Conference call First nine months of 2016 · 2016-10-28 · Quarterly sales in China Key factors...

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Conference call

First nine months of 2016

Shanghai – part of Cities Changing Diabetes

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Agenda

Highlights and key events By Lars Rebien Sørensen, president and Chief Executive Officer

R&D update By Mads Krogsgaard Thomsen, CSO

Financials and outlook By Jesper Brandgaard, CFO

Sales update By Lars Fruergaard Jørgensen, EVP Corporate Development

Conference call First nine months of 2016

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Forward-looking statements

Novo Nordisk’s reports filed with or furnished to the US Securities and Exchange Commission (SEC), including the company’s Annual Report 2015 and Form 20-F, which are both filed with the SEC in February 2016 in continuation of the publication of the Annual Report 2015, and presentations made, 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 recall, 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 ‘Managing risks’ on p 42-43 of the Annual Report 2015.

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® (liraglutide 1.2 mg & 1.8 mg) is approved for the management of type 2 diabetes only

• Saxenda® (liraglutide 3 mg) is approved in the US and EU for the treatment of obesity only


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Highlights – First nine months of 2016

1 Adjusted operating profit account for partial divestment of NNIT and out-licensing of assets for inflammatory disorders, both in 2015

Research and Development • Semaglutide significantly reduced the risk of major cardiovascular events with 26% vs placebo in the SUSTAIN 6 trial • Updated R&D strategy including a raised innovation threshold for R&D projects specifically within diabetes

Sales development • Sales increased by 6% in local currencies and 4% in Danish kroner

• USA grew by 6% in local currencies and accounted for 44% share of growth in local currencies • International Operations and Region China grew by 13% and 11% in local currencies, respectively • Tresiba® increased by 187% in local currencies and accounted for 33% share of growth in local currencies

Financials • Adjusted1 operating profit increased by 7% in local currencies • Diluted earnings per share adjusted for the partial divestment of NNIT increased by 22% to 11.50 DKK per share • 2016 financial outlook:

• Sales growth is now expected to be 5-6% measured in local currencies (around 2% lower in reported currencies) • Adjusted1 operating profit growth is now expected to be 5-7% measured in local currencies (around 2% lower in reported

currencies) • 2017 preliminary financial outlook in local currencies:

• Sales growth is expected to be low single digit • Operating profit growth is expected to be flat to low single digit

• Updated long-term financial targets • A new target for operating profit growth has been set at 5% on average while the two other targets remain unchanged

Organisational • Lars Rebien Sørensen retires as CEO effective 1 January 2017; Lars Fruergaard Jørgensen appointed as successor • Global reduction of workforce by approximately 1,000 employees


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Growth analysis – first nine months of 2016

All regions contribute to sales growth measured in local currencies for the first nine months of 2016

Sales as reported – first nine months of 2016

Sales of DKK 82,208 million (+4%)

Local currencies Growth Share of growth

USA 6% 44%

Europe 2% 6%

International Operations 13% 27%

Region China 11% 16%

Pacific 6% 7%

Total sales 6% 100%

51%

19%

12%

10%

8%

International Operations

0%

Region China +5%

Pacific +11%

USA +5%

Europe 0%


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Quarterly sales in the US Key factors impacting sales growth

Continued modest US sales growth in the third quarter of 2016

Sales as reported

bDKK

Q3 2016

Q1 2014

MAT quarterly local currency growth %

Average local currency growth %

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

2

4

6

8

10

12

14

16

Th

ou

san

ds

• Sales growth primarily driven by Tresiba®, Victoza® and Saxenda®

• Declining sales of modern insulin driven by impact from: • NovoLog®/NovoLog® Mix 70/30 contract loss • Declining Levemir® sales following the launch of

Tresiba®

• Lower modern insulin prices

• Decline in NovoSeven® sales due to increasing competitive pressure


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Quarterly sales in China Key factors impacting sales growth

Sales growth rebounds in China in the first nine months of 2016

Sales as reported

bDKK

Q3 2016

Q1 2014

MAT quarterly local currency growth %

Average local currency growth %

0%

2%

4%

6%

8%

10%

12%

14%

16%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Th

ou

san

ds

• Increasing modern insulin sales growth driven by: • Increased insulin market volume growth • Modern insulin volume market penetration

• The growth was partly offset by declining human insulin sales reflecting increased competitive pressure and negative price impact from provincial biddings


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Local currencies Growth Share of growth

New-generation insulin1 185% 36%

Modern insulin (1%) (7%)

