Novo Nordisk Annual Report 2021
Contents
Introducing Novo Nordisk
Strategic Aspirations
Key risks Management
Consolidated statements
Additional information
Novo Nordisk Annual Report 2021 58
2.3 Research and development costs
DKK million
2021
2020
2019
Employee costs (note 2.4)
7,328
6,269
5,968
Amortisation and impairment
losses, intangible assets
(note 3.1)
744
1,025
522
Depreciation and impairment
losses, property, plant and
equipment (note 3.1)
736
724
783
Other research and
development costs
8,964
7,444
6,947
Total research and
development costs
17,772
15,462
14,220
As percentage of net sales
12.6%
12.2%
11.7%
Novo Nordisk's research and development is mainly focused on:
- insulins, GLP-1s and other therapeutic compounds for diabetes treatment
- GLP-1s, combinations and new modes of action for Obesity care
- blood-clotting factors and new modes of action for treatment of
haemophilia and other rare blood disorders
- human growth hormone and new modes of action for treatment of growth
disorders and other rare endocrine disorders
- new indications with existing assets within NASH, Alzheimer's, and chronic
kidney disease
- new research platforms including cell therapy and RNAi for treatment
of NASH, cardiovascular disease, chronic kidney disease and Parkinson's
disease, among others
The research activities mainly utilise biotechnological methods based on
advanced protein chemistry and protein engineering. These methods have
played a key role in the development of the production technology used to
manufacture insulin, GLP-1, recombinant blood-clotting factors and human
growth hormone. Research activities further focus on new technology
platforms including stem cells, gene therapy and developing RNAi therapies.
Research and development activities are carried out by Novo Nordisk's
research and development centres, mainly in Denmark, the US, the UK and
China. Clinical trials are carried out all over the world. Novo Nordisk also
enters into partnerships and licence agreements.
Accounting policies
Novo Nordisk expenses all research costs. In line with industry practice,
internal and subcontracted development costs are also expensed as
they are incurred, due to significant regulatory uncertainties and other
uncertainties inherent in the development of new products. This means
that they do not qualify for capitalisation as intangible assets until marketing
approval by a regulatory authority is obtained or considered highly probable.
Costs for post-approval activities that are required by authorities as a
condition for obtaining regulatory approval are recognised as research and
development costs.
Research and development costs primarily comprise employee costs,
and internal and external costs related to execution of studies, including
manufacturing costs and facility costs of the research centres. The costs
also comprise amortisation, depreciation and impairment losses related
to software and property, plant and equipment used in the research and
development activities. Impairment losses recognised on intangible assets
related to research and development projects are presented in research and
development costs.
Certain research and development activities are recognised outside research
and development costs:
- Royalty expenses paid to partners after regulatory approval are expensed
as cost of goods sold.
- Royalty income received from partners is recognised as part of other
operating income and expenses.
- Contractual research and development obligations to be paid in the future
are disclosed separately as commitments in note 5.2.
2.4 Employee costs
DKK million
Wages and salaries
2021
2020
2019
28,939
26,778
25,335
Share-based payment costs
(note 5.1)
1,040
823
363
Pensions defined contribution
plans
2,022
1,961
1,910
Pensions defined benefit plans
(note N/A)
139
138
151
Other social security contributions
Other employee costs
2,203
1,862
1,963
2,189
2,044
2,203
Total employee costs for the year
36,532
33,606
31,925
Employee costs capitalised as
intangible assets and property,
plant and equipment
(1,240)
(1,279)
(1,314)
(56)
(60)
(139)
35,236
32,267
30,472
Included in the income statement:
Cost of goods sold
9,611
8,896
8,134
Sales and distribution costs
15,003
14,146
13,463
Research and development costs
7,328
6,269
5,968
Administrative costs
3,098
2,848
2,679
Other operating income and
expenses
196
108
228
Total employee costs in the
income statement
35,236
32,267
30,472
Change in employee costs
capitalised as inventories
Total employee costs
in the income statement
Number of employees
2021
2020
2019
Average number of
full-time employees
46,171
43,759
42,218
Year-end number of
full-time employees
47,792
44,723
42,703
Employees (total)
48,478
45,323
43,258View entire presentation