Financial, social and environmental performance
`
`Novo Nordisk Exhibit 2065
`Mylan Pharms. Inc. v. Novo Nordisk A/S
`IPR2023-00724
`Page 00001
`
`

`

`Key fi gures
`2010
`
`
`
`Financial performance
`Sales total
`Diabetes care
`– of which modern insulins
`Biopharmaceuticals
`Gross profi t
`Gross margin
`Sales and distribution costs
`Research and development costs
`Administrative expenses
`Operating profi t
`Net profi t
`Effective tax rate
`Capital expenditure, net
`Return on equity (ROE)
`Free cash fl ow
`
`Long-term fi nancial targets
`Operating profi t growth
`Operating profi t margin
`Return on invested capital (ROIC)
`Return on invested capital (ROIC) excl non-recurring impact
`from divestment of ZymoGenetics, Inc. in 2010
`Cash to earnings (three-year average)
`
`Non-fi nancial performance
`Donations
`Least developed countries where Novo Nordisk
`sells insulin according to the differential pricing policy1
`New patent families (fi rst fi lings)
`Employees (total)
`Employee turnover
`Energy consumption
`Total waste
`
`Non-fi nancial targets
`Maintain a level of engaging culture of 4.0 or above up to 20142
`Diversity in all 28 senior management teams by 20143
`Water consumption: 11% reduction by 2011 compared to 2007
`CO2 emissions: 10% reduction by 2014 compared to 2004
`
`Share performance
`Diluted earnings per share/ADR
`Dividend per share (proposed)
`Closing share price (B shares)
`Market capitalisation (B shares)4
`
`
`
`2010
`
`2009
`
`Change
`
`DKK million
`DKK million
`DKK million
`DKK million
`DKK million
`% of sales
`% of sales
`% of sales
`% of sales
`DKK million
`DKK million
`%
`DKK million
`%
`DKK million
`
`%
`%
`%
`
`%
`%
`
`DKK million
`
`%
`Number
`Number
`%
`1,000 GJ
`Tons
`
`Scale 1–5
`%
`%
`%
`
`DKK
`DKK
`DKK
`DKK billion
`
`60,776
`45,710
`26,601
`15,066
`49,096
`80.8
`29.9
`15.8
`5.0
`18,891
`14,403
`21.2
`3,308
`39.6
`17,013
`
`26.5
`31.1
`63.6
`
`62.4
`115.6
`
`84
`
`67
`62
`30,483
`9.1
`2,234
`20,565
`
`4.3
`54
`(37)
`(55)
`
`24.60
`10.00
`629
`292
`
`51,078
`37,502
`21,471
`13,576
`40,640
`79.6
`30.2
`15.4
`5.4
`14,933
`10,768
`23.0
`2,631
`31.3
`12,332
`
`20.7
`29.2
`47.3
`
`47.3
`111.5
`
`83
`
`73
`55
`29,329
`8.3
`2,246
`21,019
`
`4.3
`50
`(34)
`(31)
`
`17.82
`7.50
`332
`159
`
`19.0%
`21.9%
`23.9%
`11.0%
`20.8%
`
`26.5%
`33.8%
`
`25.7%
`
`38.0%
`
`1.2%
`
`12.7%
`3.9%
`
`(0.5)%
`(2.2)%
`
`38.0%
`33.3%
`89.5%
`83.7%
`
`1. Novo Nordisk offers insulin at a price not exceeding 20% of the average western world price to least developed countries as defi ned by the United Nations.
`2. Based on eVoice, an employee survey using a scale of 1–5, with 5 being the best.
`3. Diverse in gender and nationality.
`4. Novo Nordisk B shares (excluding treasury shares).
`
`See more fi nancial and non-fi nancial highlights and non-fi nancial targets on pp 14–15.
`
`Novo Nordisk Exhibit 2065
`Mylan Pharms. Inc. v. Novo Nordisk A/S
`IPR2023-00724
`Page 00002
`
`

