NOVO NORDISK FOUNDATION GROUP FACTS AND RESULTS 2013

Transcription

1 NOVO NORDISK FOUNDATION GROUP FACTS AND RESULTS 2013

2 CONTENTS 1 Grants from the Novo Nordisk Foundation 2 Results of the Novo Nordisk Foundation Group 3 The Novo Nordisk Foundation Group and society

3 NOVO NORDISK FOUNDATION GROUP The Novo Nordisk Foundation and the companies in the Novo Group comprise the Novo Nordisk Foundation Group. The Novo Nordisk Foundation receives dividends from Novo A/S, comprising: dividends from Novo Nordisk A/S and Novozymes A/S; and dividends and other income from investments within life-science and bioindustrial companies and from financial investments. NOVO NORDISK FOUNDATION DIVIDENDS Grants Investments NOVO A/S DIVIDENDS DIVIDENDS NOVO NORDISK A/S NOVOzymes A/S THE NOVO GROUP

4 NOVO NORDISK FOUNDATION IN BRIEF The Novo Nordisk Foundation is a Danish foundation with corporate interests with a history extending to the 1920s. The Foundation s two main objectives are: to provide a stable basis for the commercial and research activities of the companies in the Novo Group; and to support scientific, humanitarian and social purposes. In organizational terms, the Foundation awards grants and Novo A/S, the Foun dation s wholly owned subsidiary, manages the commercial activities. Novo A/S manages the Foundation s financial assets as well as the controlling shareholding in Novo Nordisk A/S and Novozymes A/S. The Foundation finances its activities by dividends from Novo A/S, whose income derives from: dividends from Novo Nordisk A/S and Novozymes A/S; and The ambition of the Foundation is that Novo Group companies will position themselves as internationally recognized and significant actors and generate world-class business results through research-based products and services that improve how disease is combated and how natural resources are used. The Foundation aims to use its independence and flexibility to promote world-class research at universities and hospi tals in Denmark and the other Nordic countries. The Foundation thereby strives to ensure that the Nordic region develops and is recognized as an international powerhouse within the health sciences and biotechnology. This is achieved by providing long-term funding for developing a knowledge environment in which top researchers and innovative talents can carry out research of the highest quality. dividends and other income from investments within life-science and bioindustrial companies and from financial investments.

5 NOVO NORDISK FOUNDATION IN BRIEF GRANTS In 2013, the Novo Nordisk Foundation awarded grants worth DKK 689 million ( 92 million) and paid out DKK 784 million ( 105 million). GENERATING NEW KNOWLEDGE Research leads to new knowledge, which is required for economic growth, and makes Danish society robust and increases its competiveness. The grants help to retain, create and develop dynamic knowledge and research environments, including talented fellows and researchers who will be the employees of the future in companies and research institutions. The grants awarded by the Foundation enable many scientific articles to be published, mostly in international journals, giving the whole world insight into the research. COMMERCIALIZING RESEARCH The Foundation provides funding that enables researchers in the Nordic countries to identify the commercial potential of their research discoveries. The focus is on commercializing new diagnostic methods, therapies, medical devices and technologies that can result in establishing new biotechnology companies. In 2013, the Foundation increased its funding for this purpose from DKK 25 million ( 3.3 million) to DKK 30 million ( 4.0 million). HUMANITARIAN AND SOCIAL SUPPORT In accordance with the Articles of Association, the Foundation provides grants for operating the Steno Diabetes Center. The Foundation also provides annual support to numerous well-known humanitarian and social organizations. In 2013, the Foundation awarded grants to 10 such organizations. JOBS IN DENMARK In all, the research grants provided by the Foundation over a five-year period have generated an estimated 1000 science-related jobs in Denmark. The investment in life-science companies by Novo A/S creates the basis for a similar number of jobs in Denmark. In 2013, Novo Nordisk A/S employed about 16,000 people in Denmark and Novozymes A/S about TAXES PAID In 2013, the activities of the Novo Nordisk Foundation Group resulted in about DKK 10 billion ( 1.34 billion) in taxes paid in Denmark in the form of corporate tax, personal income tax and other taxes. SUSTAINABLE ACTIVITIES The companies in the Novo Group must comply with the Charter for Companies in the Novo Group, which obligates the companies to demonstrate financial, environmental and social responsibility and to deliver products that improve how people live and work. Both Novo Nordisk A/S and Novozymes A/S produce annual Communication on Progress reports that detail the initiatives the companies take to support and implement the principles of the United Nations Global Compact in their business activities. Novo Nordisk A/S was rated as the world s most sustainable company, achieving first place in the 2012 Global 100 List. ENVIRONMENTAL AWARENESS Novo Nordisk A/S and Novozymes focus on reducing the amount of energy and water used and carbon dioxide (CO 2 ) emitted. This has resulted in considerable reductions for both companies in 2013 and previous years. 23

