate Affairs
• Henrik Wulff, EVP of Product Supply, Quality and IT
Followed by 10 minutes Q&A on environmental responsibility
Social responsibility - Defeat Diabetes and Sustainable Workplace
• Camilla Sylvest, EVP of Commercial Strategy & Corporate Affairs
• Monique Carter, EVP of People & Organisation
Followed by 10 minutes Q&A on social responsibility
Governance structure - Responsible business conduct
• Karsten Munk Knudsen, EVP and Chief Financial Officer
Followed by 15 minutes closing Q&A
We are driving change to Defeat Diabetes by…
…accelerating | …providing access to | …innovating to |
prevention to | affordable care for vulnerable | improve lives… |
bend the curve… | patients in every country… |
… and thereby help society rise to one of its biggest challenges
Innovation is a core element to improve millions of people's lives
Keep people at high risk from developing diabetesExplore transformative treatments for people living with diabetesStrive for curative therapies also within type 1 diabetes
%
0
Increase weight loss towards 15- 30%
5
I1n0vestigate product combinations
Today's marketed
treatment options
15
Provide data applicable foSremaglutide 2.4 mg individualised treatment
20
25
Pipeline
30
Bariatric surgery
Weight loss over time
NOT EXHAUSTIVE
First and only oral GLP-1 with Rybelsus®
Icodec to initiate phase 3
Glucose sensitive insulin in phase 1
Utilisation of digital solutions to improve outcomes
Ambition to progress stem cells into clinical trials in the coming years
Providing access to affordable care for vulnerable patients in every country
Finding solutions to improve care for vulnerable patients in every country requires a multi-faceted approach and actions
Identifying vulnerable populations globally
• Map vulnerable patient based on:
o Minority, migrant or displaced populations
o Low socioeconomic status or limited resources
o Underserved populations
• Analysis completed in 20+ affiliates in 2020 and by end-2021 in 2/3 of affiliates
• Implementation of action plan to be done within a year of analysis completion
Affordable human insulin in low- & middle-income countries
• As of 1 August 2020, ceiling price reduced to 3 USD per human insulin vial in 76 low and middle income countries
• Access to Insulin Commitment is promise of low-cost human insulin
Expanding Changing Diabetes® in Children programme
• No child should die from type 1 diabetes
• Ambition to reach 100,000 children by 2030
Partnerships are essential to reach vulnerable patients
Humanitarian Crises
Note: Changing Diabetes in Children is a public-private partnership between the International Society for Pediatric and Adolescent Diabetes, the World Diabetes Foundation, Roche and Novo Nordisk.
Donations to World Diabetes Foundation and Novo Nordisk
Haemophilia Foundation
Chronic Care in
US insulin net prices have declined in recent years, but vulnerable patients rely on our affordability offerings
The US population by health insurance coverage
Private insurance schemesUninsuredGovernment insurance schemes
333 million people
Net price development for
NovoLog® vial
Net price1
Index
200
180
160
140
120
115
100
80
60
40
20 0 2001 2004 2007 2010 2013 2016 2019
Note: Government insurance schemes cover Medicare, Medicaid and public exchanges, some of these with high deductibles Source: Census.gov; Congressional Budget Office Health Insurance Coverage 2016-2026; Medicare Enrolment Dashboard; CMS Health Insurance Enrolment Projection 2015-2025; Medicaid and CHIP Enrolment Report Oct 2017; CMS Insurance Marketplace Fact sheet 2017; CDC.gov1 Adjusted for inflation
Novo Nordisk insulin affordability offerings in the US
• Follow-on brand fast-acting (Novolog®) and premix insulin (Novolog® Mix) with 50% list price discount vs branded versions
• My$99Insulin 30-day supply of a combination of Novo Nordisk insulin products (up to 3 vials or 2 packs of pens) for USD 99
• Patient Assistance Program free diabetes medication to people in need, annual income <400% above government defined poverty. Program expanded during COVID-19 outbreak
• Human insulin for about USD25/vial at national pharmacies, including Walmart and CVS
• Immediate supply a short-term, immediate-need program offering free insulin for those at risk of rationing
• Co-pay Savings Cards providing USD ~250 million in assistance in 2019
Defeating diabetes starts by taking preventive measures
Global obesity burden is part of the cause for rising diabetes prevalence for both adults and childrenStrengthen prevention by focusing on health inequality in cities
The global obesity burden
Adults living with obesity
Children living with obesity
Bend the global obesity curve
• Anti-obesity market is mainly an out-of-pocket market, but progress is being made in reimbursement for adults
• Changing Obesity is our commitment to prevention, recognition and care within obesity
• UNICEF partnership to help prevent childhood overweight and obesity worldwide1 by enhancing knowledge and awareness with initial focus on Latin America and the Caribbean