`

`For nearly 90 years, Novo Nordisk has combined drug discovery with
`technology to turn science into solutions for people with diabetes.
`We also provide treatments for people with haemophilia and growth
`hormone deficiency and for women experiencing the symptoms of
`menopause. We leverage our expertise with protein molecules,
`chronic disease management and device technology to provide
`innovative treatments that make a difference in quality of care.
`
`Novo Nordisk has more than 30,000 employees in 74 countries
`and markets products in about 180 countries. Our B shares are
`listed on NASDAQ OMX Copenhagen and our ADRs are listed on
`the New York Stock Exchange under the symbol NVO. For more
`information about our company, visit novonordisk.com.
`
`Since 2004, we have reported on financial, social and environmental
`performance in one integrated report, with both financial and
`non-financial statements. We report additional information online.1
`The most material and business critical information is reported in the
`annual report. Information for specific stakeholder groups is reported
`at annualreport2010.novonordisk.com. We value feedback and
`welcome questions or comments about this report or our
`performance at annualreport@novonordisk.com.
`
`
`
`2 Our 2010 accomplishments
`and results
`
`2 Letter from the Chairman
`
`3 Letter from the CEO
`
`5 Valuing therapeutic innovation
`
`6 Performance in 2010
`
`11 Outlook 2011
`
`12 Managing performance using long-term targets
`
`14 Performance highlights
` 16 Our business
`
`17 Strategic focus areas
`
`19 Delivering on our strategy
`
`21 Creating long-term value
`
`22 The Novo Nordisk Way
`
`24 Pipeline overview
`
`26 Novo Nordisk at a glance
` 28 Diabetes care
`
`29 Modern insulin portfolio
`
`31 Victoza®: innovative early treatment
`
`31 Changing Diabetes®
`
`31 Expanding access to care
`
`32 Public awareness and action
`
`34 Prevention and early detection
`
`35 Improvements in diabetes care
` 36 Biopharmaceuticals
`
`37 Commitment to haemophilia
`
`37 Changing Possibilities in Haemophilia®
`
`38 Expanding access to care
`
`39 Other therapy areas
`
`39 Recruitment for clinical trials
` 40 Corporate governance,
`remuneration and leadership
`
`40 Corporate governance
`
`43 Risk management
`
`46 Remuneration report
`
`50 Board of Directors
`
`53 Executive Management
` 54 Shares and capital structure
` 57 Consolidated financial and
`non-financial statements 2010
`58 Consolidated financial statements
`93 Supplementary information
` 93 Consolidated non-financial statement
` 100 Summary of financial data 2006–2010 in EUR
` 101 Quarterly financial figures 2009 and 2010
`
`
`
`
`
`
`
`1. This public filing contains references and links to information posted on the company’s
`website; such information is not incorporated by reference into the public filing.
`
`
`
`102 Financial statements of the Parent company
`
`
`109 Management’s statement
`
`110 Auditor’s reports
` 112 Additional information
`
`112 Index
`
`113 Our products
`
`Novo Nordisk Annual Report 2010 1
`
`Novo Nordisk Exhibit 2065
`Mylan Pharms. Inc. v. Novo Nordisk A/S
`IPR2023-00724
`Page 00003
`
`

