Economic footprint

Novo Nordisk's business strategy aims to contribute to society in those areas where the company has outstanding knowledge and expertise. Access to health, ethical business practice, supply chain management and environmental management at production sites are important for the institutional framework within which the markets work.

The 'economic footprint model' helps to bring about a better understanding of how Novo Nordisk contributes to society, locally and globally. It illustrates Novo Nordisk, its economic stakeholders and the interactions that drive economic growth in well-developed societies.

The number of people who receive diabetes care is an indicator for the indirect economic impacts of Novo Nordisk's products and services. In 2005 Novo Nordisk provided insulin for 12-14 million people, of whom 6.5 million live in Europe, Japan and Oceania, with the remaining 5.5-7.5 million in the International Operations region. The range is due to the fact that, in the developing world, two or three persons may share a daily dose of insulin.

Novo Nordisk's access to health programmes are estimated to reach out to at least 22 million people worldwide through awareness-raising, education, diagnosis or treatment.

As a business, Novo Nordisk impacts society through sustainable business practices, investments and employment. As a pharmaceutical company, Novo Nordisk offers knowledge, R&D and healthcare products. This illustrates that successful development requires interplay of various economic processes.

The cash-value distribution provides an overview of Novo Nordisk's economic interactions with stakeholders at corporate level: sales of products and services, payments to suppliers, remuneration of employees, dividend and interest to investors and funders, taxes paid to the public sector and profits generated for future growth of the company.

In reports from the major production sites the company's contribution to socio-economic growth at the local level is assessed and quantified. This includes job creation, local and national taxes and local purchases.

Novo Nordisk seeks to contribute to society in those areas where the company has outstanding knowledge and expertise. One of the key questions in relation to socio-economic development is how private companies and responsible business practice can make a difference in the market economies of the developing world.

Health and education are acknowledged to be key elements in development. The pharmaceutical industry is increasingly active in the developing world, offering products and, in some cases, a cure for events that were previously regarded as inevitably mortal. However, offering health products is not enough; products must be affordable and income must be generated in the local economies to generate funds for a sustainable healthcare system.

Economic growth and trade combined with foreign investments that create employment are well known factors in building economic growth and generating funding for societal infrastructure. By creating jobs or buying materials from suppliers in the developing world and offering healthcare products, Novo Nordisk can contribute to economic growth and social development. See a discussion of Novo Nordisk's globalisation strategies.

By its very presence, Novo Nordisk can contribute to building well-functioning societies through the application of company policies and standards. See a current picture of direct and indirect economic impacts.

The responsibility of companies as corporate citizens cannot be limited to investments, job creation, tax contributions and products.

Novo Nordisk believes that responsible business practices in conjunction with government regulation may be a way to ensure social equity and that the market economy works for everyone. By setting rules, norms and standards, the company can contribute to achieving common goals such as the Millennium Development Goals. Responsible business practices have the potential to alleviate the consequences of the absence of a legal and regulatory framework and infrastructure. Novo Nordisk does so by contributing to the building of health infrastructure such as offering assistance in building national diabetes strategies and educating healthcare professionals and people with diabetes.

Customer, employee and environmental protection may also be absent. Being responsible implies not taking advantage of that. The policies, described in the Novo Nordisk Way of Management, guide employees' behaviour. Novo Nordisk actively supports the UN Universal Declaration on Human Rights and the principles of the Global Compact such as protection of human rights, freedom of association and the right to collective bargaining, and elimination of discrimination and forced labour.

All social and people policies in Novo Nordisk apply throughout Novo Nordisk's global operations. Social responsibility and environmental management are implemented at all production sites and all affiliates inform their key suppliers of the scope of the company's social and environmental policies.

All of these policies directly impact the workings of the market economy and individuals' ability to influence and improve their economic situation.

In 2005 Novo Nordisk's financial performance was very strong. 

In economic terms, the year's performance is accounted for as part of the consolidated non-financial statements. This includes a report on the company's net employment creation and average turnover at corporate level. 

Novo Nordisk does not break down the average employee turnover by region or country, but the turnover for all our production sites can be viewed in the interactive charts.

See the reporting on economic performance.

Reported sales were 33,780 million Danish kroner, which correspond to a sales growth of 16% compared to 2004. Sales growth was realised both within diabetes care and bipharmaceuticals – primarily driven by the portfolio of insulin analogues as well as NovoSeven®. Furthermore, sales of growth hormone therapy products contributed to growth. Sales growth was realised in all regions. The main growth driver was North America, constituting 28% of total sales, followed by International Operations with 18% of total sales.