Human insulin 0% 0%

Victoza® 13% 33%

Other diabetes and obesity care2 26% 18%

- Hereof Saxenda® 331% 16%

Diabetes and obesity care 6% 81%

Haemophilia3 (1%) (2%)

Norditropin® 16% 19%

Other biopharmaceuticals4 4% 2%

Biopharmaceuticals 6% 19%

Total 6% 100%

Sales growth is driven by new-generation insulin and Victoza®

Sales as reported – first nine months of 2016 Growth analysis – first nine months of 2016

1 Comprises Tresiba®, Xultophy® and Ryzodeg® 2 Primarily NovoNorm®, needles and Saxenda®

3 Comprises NovoSeven®, NovoEight® and NovoThirteen®

4 Primarily Vagifem® and Activelle®

Other biopharmaceuticals +3%

7% Haemophilia (3%)

11%

Diabetes and obesity care

+4%

79%

3%

79%

9%

8% 3%

Norditropin®

+14%

Note: Norditropin® sales growth in the first nine months of 2016 is derived primarily from the USA reflecting a positive non-recurring adjustment to rebates in the Medicaid patient segment

Sales of DKK 82,208 million (+4%)


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Victoza® maintains leadership in the faster growing US GLP-1 market

US GLP-1 market development

Source: IMS NPA monthly, August 2016

US GLP-1 market shares

Total TRx Growth rate

exenatide Victoza®

albiglutide dulaglutide

MAT GLP-1 TRx (million)

GLP-1 TRx market share

MAT volume growth rate

Aug 2016

Aug 2013

0%

5%

10%

15%

20%

25%

30%

35%

0

1

2

3

4

5

6

7

8

Mill

ions

51%

8%

22%

19%

0%

20%

40%

60%

80%

100%

Aug 2013

Aug 2016

US GLP-1 market TRx volume

0.00

0.10

0.20

0.30

0.40

GLP-1 TRx volume (million)

Aug 2013

Aug 2016

exenatide Victoza®

albiglutide dulaglutide


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40%

8%

13% 14% 15%

3%

17% 20%

28%

7%

0%

10%

20%

30%

40%

0 10 20 30 40

• Tresiba® launched in 47 countries with solid penetration in markets with similar reimbursement as insulin glargine

• Ryzodeg® launched in Mexico, India, Bangladesh, Japan,

Russia, Lebanon and now South Africa and Nepal

• Xultophy® launched in Switzerland, the United Kingdom, Sweden, Hungary, Greece and now Cyprus

Key launch observations Tresiba® value share of basal insulin segment

in selected countries, excluding the USA

Roll-out of new-generation insulin portfolio is progressing

Note: Limited IMS coverage in India Source: IMS Monthly value figures, August 2016

Months from launch

Mexico

Switzerland Japan

Denmark

Netherlands Argentina Brazil

UK India Greece Italy

24%

28%

Spain


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Weekly US NBRx volume market shares

Steady uptake of Tresiba® in the USA

Source: IMS weekly data, 7 October 2016, excludes Medicaid

Tresiba® launched in the USA

• Full commercial launch in January 2016 following specialist engagement in Q4 2015

• Tresiba® volume market share has reached 4.0%

• Tresiba® U200 accounts for nearly 80% of total Tresiba® volume

• Wide formulary access has been obtained with around 75% access for patients in commercial channels and Medicare part D combined

Levemir® NN Total Basal Tresiba®

glargine U100 glargine U300

Note: The graph does not show NPH, which accounts for the residual market share Source: IMS weekly data, 7 October 2016, excludes Medicaid NBRx: New-to-brand prescriptions; MS: Market share

Basal NBRx MS

12%

46%

19%

14%

31%

0%

10%

20%

30%

40%

50%

01-01-2016 01-05-2016 01-09-2016Jan

2016 Sep

2016


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Semaglutide demonstrated 26% reduction in composite CV outcome compared with placebo

Semaglutide significantly reduced the risk of major cardiovascular events with 26% vs placebo in SUSTAIN 6

Note: p-value is two-sided, pooled data reported for both semaglutide and placebo MACE: Major adverse cardiovascular event; 3-point MACE comprises cardiovascular death, non-fatal myocardial infarction and non-fatal stroke; CI: Confidence interval * No adjustment for multiple tests

Patients with an event (%)

Weeks

Hazard ratio = 0.74 (95% CI: 0.58;0.95) Events: 108 semaglutide; 146 placebo

p<0.001 for non-inferiority p=0.02 for superiority*

semaglutide

0

5

10

15

0 8 16 24 32 40 48 56 64 72 80 88 96 104

placebo

Key results and next step

• Non-inferiority of semaglutide compared to placebo was confirmed for time to first MACE in people with type 2 diabetes