`

`Letter
`from the
`Chairman
`
`Sten Scheibye
`Chairman of the Board of Directors
`
`The world economy was on the mend in 2010. Much of the rebound
`has been due to strong fiscal stimulus provided by governments,
`which has put pressure on public budgets, particularly in Europe and
`the US. This may in due course put further pressure on the already
`strained healthcare environment in these parts of the world.
`Economic growth has been maintained in emerging markets,
`and many of these countries are investing in improved services,
`including healthcare.
`
`As part of the global response to the recent financial crisis, efforts
`have been made to improve corporate governance systems and
`make companies more transparent. In Denmark, new corporate
`governance recommendations were introduced in early 2010.
`While Novo Nordisk’s practices are in accordance with the majority
`of the new recommendations, the company’s remuneration
`principles have been revised to ensure that long-term management
`incentives and shareholder interests remain aligned, and these
`will be presented to the 2011 Annual General Meeting for approval.
`The proposed remuneration principles include incentive guidelines
`and introduce claw-back provisions allowing Novo Nordisk to
`recover variable remuneration paid on the basis of data that is
`subsequently determined to be misstated.
`
`2 Novo Nordisk Annual Report 2010
`
`The Board of Directors oversees the strategic direction of the
`company, and in this capacity we have approved new long-term
`financial targets. The business and competitive environment has
`been quite favourable for Novo Nordisk recently, as have exchange
`rates, allowing the company to achieve the previous targets in an
`unusually short time frame.
`
`In recognition of Novo Nordisk’s strong balance sheet, sustainable
`significant cash flow and the Board’s confidence in the strategic
`direction and long-term prospects for the business, we have
`consistently increased the dividend paid over the last five years.
`During 2010, dividends paid to Novo Nordisk shareholders increased
`by 25% to 7.50 Danish kroner per share. The proposed dividend
`for 2011 is up 33% to 10.00 Danish kroner per share. Also in 2010
`Novo Nordisk repurchased shares worth 9.5 billion Danish kroner
`in 2010, helped by the 1.1 billion kroner profit from sale of shares
`in ZymoGenetics, Inc. In continuation of this, Novo Nordisk intends
`to buy back 10 billion kroner worth of shares in 2011.
`
`As Novo Nordisk marks its 10th year as a focused pharmaceutical
`company, the Board would like to express its appreciation of the
`leadership shown by President and CEO Lars Rebien Sørensen and
`the Executive Management team. On behalf of the Board, I would
`also like to thank all Novo Nordisk employees around the world for
`their contribution to what has been an outstanding year.
`
`Sten Scheibye
`Chairman of the Board of Directors
`
`2010 accomplishments and results
`
`Novo Nordisk Exhibit 2065
`Mylan Pharms. Inc. v. Novo Nordisk A/S
`IPR2023-00724
`Page 00004
`
`

`

`2010 accomplishments and results
`
`Letter
`from
`the CEO
`
`Lars Rebien Sørensen
`President and chief executive officer
`
