Investor Presentaiton
Novo Nordisk Annual Report 2023
Introducing Novo Nordisk
Strategic Aspirations
Risks
Management
Consolidated statements
Additional information
2.3 Research and development costs
ACCOUNTING POLICIES
Novo Nordisk expenses all research costs. Due to significant regulatory uncertainties
and other uncertainties inherent in the development of new products, internal and
subcontracted development costs are also expensed as they are incurred, in line with
industry practice. 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.
2.4 Employee costs
Total employee costs for the year
DKK million
2023
2022
Employee costs (note 2.4)
12,429
9,952
2021
7,328
Research and development activities are mainly carried out by Novo Nordisk's research
and development centres, 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.
DKK million
2023
2022
2021
Wages and salaries
42,867
34,575
28,939
Amortisation and impairment losses,
intangible assets (note 3.1)
1,757
1,364
744
Other research and development costs mainly comprise external consulting fees, IT
services, facilities, consumables and other internal costs.
Share-based payment costs (note 5.1)
Pensions - defined contribution plans
2,149
1,539
1,040
3,267
2,472
2,022
Depreciation and impairment losses,
property, plant and equipment (note 3.2)
1,313
922
736
Clinical trial cost
9,468
6,313
4,214
Pensions defined benefit plans
Other social security contributions
Other employee costs
126
185
139
3,039
2,713
2,203
4,066
3,105
2,189
Other research and
development costs
7,476
5,496
Total research and development costs
32,443
24,047
4,750
17,772
55,514
44,589
36,532
As percentage of net sales
14.0%
13.6%
12.6%
Employee costs capitalised as intangible
assets and property, plant and equipment
Change in employee costs capitalised
as inventories
(2,337)
(1,451)
(1,240)
(409)
(70)
(56)
Total employee costs
•
in the income statement
52,768
43,068
35,236
•
Included in the income statement:
.
Cost of goods sold
15,490
11,766
9,611
•
Sales and distribution costs
20,810
17,700
15,003
Research and development costs
12,429
9,952
7,328
Administrative costs
3,962
3,517
3,098
Other operating income and expenses
Total employee costs in the
income statement
77
133
196
52,768
43,068
35,236
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
Novel targets within cardiovascular disease focusing on ASCVD and Heart failure
Human growth hormone and new modes of action for treatment of growth
disorders and other rare endocrine disorders
New indications with existing assets within MASH, Alzheimer's disease and
chronic kidney disease
Research technology platforms including cell therapy and RNAi for treatment of
MASH, 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 utilise new technology platforms including stem cells, gene therapy, small
molecules and RNAi therapies.
Research and development costs primarily comprise employee costs as well as internal
and external costs related to execution of studies, including manufacturing costs and
facility costs of the research centres. The costs also comprise amortisation, deprecia-
tion and impairment losses related to intellectual property rights and property, plant
and equipment used in the research and development activities.
Amortisations of intellectual property rights related to marketed products are
recognised in cost of goods sold. Royalty expenses paid to partners after regulatory
approval are also expensed as cost of goods sold.
Contractual research and development obligations to be paid in the future are
disclosed separately as commitments in note 5.2.
Number of employees
Number
2023
2022
2021
Average number of full-time employees
59,552
51,046
46,171
Year-end number of full-time employees
63,370
54,393
47,792
Year-end employees (total)
64,319
55,185
48,478
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