• Medium-term goal of enrolling >500,000 children in Latin America by 2023
1 UNICEF does not endorse any company, product, brand or service. Note: An extensive overview of specific actions taken within Cities Changing Diabetes can be found here:https://www.citieschangingdiabetes.com/
Today's challenge: Two-thirds of people with diabetes globally live in cities and it is increasing
Expanding the reach with engaged cities in Cities Changing Diabetes
• Today, 36 cities are enrolled in Cities Changing Diabetes, totalling 200+ million citizens
• In Houston, faith-organisations target people at risk of diabetes, who are affected by social isolation and mistrust, with tools to better manage their diabetes and diet
• In November 2020, Urban Diabetes Action Framework was launched, helping city practitioners to develop impactful public health interventions
The Novo Nordisk Way sets direction for a purpose-driven culture
The Novo Nordisk Way describes who we are, where we want to go and the values that characterise our company1
• We are open and honest, ambitious and accountable, and treat everyone with respect
• We offer opportunities for our people to realise their potential
• We never compromise on quality and business ethics
Every day, we must make difficult choices, always keeping in mind what is best for patients, our employees and our shareholders in the long run
• | We aim to lead in all disease areas in which we are active | |
• | Our key contribution is to discover and develop innovative biological medicines and make them | |
accessible to patients throughout the world | ||
Engagement is key for success | ||
• | Growing our business and delivering competitive financial results is what allows us to help patients live | |
92% | ||
better lives, offer an attractive return to our shareholders and contribute to our communities | ||
• | Our business philosophy is one of balancing financial, social and environmental considerations - we call | Engagement score2 |
it 'The Triple Bottom Line' | >90% | |
during the past three years3 |
1 This is based on an extract of the Novo Nordisk Way. For the full version please see the homepage:www.novonordisk.com/about/who-we-are;
2 Based on Q3 2020 assesment (Oct 2020 excl Novo Nordisk USA)
3 based on the latest three years score
The aspiration is to be a sustainable workplace
Organise to win by accelerating diversity and inclusionGrow our people and be a talent incubatorDrive cultural evolution to be an employer for the future
Aspiring for balanced gender representation at all managerial levels
An organisation that consistently grows talent to fuel the internal talent pool and strengthen the pipeline
An organisation where new generations entering the workforce can thrive, innovate and perform to the full extent of their capabilities
Diversity and inclusion is a key focus area for Novo Nordisk
Novo Nordisk is committed to building a diverse and inclusive culture
All managersWomenMen
59% | 59% |
41% | 41% |
2015
Sr. Managers1
20202
86% | 76% |
24% | |
14% |
2015
20202
1 Senior Managers defined as executive vice presidents and senior vice presidents
2 Based on Q3 2020 numbers
Driving an inclusive and diverse workplace
• Aspiring for balanced gender representation at all managerial levels
• Anchoring diversity and inclusion targets in short-term and long-term incentive programmes
• Local action plans in all areas
• Ensure inclusive leadership
• Aspiration of 50/50 gender split in talent programmes and succession lists
• New recruitment guidelines to ensure diverse slate of candidates
• Focus on posting job opportunities both internally and externally
A purpose driven culture is supported by facilitation to safeguard Novo Nordisk values
Facilitation purpose
Facilitations - Ensure we walk the talk
• A systematic approach to follow up on how the Novo Nordisk Way is embedded in the organisation
• Facilitations have been done consistently since 1997
• Novo Nordisk conducts around 30 facilitations of management areas every year with interviews of >1,000 employees
• Eighty-five percent of facilitated areas are Novo Nordisk Way champions
• Actions are taken to resolve identified issues
• Facilitation supports cultural coaching and evolution of Novo Nordisk way culture
Social responsibility - k eytake-aways
• Defeat Diabetes
• Accelerating prevention to bend the curve
• Providing access to affordable care for vulnerable patients in every country
• Innovating to improve lives
• Ensure a sustainable workplace by ensuring
• A diverse and inclusive work force with a balanced gender representation
• Grow our people and be a talent incubator
• Drive cultural evolution to be an employer of the future
Agenda
Environmental responsibility - Circular for Zero
• Camilla Sylvest, EVP of Commercial Strategy & Corporate Affairs
• Henrik Wulff, EVP of Product Supply, Quality and IT
Followed by 10 minutes Q&A on environmental responsibility
Social responsibility - Defeat Diabetes and Sustainable Workplace