`Novo Nordisk continued to deliver on our commitment to improve
`the lives of people with diabetes and other chronic diseases during
`2010, with very positive performance for the year.
`
`related to the development of innovative new treatments for
`haemophilia, and continued our build-up of a robust pipeline of
`therapies for chronic inflammatory diseases.
`
`As the global leader in diabetes care, with 51% of the insulin
`market measured by volume, the success of our core business is
`linked to innovations and improvements in global diabetes care.
`
`• Our strong sales growth has been driven by sales of our modern
`insulins, particularly in North America and our International
`Operations region, and by Victoza®.
`
`• Modern insulins accounted for close to 70% of our total insulin
`sales in 2010. These therapies have the potential to improve
`glucose control compared with human insulins, lowering the
`risk of hypoglycemia.
`
`We achieved the long-term financial targets we set in our 2008
`Annual Report with growth in operating profit of 27%. Sales
`increased by 19% in Danish kroner and 13% measured in local
`currencies. Our diabetes care sales increased 22% in 2010, while
`sales of our biopharmaceutical products increased 11%, both
`measured in kroner.
`
`• Victoza®, our new Glucagon-Like Peptide-1 treatment, which
`is an analogue of the naturally occurring hormone involved in
`glucose regulation, has expanded the market for GLP-1 treatment.
`Victoza® is used for treating type 2 diabetes when oral antidiabetic
`therapy will no longer suffice, offering another option for
`managing this progressive disease at early stages.
`
`Uncertainties in early 2010, such as the pending approval of Victoza®
`and the potential for generic competition to our oral antidiabetic
`agent Prandin® in the US, made us cautious from the beginning
`of the year. Victoza® was approved in the US in January 2010 and
`the launch came off to a very good start, while Prandin® remained
`uncontested in the US throughout the year. This, combined with
`our strong business performance, allowed us to exceed our
`expectations for 2010.
`
`We saw tremendous progress in 2010 in our development pipeline,
`with positive results from phase 3 trials for our next-generation
`insulins, Degludec (insulin degludec) and DegludecPlus (insulin
`degludec/insulin aspart). We also achieved significant milestones
`
`• We have continued our efforts to improve access to care through-
`out the world, donating a portion of income from our net insulin
`sales to the World Diabetes Foundation and supporting
`improvements in the ability of healthcare systems to diagnose
`and treat diabetes.
`
`• As part of our Changing Diabetes® in Children programme, we
`established 13 new clinics to improve diagnosis and treatment
`of children with type 1 diabetes in developing countries.
`
`Our manufacturing organisation reached a very ambitious milestone,
`increasing productivity to the extent that our cost of goods sold
`in 2010 fell to less than 20% of the sales volume. As the efficiency
`
`Novo Nordisk Annual Report 2010 3
`
`Novo Nordisk Exhibit 2065
`Mylan Pharms. Inc. v. Novo Nordisk A/S
`IPR2023-00724
`Page 00005
`
`