In 2005 Novo Nordisk's share of the world market for insulin was 51.1%. Broken down by regions, the company's market share in the US was 37.7%; in Japan it was 73.7%, in Europe 58.1% and in Canada, New Zealand and Australia 63.1% (IMS market share data, as per November 2005).

In the diabetes care segment, which accounts for approx 70% of sales, Novo Nordisk reports sales on a regional basis: Europe, North America, International Operations, and Japan & Oceania.

In the biopharmaceuticals sector, which accounts for the remaining approx 30% of sales, sales figures are consolidated and reported at global level.

Novo Nordisk does not report national market shares. There are no countries in which Novo Nordisk's sales represent more than 5% of GDP.

Novo Nordisk markets its products in 179 countries across the world. The company's tangible assets, production and the majority of employees are still primarily located in Denmark, but an increasing proportion of the investments in production is made outside Denmark and outside the developed world.

The growth in employees outside Denmark reflects this trend. Of the 22,007 full-time positions in Novo Nordisk, 9,847 are outside Denmark.

See cash value distribution.

Click here to see details of Novo Nordisk's financial performance in 2005

Payments to suppliers are accounted for in the Annual Report. In 2005 total payments amounted to DKK 15,556 million.

Following the implementation of a web-enabled system for payments to vendors, Novo Nordisk has significantly improved the rate at which contracts are paid on time and in accordance with agreed terms.

In 2005, on average 86% of payments were paid on time based on monthly records at corporate at the corporate headquarters. This figure includeds payment of invoices made on 'net payment terms', in which case payment within just a few days of receipt would be recorded as 'not paid on time'.

To improve efficiency of payments, the invoice capture system has been adopted to become a global standard. It is currently being rolled out to the affiliates in the market through Novo Nordisk's regional offices. For a geographic breakdown of Novo Nordisk's suppliers and more information about the company's sustainable supply chain management. 

Wage costs are accounted for in the Annual Report. In 2005 total employee costs were 11,498 million Danish kroner. This figure includes total payroll and benefits (including wages, pension and other benefits and compensation payments). Novo Nordisk does not report break-down of such payments by country or region.

In 2005 dividend payments to Novo Nordisk shareholders amounted to DKK 6.00 per share. Interest payments are reported in the consolidated balance sheet .

In 2005 retained earnings amounted to DKK 26,962 million. Details are provided in the consolidated income statements.

In 2005 Novo Nordisk paid a total of DKK 2,370 million in taxes, corresponding to an effective tax rate of 28.8%. Novo Nordisk's contribution to the national economy in Denmark accounted for 2.2% as a share of Danish GDP, compared to 2% in 2004.

Novo Nordisk does not report on all types of taxes paid broken down by country.

Through its presence and activities, Novo Nordisk invests in the local communities in which it does business. This relates in particular to investments in communities around Novo Nordisk's production sites in Denmark (Bagsværd, Gentofte, Hillerød, Hjørring, Kalundborg, Køge and Måløv), France (Chartres), the US (Clayton, North Carolina), China (Tianjin) and Brazil (Montes Claros).

Economic contributions at locations where Novo Nordisk has major production sites are accounted for in a three-year cycle. See the most recent local economic footprint accounts from 2004.

Novo Nordisk does not report on any subsidies received broken down by country or region.

Community investments may take the form of investments in infrastructure and donations to community, civil society and other groups.

Novo Nordisk does not account for the total spend on non-core business infrastructure development in the consolidated annual statements.

Novo Nordisk collects information on donations paid from its sales affiliates and reports on such cash payments, although not broken down by type of group to whom they are paid. In-kind donations are not included in the figures. See also community engagement.

In addition to economic impacts through the company's local presence, Novo Nordisk recognises the indirect economic impacts of its products and services. These impacts can be measured in terms of life and life expectancy for people who receive medical treatment as well as in terms of their productivity and the direct and indirect costs to patients, their families and carers and the healthcare providers. See health economics studies here.

This page has been assessed by PricewaterhouseCoopers as part of its assessment of Novo Nordisk’s statement that it reports ‘in accordance’ with GRI. Please refer to Audit and assurance for a full description of the nature of assurance offered.