• Semaglutide reduced the risk of MACE by 26% driven by reductions of non-fatal stroke by 39%* and non-fatal MI by 26%

• Semaglutide significantly reduced the risk of nephropathy while increasing the risk of retinopathy complications

• Next step: Novo Nordisk expect to submit an NDA for semaglutide to regulatory authorities in Q4 2016

* P-value <0.001 NDA: New drug application


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Updated R&D strategy including a raised innovation threshold for R&D projects specifically within diabetes

CV disease

T1D intervention

Haemophilia: Novel by-passing agents

Pre-diabetes

Core areas

Blood glucose regulation incl insulin resistance

Obesity treatment

Haemophilia: Coagulation factor therapy

Growth hormone treatment

Stem cells in T1D

NASH

Nephropathy

Utilisation of core protein capabilities to enter adjacent areas

• R&D strategy and priorities have been updated to reflect the increasingly challenging payer environment, particularly in the US market, by applying an even higher innovation threshold for starting and progressing R&D projects within diabetes

• Intensified focus on exploring current projects into adjacent disease areas of high unmet need including NASH, CVD and CKD

• Build research portfolios via strengthened activities related to in-licensing of early stage projects and enhanced external academic collaborations

• Discontinuation of oral insulin and combinations involving oral insulin, as well as a number of changes to the portfolio of early-stage projects will also be implemented, reflecting the required higher innovation threshold

Updated R&D strategy

T1D: Type 1 diabetes; NASH: Non-alcoholic steatohepatitis; CV: Cardiovascular NASH: Non-alcoholic steatohepatitis; CVD: Cardiovascular disease; CKD: Chronic kidney disease


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Key development milestones

Supplemental application for the SWITCH hypoglycaemia trials submitted for Tresiba® (NN1250) in the US

FDA extended regulatory review period for IDegLira (NN9068) by three months

Complete Response Letter received in the US for faster-acting insulin aspart (NN1218)

Oral semaglutide (NN9924) phase 3a trial initiations progress as planned

Supplemental applications for the LEADER CV trial submitted for Victoza® (NN2211) in the US and EU


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R&D news flow with several regulatory decisions in the past six months

Project Past 6-9 months Past 3-6 months Within 3 months In ~3-6 months

Tresiba®

Victoza®

Results available

Xultophy®

SUSTAIN 6

LEADER

FDA regulatory decision

Once-weekly semaglutide

SWITCH 1 DEVOTE

Note: Indicated timeline as of financial release of first nine months of 2016 on 28 October 2016; 1 Study conducted in adult growth hormone disorder CRL: Complete Response Letter

SUSTAIN 5

N9-GP USA submission

Diabetes Haemophilia Growth disorders

√

√

√

√

Variation application in the USA

Regulatory milestone

Variation applications in the USA and EU

Faster-acting FDA regulatory decision

FDA AdComm

USA and EU submission

√

√

EASD - Detailed results from SUSTAIN 6

CHMP opinion

EMA regulatory decision

√

√

√

√

Somapacitan Phase 3a1 √

CHMP opinion

Concizumab Phase 1 results

Variation application in EU


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DKK million 9M 2016 9M 2015 Change Sales 82,208 79,051 4% Gross profit 69,943 67,471 4% Gross margin 85.1% 85.4%

Sales and distribution costs (20,468) (20,273) 1% Percentage of sales 24.9% 25.6%

Research and development costs (10,093) (9,574) 5% Percentage of sales 12.3% 12.1%

Administration costs (2,796) (2,693) 4% Percentage of sales 3.4% 3.4%

Other operating income, net 640 3,388 N/A Non-recurring income1 - 2,825

Operating profit 37,226 38,319 (3%)

Operating profit adjusted for non-recurring income1 37,226 35,494 7%

Financial items (net) (370) (5,150) (93%)

Profit before income tax 36,856 33,169 11% Tax (7,630) (6,567) 16% Effective tax rate 20.7% 19.8%

Net profit 29,226 26,602 10% Diluted earnings per share (DKK) 11.50 10.28 12% Diluted earnings per share (DKK) adjusted for partial divestment of NNIT 11.50 9.40 22%

Financial results – first nine months of 2016

1 Non-recurring income comprises the partial divestment of NNIT (DKK 2,376 million) and out-licensing of assets for inflammatory disorders (DKK 449 million), both in 2015


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40

60

80

100

120

140

Negative currency impact in 2016 driven by unfavourable development in both hedged and unhedged currencies

Hedged c

urr

encie

s

Index (

1 J

an 2

015=

100)