`

`• We are anticipating a continued successful roll-out of Victoza®
`worldwide as well as continued market penetration of our
`portfolio of modern insulins.
`
`• Finally, we will continue to pursue further productivity
`improvements throughout our organisation.
`
`Succeeding in these areas requires that we attract, retain and
`engage the most talented people to support global growth and as
`well as continuously improving our ability to manage innovation.
`
`I want to thank everyone at Novo Nordisk for their contributions
`to our success. With the capabilities of our talented employees
`around the world, I believe 2011 will be yet another successful
`year for Novo Nordisk, one with significant growth and continued
`innovation for the benefit of all of our stakeholders.
`
`Lars Rebien Sørensen
`President and chief executive officer
`
`of our production activities has increased, we have also reduced
`our environmental impact. We reduced energy and water consumed
`for production activities during the year and CO2 emissions from
`energy consumption fell 35% compared with 2009 levels.
`
`Pursuing new ambitions
`Ten years ago, when I was first appointed CEO, I went on an
`educational journey to study what our customers, employees
`and other stakeholders expected from our company. This led
`to the establishment of our values-based management system
`called the Novo Nordisk Way of Management.
`
`I made this journey again in 2010 and was pleased to find that
`despite having tripled our workforce and sales and becoming
`a much more global business over the past decade, the values
`expressed in the Novo Nordisk Way of Management are more
`ingrained than ever. In the words of our people, we are continuing
`to manage our business in a responsible and sustainable way, with
`a focus not only on improving the company’s finances but also on
`improving our social and environmental performance.
`
`Part of the Novo Nordisk Way of Management framework has been
`our vision to become the world’s leading diabetes care company.
`I am proud to report that we have realised this vision and are
`introducing a new set of milestones reflecting the challenges of
`the next decade. As part of our 2010 update of what is now called
`the Novo Nordisk Way, we are now focusing on strengthening our
`leadership in diabetes and aspiring to change possibilities in
`haemophilia and other serious chronic conditions where we can
`make a difference.
`
`What has not changed is our dedication to achieving good business
`results in a responsible way. Our newly updated values-based
`management system holds all employees accountable for working
`in accordance with our principles and provides concise, clear
`guidance on how we work. The update is the outcome of an
`extensive, inclusive process involving consultation of employees
`from all over the world, patient organisations, healthcare providers
`and other stakeholders.
`
`Preparing for future growth
`In 2011, we will work to solidify our leadership in diabetes care
`and expand into new markets and therapy areas. Our future
`success will depend on our performance in a number of key areas:
`
`• We expect to file for regulatory approval of Degludec (insulin
`degludec) and DegludecPlus (insulin degludec/insulin aspart)
`this year.
`
`• We are exploring entry into the obesity market, following the
`first phase 3 clinical results for liraglutide in obesity, which
`demonstrated weight loss in people with severe obesity and
`other co-morbidities.
`
`• We will initiate phase 3 trials for a fixed combination of Degludec
`(insulin degludec) and Victoza® which may offer the benefits of
`both compounds in a fixed, convenient solution.
`
`• We will initiate the final clinical and regulatory studies for a new
`recombinant factor VIIa analogue to treat people with
`haemophilia who have developed inhibitors. This new analogue
`offers the possibility of forming even stronger clots in less time.
`
`4 Novo Nordisk Annual Report 2010
`
`2010 accomplishments and results
`
`Novo Nordisk Exhibit 2065
`Mylan Pharms. Inc. v. Novo Nordisk A/S
`IPR2023-00724
`Page 00006
`
`