• Camilla Sylvest, EVP of Commercial Strategy & Corporate Affairs
• Monique Carter, EVP of People & Organisation
Followed by 10 minutes Q&A on social responsibility
Governance structure - Responsible business conduct
• Karsten Munk Knudsen, EVP and Chief Financial Officer
Followed by 15 minutes closing Q&A
Novo Nordisk®
Structure in place to ensure corporate governance
Rules and Regulations
Danish and foreign laws and regulations
Corporate governance standards1
Articles of AssociationNovo Nordisk Way
Shareholders
A and B share structure
Board of Directors2
Nine shareholder-elected and four employee-elected board members
Chairmanship | Audit Committee | Nomination Committee | Remuneration Committee | R&D Committee |
Executive Management
1 The corporate governance standards designated by Nasdaq Copenhagen and New York Stock Exchange
2 In 2019, the Board of Directors met eight times
Governance structure
Organisation
Assurance measures
Audit financial data and review social and environmental data (internal and external)Facilitation (internal)Quality audit and inspections (internal and external)
Novo Nordisk®
Robust governance in place to ensure responsible business principles translate into conduct
International standards and principles for responsible business conduct
• UN Guiding Principles on Business and Human Rights
• OECD Guidelines for multi-national enterprises
• UN Global Compact
• SASB1/IIRC/TCFD
Novo Nordisk global standards and codes of conduct
• Environmental responsibility
• Bioethics
• Responsible work place (Labour Code of Conduct, Occupational health and safety)
• Responsible sourcing
• Business Ethics Code of Conduct (including human rights)
• Sustainable tax approach
See novonordisk.com for more information on how Novo Nordisk is running a sustainable business
1SASB refers to the Biotechnology & Pharmaceuticals Sustainability Accounting Standard developed by the Sustainability Accounting Standards Board (SASB) IIRC: International Integrated Reporting Council; TCFD: Task Force on Climate-related Financial Disclosures
Novo Nordisk®
Global Business Ethics Code of Conduct based on the Novo Nordisk Way
Novo Nordisk Way
"We never compromise on quality and business ethics"
Identify Trends and risks
Report
Employee training Business ethics reviews
Verify
Monitor, audit, and compliance hotline
Implement
Code of Conduct and guidelines
Establish and Train Mindset and behaviour
Business ethics compliance framework
Identify
• Trends such as increased focus on anti-bribery and anti-corruption legislation
• Risks include improper product promotion, corruption, undue influence, and use of third party representatives
Implement
• Novo Nordisk Business Ethics Code of Conduct reflects the steps taken to protect the company and its partners
Establish and Train
• In 2019, 99% of relevant employees were trained in business ethics
Verify
• In 2019, 34 business ethics audits were performed with 87 findings
Report
• Detailed reporting to Executive Management, Audit Committee, and information is included in the Annual Report
29 ESG conference call
Novo Nordisk®
Novo Nordisk has a sustainable tax approach
Sustainable tax approach
Commercially driven |
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Responsible |
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Transparent |
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OECD: The Organisation for Economic Co-operation and Development
Both short- and long-term incentive programmes have links to Strategic Aspirations 2025
Remuneration policy
Remuneration policy balances fixed and variable remuneration to promote short- and long-term perspectives.
Strategic aspirations 2025
Purpose and sustainability | Innovation and therapeutic focus |
Commercial execution | Financials |
Remuneration report
All four dimensions of Strategic Aspirations 2025 are linked to the short- and long-term incentives for executive remuneration with linkage further enhanced in the future.
Progress reporting on sustainability in Integrated Annual Report
Environmental statement |
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Social statement |
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Governance statement |
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1 Gender in the Board of Directors and children reached through CDiC have historically been disclosed in the management review section of the Annual Report.
CDiC: Changing Diabetes in Children
Governance - k eytake-aways
• Clearly defined governance structure, compliance and assurance
• Sustainability approach defined and integrated
• Integrated reporting approach since 2004
Thank you for today
For more information on the material presented today including detailed reporting, please see our website novonordisk.com
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Novo Nordisk A/S published this content on 01 December 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 December 2020 09:30:07 UTC