CNY/DKK JPY/DKK USD/DKK

Non-h

edged c

urr

encie

s

Index (

1 J

an 2

015 =

100)

CAD/DKK GBP/DKK

1 DKK per 100; 2 As of 24 October 2016; 3 Operating profit in DKK million per annum; 4 Chinese Yuan traded offshore (CNH) Note: Operating profit impact of one of the non-hedged currencies appreciating 5% is in the range of DKK -15 to +30 million

Hedged Currencies

2015 average

2016 average2

Spot rate2

Impact of a 5% move3

Hedging (months)

USD1 673 668 683 2,000 12

CNY1 107.0 101.3 100.9 300 114

JPY1 5.56 6.20 6.57 190 12

GBP1 1,028 921 836 70 12

CAD1 526 506 512 75 11

Non-hedged Currencies

2015 average

2016 average2

Spot rate2

RUB1 11.06 9.89 10.97

INR1 10.49 9.95 10.22

ARS1 0.73 0.46 0.45

BRL1 205 191 217

TRY1 248 227 222

INR/DKK ARS/DKK RUB/DKK TRY/DKK BRL/DKK

3 1 2 4 1 2

2015 2016

80

90

100

110

120

130

140

3


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Financial outlook for 2016

The financial outlook is based on an assumption of a continuation of the current business environment and given the current scope of business activities and has been prepared assuming that currency exchange rates remain at the level as of 24 October 2016

Sales growth - local currencies

Sales growth - reported

Operating profit growth - local currencies

Operating profit growth - reported

Financial items (net)

Effective tax rate

Capital expenditure

Free cash flow

Depreciation, amortisation and impairment losses

Expectations 28 Oct 2016

5-6%

Around 2 percentage points lower

5-7%

Loss of around DKK 600 million

20-22%

Around DKK 7.0 billion


Around DKK 38-41 billion

Previous expectations 5 Aug 2016

5-7%

Around 2 percentage point lower

5-8%

Around 3 percentage point lower

Loss of around DKK 600 million

20-22%



Around DKK 38-41 billion

Around 2 percentage points lower


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Previous Target1

Updated Target

Operating profit growth 10% 5%

Operating profit after tax to net operating assets 125% 125%

Cash to earnings (three year average) 90% 90%

Updated operating profit growth target of 5% Challenging environment in the US leads to the

update of operating profit target

Note: The targets have been revised based on an assumption of a continuation of the current business environment 1 The long-term financial targets were last updated in connection with the 2015 annual results

Updated long-term financial targets

• Updated operating profit growth target of 5% on average primarily reflecting:

• More challenging pricing environment in the US especially within insulin and human growth hormone products

• Intensified competitive situation within diabetes care and haemophilia

• Targets for operating profit after tax to net operating assets

as well as cash to earnings remain unchanged


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Source: IMS MAT August 2016 volume and value (DKK) figures

Solid market performance Promising pipeline

Closing remarks

> > • The only company with a full portfolio of novel insulin and GLP-1 products

• Semaglutide portfolio offers expansion opportunity with both injectable and oral administration

• Xultophy® supports promising outlook for insulin and GLP-1 combination therapy

• Saxenda® and multiple early stage development projects hold potential within obesity

• Broad pipeline within haemophilia and growth hormone disorders

• 27% value market share in diabetes care and solid leadership position

• ~4% annual insulin volume growth

• 46% insulin volume market share with leadership position across all regions

• >20% annual GLP-1 volume growth

• 53% GLP-1 volume market share with strong global leadership position


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Share information Investor Relations contacts

Investor contact information

Novo Nordisk’s B shares are listed on the stock exchange in Copenhagen under the symbol ‘NOVO B’. Its ADRs are listed on the New York Stock Exchange under the symbol ‘NVO’. For further company information, visit Novo Nordisk on the internet at: novonordisk.com

Peter Hugreffe Ankersen +45 3075 9085 [email protected]

Melanie Raouzeos +45 3075 3479 [email protected]

Hanna Ögren +45 3079 8519 [email protected]

Anders Mikkelsen +45 3079 4461 [email protected]

In North America:

Kasper Veje +1 609 235 8567 [email protected]

Novo Nordisk A/S Investor Relations Novo Allé, DK-2880 Bagsværd

Upcoming events

02 Feb 2017 Financial statement for 2016

23 Mar 2017 Annual General Meeting 2017

03 May 2017 Financial statement for the first three months of 2017

09 Aug 2017 Financial statement for the first half of 2017

01 Nov 2017 Financial statement for the first nine months of 2017


mailto:[email protected]





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Conference call First nine months of 2016 · 2016-10-28 · Quarterly sales in China Key factors...

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