`

`2010 accomplishments and results
`
`Valuing
`therapeutic
`innovation
`
`Interview with Lars Rebien Sørensen,
`Novo Nordisk’s chief executive officer
`
`What are the benefits of therapeutic innovations?
`The research-based pharmaceutical industry’s continued efforts
`to discover new therapeutic offers are intended to benefit
`patients as well as society. In our field of business, we have
`seen how treatment of diabetes has improved dramatically
`since insulin was discovered nearly 90 years ago. Through
`a combination of incremental development and more radical
`breakthroughs, significant improvements have been achieved
`over just one generation, enabling people with diabetes to
`lead their lives in full and achieve a normal life expectancy.
`
`Improvements have been made possible because products were
`priced in a way that allows for reinvestment into research in new
`products. Our modern insulins are now widely available, and
`the improvements they entail will have a cumulative impact on
`chronic disease treatment over decades. In our view, innovations
`will eventually benefit all people with diabetes.
`
`Our diabetes care portfolio today includes human insulins
`as well as modern insulins, which makes it possible for Novo
`Nordisk to offer life-saving treatments at affordable prices
`and continue to improve treatment regimes that meet individual
`needs. Our goal is to develop the best diabetes care portfolio
`for healthcare systems in all parts of the world.
`
`What do you consider to be reasonable price
`levels for new pharmaceutical products?
`The price of a new therapeutic treatment reflects the clinical
`benefit as well as the societal value of the therapeutic
`innovation, but also takes into account the cost of innovation.
`If pharmaceutical companies cannot recoup their investments
`in research and development, the business of pharmaceutical
`innovation will not be sustainable. And in the long run it would
`be patients who would pay the price.
`
`To conduct business responsibly, we have to be profitable and
`provide economically viable solutions. For example, Novo
`Nordisk’s newest product, Victoza®, was in development for
`nearly two decades. When planning development projects,
`we know we must finance larger and more complex trials
`over longer and longer trial periods before we can hope to
`receive product approval.
`
`How should innovation be valued?
`Ideally, a product would be priced on the basis of an assessment
`of its benefits in a real world setting. Today, this is not the
`case. It is difficult to get sufficient information about the
`relative treatment benefit before a new product is launched.
`Allowing for conditional pricing when new products are
`launched would be an option to ensure that the price is
`right based on clinical utility and benefits to the patients.
`In such a pricing model, prices for new therapies could be
`
`subsequently increased or decreased based on efficacy
`when compared with other treatment options.
`
`What role does pricing play for Novo Nordisk
`in terms of ensuring availability of treatment?
`When looking at the full impact of diabetes on healthcare
`budgets, the price of diabetes treatment is a fraction of that.
`The most costly part of diabetes lies with the late-stage
`complications that require hospitalisation, costly interventions
`and leave people incapacitated for longer periods of time.
`That said, we do recognise that availability and affordability of
`medicines are preconditions for expanding access to health care.
`Our premise is that access to essential medicines is a human
`right, and we acknowledge our responsibility in addressing the
`barriers for proper diagnosis, treatment and care.
`
`In the world’s poorest countries, as defined by the United
`Nations, we sell human insulin through our long-standing
`differential pricing policy, offering products at a price not
`more than 20% of the average prices in the western world.
`
`In other countries, we market the full Novo Nordisk portfolio
`of insulins with the goal of reaching the majority of patients
`with diabetes with a product mix of human and modern insulins
`and a range of devices to suit the affordability levels of both
`public and private customers as well as patients who may pay
`out of pocket.
`
`Why does Novo Nordisk remove products from the market?
`We make every effort to ensure that life-saving medicines are
`available to patients. This year, as several governments in Europe
`mandated price cuts to address their economic problems, we
`faced dilemmas between operating profitably and continuing
`to serve people who rely on our products.
`
`In May 2010, the Greek government announced temporary
`price cuts of up to 27%. As a consequence, we made a decision
`to temporarily withdraw some products from the Greek market,
`but we continued to offer human insulin in vials.
`
`In a situation like this, there is a major dilemma for a company
`like ours. The proposed price reductions for patented products
`would not have allowed us to continue running a profitable
`business in Greece. In the long term, if we cannot maintain
`profitability, we will be unable to continue to provide and
`improve treatment for the people who most need it. While
`pricing issues remain unresolved in Greece, we have been able
`to continue to offer our broad portfolio of products, including
`modern insulins, with Penfill® cartridges in the NovoPen® 4
`device.
`
`How should governments assess the value of treatment?
`We understand the budget constraints governments are
`facing. Medical costs can be an easy target in times of tough
`political choices. While there may be short-term savings, the
`cost to society can be greater over a longer time frame. The
`cost of treatment is usually a small fraction of overall
`spending on diabetes care, with most spending allocated to
`treat serious complications related to inadequate medical
`care. In the US and Europe, for instance, insulin accounts for
`3% of the total costs associated with treating diabetes.
`
`Novo Nordisk Annual Report 2010 5
`
`Novo Nordisk Exhibit 2065
`Mylan Pharms. Inc. v. Novo Nordisk A/S
`IPR2023-00724
`Page 00007
`
`

