Investor Presentaiton
Novo Nordisk Annual Report 2023
Introducing Novo Nordisk Strategic Aspirations
Risks
Management
Consolidated statements
Additional information.
Where absolute amounts are known, the rebates are recognised as other liabilities.
Wholesaler charge-backs that are absolute are netted against trade receivable balances.
The impact of foreign currency hedging in the income statement is recognised as part
of financial items. Refer to notes 4.4, 4.5 and 4.10 for more details on hedging.
KEY ACCOUNTING ESTIMATES OF SALES DEDUCTIONS AND
PROVISIONS FOR SALES REBATES
Sales deductions are estimated and provided for at the time the related sales are
recorded. These estimates of unsettled rebate, discount and product return obligations
is considered a key accounting estimate as not all conditions are known at the time of
sale, for example total sales volume to a given customer. The estimates are based on
analyses of existing contractual obligations and historical experience. Provisions are
calculated on the basis of a percentage of sales for each product as defined by the
contracts with the various customer groups. Provisions for sales rebates are adjusted to
actual amounts as rebates, discounts and returns are processed.
Revenue related to the 340B Drug Pricing Program can only be recognised to the
extent that it is highly probable that a significant reversal of the recognised revenue
will not occur. Significant estimation is required to determine the amount of revenue
to recognise. Management has considered interpretations of applicable laws, whether
the consideration is highly susceptible to factors outside Novo Nordisk's influence, as
well as the experience of historical claims. Refer to note 3.5 for information on the
ongoing litigation related to the 340B Drug Pricing Program.
Novo Nordisk considers the provisions established for sales rebates to be reasonable
and appropriate based on the information currently available. However, the actual
amount of rebates and discounts may differ from the amounts estimated by
Management as more detailed information becomes available.
2.2 Segment information
Business segments - Key figures
DKK million
Net sales
Cost of goods sold
Diabetes and Obesity care
2023
2022
2021
215,098
156,412
121,597
2023
17,163
Rare disease
2022
Total
2021
2023
2022
2021
20,542
19,203
232,261
176,954
140,800
(30,483)
(23,405)
(19,363)
(5,282)
(5,043)
(4,295)
(35,765)
(28,448)
(23,658)
Sales and distribution costs
(52,477)
(42,392)
(33,791)
(4,266)
(3,825)
(3,217)
(56,743)
(46,217)
(37,008)
Research and development costs
(28,073)
(20,157)
(15,600)
(4,370)
(3,890)
(2,172)
(32,443)
(24,047)
(17,772)
Administrative costs
(4,435)
(3,955)
(3,504)
(420)
(512)
(546)
(4,855)
(4,467)
(4,050)
Other operating income and expenses
Segment operating profit
(7)
892
199
126
142
133
119
1,034
332
99,623
67,395
49,538
2,951
7,414
9,106
Operating margin
46.3%
43.1%
40.7%
17.2%
36.1%
47.4%
102,574
44.2%
74,809
58,644
42.3%
41.7%
Depreciation, amortisation and impairment
losses expensed
(8,195)
(5,701)
(4,895)
(1,218)
(1,661)
(1,130)
(9,413)
(7,362)
(6,025)
Business segments
Novo Nordisk operates in two business segments based on therapies: Diabetes and
Obesity care and Rare disease, representing the entirety of the Group's operations.
The activities of the segments include research, development, manufacturing and
marketing of products within the following areas:
Diabetes and Obesity care: diabetes, obesity, cardiovascular and emerging therapy areas
Rare disease: rare blood disorders, rare endocrine disorders and hormone
replacement therapy.
Segment performance is evaluated on the basis of operating profit, consistent with the
consolidated financial statements. Financial income and expenses and income taxes
are managed at Group level and are not allocated to business segments. There are no
sales or other transactions between the business segments. Costs have generally been
split between business segments according to a specific allocation. Certain corporate
overhead costs are allocated between segments based on overall allocation keys.
Other operating income and expenses have been allocated to the two segments based
on the same principle.
ACCOUNTING POLICIES
Operating segments are reported in a manner consistent with the internal reporting
provided to Executive Management and the Board of Directors. We consider Executive
Management to be the operating decision-making body.
Geographical areas
In 2023, Novo Nordisk operated in two main commercial units:
International Operations
EMEA: Europe, the Middle East and Africa.
China: Mainland China, Hong Kong and Taiwan.
•
Rest of World: All other countries except for North America.
North America Operations (the US and Canada).
In 2023, the US contributed 10% or more of total net sales. In 2022, the US also
contributed 10% or more of total net sales. The country of domicile is Denmark, which
is part of EMEA. Denmark is immaterial to Novo Nordisk's activities in terms of sales as
99.2% of total net sales are realised outside Denmark (99.8 % in 2022). Sales are
attributed to geographical areas according to the location of the customer.
Out of total property, plant and equipment and intangible assets of DKK 151,367 million
(DKK 117,610 million in 2022), DKK 82,274 million is located in Denmark (DKK 54,492
million in 2022) and DKK 46,609 million is located in the US (DKK 44,267 million in
2022) where the majority of production facilities and intangible assets are located.
Refer to note 5.7 for an overview of companies in the Novo Nordisk Group based on
geographical areas.
99
56View entire presentation