`

`North America
`Sales in North America increased by 26% in Danish kroner and by
`19% in local currencies in 2010, reflecting a continued solid market
`penetration of the modern insulins, Levemir®, NovoLog® and
`NovoLog® Mix 70/30. Novo Nordisk maintains its leadership position
`in the US insulin market with 42% of the total insulin market and
`37% of the modern insulin market, both measured in volume.
`Currently, around 43% of Novo Nordisk’s modern insulin volume
`in the US is being sold in the prefilled device FlexPen®.
`
`Europe
`Sales in Europe increased by 4% measured in Danish kroner and
`by 2% in local currencies in 2010, reflecting continued progress
`for the portfolio of modern insulins and declining human insulin
`sales. Novo Nordisk holds 53% of the total insulin market and 51%
`of the modern insulin market, both measured in volume. Device
`penetration in Europe remains high with more than 95% of Novo
`Nordisk’s insulin volume being used in devices, primarily NovoPen®
`and FlexPen®.
`
`International Operations
`Sales in International Operations increased by 26% in Danish kroner
`and by 17% in local currencies in 2010. The main contributor to
`growth was sales of modern insulins, primarily in China. Sales of
`human insulins continue to add to overall growth in the region, also
`driven by China. As of 1 January 2011, a fifth Novo Nordisk region,
`Region China, has been established comprising China, Taiwan and
`Hong Kong; therefore, these countries are no longer part of
`‘International Operations’. In China, Novo Nordisk currently holds
`63% of the total insulin market and 70% of the modern insulin
`market, both measured in volume.
`
`DKK billion
`
`Sales by
`geographical area
`
`■ Europe
`■ North America
`■ International Operations
`incl China
`■ Japan & Korea
`
`2010
`
`2009
`
`2008
`
`2007
`
`2006
`
`60.8
`
`51.1
`
`45.6
`
`41.8
`
`38.7
`
`0
`
`10 20 30 40 50 60 70
`
`DKK billion
`
`Sales by therapy area
`
`■ Diabetes care
`■ Haemostasis management
`(NovoSeven®)
`■ Growth hormone therapy
`■ Hormone replacement
`therapy (HRT)
`■ Other products
`
`2010
`
`2009
`
`2008
`
`2007
`
`2006
`
`60.8
`
`51.1
`
`45.6
`
`41.8
`
`38.7
`
`0
`
`10 20 30 40 50 60 70
`
`2006
`
`2007
`
`2008
`
`2009
`
`2010
`
`%
`25
`
`20
`
`15
`
`10
`
`05
`
`Sales growth
`Local and reported rates
`
`
`
`
`In DKK as reported
`In local currencies
`
`Performance in 2010
`
`2010 was another successful year for Novo Nordisk with achieve-
`ment of long-term financial targets set in the 2008 Annual Report,
`strong sales growth, continued improvement in gross margin
`and very significant progress in the clinical development pipeline.
`Following the initial 2009 launch of Victoza®, the first once-daily
`human GLP-1 analogue, the roll-out has succeeded in expanding
`the market for GLP-1 treatment.
`
`Sales increased by 19% in Danish kroner and by 13% measured
`in local currencies. Sales growth was realised in both diabetes care
`and biopharmaceuticals. Victoza® and modern insulins were the
`main contributors to growth, with modern insulin sales increasing
`by 24% (18% in local currencies). NovoSeven® and Norditropin®
`sales also contributed to the strong sales growth, increasing by 14%
`(8% in local currencies) and 9% (4% in local currencies) respectively.
`
`Sales growth was realised in all regions. Sales in North America
`increased by 29% and International Operations by 24% in Danish
`kroner, and by 22% and 15% respectively in local currencies.
`
`Managing our business according to the Triple Bottom Line business
`principle helps ensure that decisions are balanced and take a long-
`term view, with the objective of protecting and enhancing
`shareholder value while at the same time creating societal value.
`In addition to strong financial performance, in 2010 we met
`long-term targets relating to employee engagement and adherence
`to our values and exceeded long-term targets for reduction of
`energy and water consumption and CO2 emissions.
`
`Financial performance
`Diabetes care
`
`We continue to be the global leader in the diabetes care market
`with 51% of the total insulin market and 46% of the modern insulin
`market, both measured by volume. Sales of diabetes care products
`increased by 22% measured in Danish kroner to DKK 45,710 million
`and by 16% in local currencies compared with 2009.
`
`Modern insulins, human insulins
`and protein-related products
`In 2010, sales of modern insulins, human insulins and protein-
`related products increased by 17% in Danish kroner to DKK
`40,642 million and by 11% measured in local currencies compared
`with 2009, with North America and International Operations
`having the highest growth rates.
`
`Our portfolio of modern insulins was the main contributor to growth
`with sales increasing by 24% in Danish kroner to DKK 26,601 million
`and by 18% in local currencies compared with 2009, reflecting
`steady organic sales growth globally. All regions realised solid
`growth rates, with North America accounting for more than half
`of the growth, followed by International Operations and Europe.
`Sales of modern insulins now constitute nearly 70% of Novo
`Nordisk’s insulin sales.
`
`6 Novo Nordisk Annual Report 2010
`
`2010 accomplishments and results
`
`Novo Nordisk Exhibit 2065
`Mylan Pharms. Inc. v. Novo Nordisk A/S
`IPR2023-00724
`Page 00008
`
`

`

`2010 accomplishments and results
`
`Japan & Korea
`Sales in Japan & Korea increased by 10% measured in Danish
`kroner and decreased by 2% in local currencies in 2010. The
`sales development reflects sales growth for all three modern
`insulins, Levemir®, NovoRapid® and NovoRapid Mix® 30, offset
`by a decline in human insulin sales. In a continuously challenging
`competitive environment, Novo Nordisk now holds 63% of the
`total insulin market in Japan and 56% of the modern insulin
`market. Device penetration in Japan remains high with more
`than 98% of Novo Nordisk’s insulin volume being used in devices,
`primarily NovoPen® and FlexPen®.
`
`Victoza® (GLP-1 therapy for type 2 diabetes)
`Victoza® sales reached DKK 2,317 million during 2010 reflecting
`solid market performance in both Europe and the US. The global
`launch has continued throughout 2010, most recently in Russia,
`Argentina, Mexico and four countries in the Middle East. The market
`performance globally has been encouraging in 2010 with Victoza®
`reaching solid market shares in the GLP-1 segment as well as
`significantly increasing the GLP-1 class’s share of the total diabetes
`care market.
`
`NovoNorm®/Prandin®/PrandiMet®
`(Oral antidiabetic products)
`In 2010, sales of oral antidiabetic products increased by 4% in Danish
`kroner to DKK 2,751 million and decreased by 1% measured in local
`currencies compared with 2009. The sales development reflects
`sales growth in China being offset by lower sales in Europe due
`to generic competition in several European markets, with the main
`impact in Germany.
`
`Insulin volume
`market share
`Geographical areas
`
` Europe
` North America
`
`International Operations
`
`Japan & Korea
`
`Modern insulins
`Global value market
`share of segment
`
` NovoRapid®
` NovoMix®
` Levemir®
`
`%
`100
`
`80
`
`60
`
`40
`
`20
`
`0
`
`%
`100
`
`80
`
`60
`
`40
`
`20
`
`0
`
`2006
`
`2007
`
`2008
`
`2009
`
`2010
`
`2006
`
`2007
`
`2008
`
`2009
`
`2010
`
`Research &
`development costs
`
`■ Diabetes care
`
`(excl pulmonary
` diabetes projects)
`■ Biopharmaceuticals
`
`DKK billion
`
`2010
`
`2009
`
`2008
`
`2007
`
`2006
`
`9.6
`
`7.9
`
`7.5
`
`7.2
`
`6.3
`
`Biopharmaceuticals
`
`In 2010, sales of biopharmaceutical products increased by 11%
`measured in Danish kroner to DKK 15,066 million and by 5%
`measured in local currencies compared with 2009.
`
`NovoSeven® (Bleeding disorders therapy)
`Sales of NovoSeven® increased by 14% in Danish kroner to DKK
`8,030 million and by 8% in local currencies compared with 2009.
`Sales growth for NovoSeven® was primarily realised in North
`America, but Japan & Korea and International Operations also
`contributed to the growth.
`
`Norditropin® (Growth hormone therapy)
`Sales of Norditropin® increased by 9% measured in Danish kroner
`to DKK 4,803 million and by 4% measured in local currencies
`compared with 2009. Novo Nordisk is the second-largest company
`in the global growth hormone market with a 24% market share
`measured in volume.
`
`Other products
`Sales of other products within biopharmaceuticals, which pre -
`dominantly consist of hormone replacement therapy related
`products, increased by 6% in Danish kroner to DKK 2,233 million
`and decreased by 1% measured in local currencies. This develop-
`ment primarily reflects continued sales progress for Vagifem®
`being partly offset by generic competition to Activella® in the US.
`Development in cost
`and operating profit
`
`The cost of goods sold was DKK 11,680 million in 2010, reflecting
`a gross margin of 80.8% compared with 79.6% in 2009. This
`im prove ment primarily reflects a favourable product mix impact
`due to increased sales of modern insulins and Victoza® and a positive
`0.4 percentage point currency impact.
`
`In 2010, total non-production-related costs increased by 18% to DKK
`30,862 million and by 14% in local currencies compared with 2009.
`
`Sales and distribution costs increased by 18% to DKK 18,195 million,
`primarily reflecting the launch costs of Victoza® in Europe and the
`US, as well as a continued expansion of the field sales forces in
`Europe, Japan, China and the US, and an increase in the provision
`level for legal cases.
`
`Research and development costs increased by 22% to DKK 9,602
`million, primarily reflecting the ongoing phase 3 programme for the
`company’s next generation of insulins, Degludec1 (insulin degludec)
`and DegludecPlus2 (insulin degludec/insulin aspart).
`
`Licence fees and other operating income constituted DKK 657 million
`in 2010 compared with DKK 341 million in 2009. This development
`primarily reflects a sustainable higher level of licence fees as well as
`non-recurring income of approximately DKK 100 million related to
`a patent settlement during the first quarter of 2010.
`
`Operating profit in 2010 increased by 27% to DKK 18,891 million
`compared with 2009. In local currencies the growth was approx-
`ima tely 16%.
`
`0
`
`2
`
`4
`
`6
`
`8
`
`10
`
`1. Internal designation for insulin degludec.
`2. Internal designation for insulin degludec/insulin aspart.
`
`Novo Nordisk Annual Report 2010 7
`
`Novo Nordisk Exhibit 2065
`Mylan Pharms. Inc. v. Novo No