6 Sten Scheibye, CHAIR OF THE BOARD, NOVO NORDISK FOUNDATION Birgitte Nauntofte, CEO, NOVO NORDISK FOUNDATION The Novo Nordisk Foundation wants to help to develop solutions to some of the major challenges the world is facing: people are living longer, the global population is increasing, growing numbers of people have lifestylerelated diseases, natural resources are being depleted and CO 2 emissions are rising. Our vision is to contribute significantly to research and development that improves the health and welfare of people. This is to be achieved through the products and solutions developed by our companies as well as through the Foundation s grants. 4

7 1 GRANTS FROM THE NOVO NORDISK FOUNDATION HIGHLIGHTS OF THE GRANTS IN 2013 The year 2013 was eventful for the Novo Nordisk Foundation. The Foundation received and processed more than 1100 research applications, awarding grants to 238 applicants. The Foundation also received 312 applications from researchers to participate in the Copenhagen Bioscience Conferences. Finally, the Foundation received 146 applications for grants for humanitarian and social causes. In total, the Foundation awarded grants worth DKK 689 million ( 92 million) and paid out DKK 784 million ( 105 million).. The grants awarded included: DKK million ( 42.7 million) awarded by the Foundation s committees in the form of project grants, research leader programmes, scholarships, symposia and prizes; DKK million ( 38.6 million) in special one-off grants to celebrate 90 years of insulin production in Denmark, including DKK million to co-fund the establishment of the new Copenhagen International School in the Nordhavn district of Copenhagen, DKK 88 million for the City of Copenhagen to co-fund the establishment of the European School Copenhagen and DKK 100 million to co-fund the construction of the new Natural History Museum of Denmark; DKK 11.9 million ( 1.6 million) for standalone grants, including research, communication and education projects; DKK 60.4 ( 8.1 million) for the Steno Diabetes Center, of which DKK 27.9 million is for operating the hospital, DKK 10 million for research activities at the Steno Health Promotion Center, DKK 11.8 million for the Steno STAR (Steno Training and Application of Resources) project and DKK 10.7 million for the Steno-REACH project; DKK 6.5 million ( 875,000) for the Copenhagen Bioscience Conferences; and DKK 3 million ( 404,000) for humanitarian and social causes. In 2013, the Board of the Foundation decided to increase its total annual payout incrementally to DKK 1.5 billion ( 201 million) by The Foundation s website ( provides further information about the research grants awarded, including a complete list of the grants awarded in

8 2 RESULTS OF THE NOVO NORDISK FOUNDATION GROUP Novo Nordisk FOUNDATION The Novo Nordisk Foundation aims to use its independence and flexibility to promote world-class research at universities and hospitals in Denmark and the other Nordic countries. The Foundation thereby strives to ensure that the Nordic region develops and is recognized as an international powerhouse within the health sciences and biotechnology. This is achieved by providing long-term funding for developing a knowledge environment in which top researchers and innovative talents can carry out research of the highest quality. In organizational terms, the Foundation awards grants and Novo A/S, the Foundation s wholly owned subsidiary, manages the commercial activities. Novo A/S manages the Foundation s financial assets as well as the controlling shareholding in Novo Nordisk A/S and Novozymes A/S. The Foundation finances its activities by dividends from Novo A/S, whose income derives from: dividends from Novo Nordisk A/S and Novo - zymes A/S; and dividends and other income from investments within life-science and bioindustrial companies and from financial investments. The Foundation s ambition is for the companies in the Novo Group to position themselves as internationally recognized and significant actors and to create world-class business results through research-based products and services that improve how disease is combated and that contribute to the more intelligent use of natural resources. The inside cover of this publication provides further information on the Novo Nordisk Foundation and the structure of the Novo Nordisk Foundation Group. 5

9 SELECTED FINANCIAL HIGHLIGHTS FOR THE NOVO NORDISK FOUNDATION Millions of Danish kroner Dividends from Novo A/S 1, ,657 Net profit for the year 1, ,770 Equity in Novo A/S* 2,142 2,142 2,142 Securities 4,340 2,879 3,503 Total assets 6,540 5,360 5,789 Equity 3,672 2,409 3,313 Grants awarded (pending payment) 2,843 2,938 2,466 Grants awarded Equity ratio 56.1% 44.9% 57.2% *Valued at historical cost price. For further information, please see 6

10 RESULTS OF THE NOVO NORDISK FOUNDATION GROUP Novo A/S Novo A/S is a Danish private limited liability company fully owned by the Novo Nordisk Foundation that plays a major and independent role as an investor in biotechnology companies. Novo A/S aims to bring the best of two worlds together: insight and network from the company s pharmaceutical and biotechnology origins combined with an investor s focus on results and creating value. Since 2000, when Novo A/S began establishing its portfolio with the primary aim of investing in Danish companies, its venture activities have developed significantly. Today, Novo is a recognized and heavyweight venture capital investor in the life sciences. As of the end of 2013, Novo had invested a total of DKK 5.1 billion ( 683 million) in 89 companies in Europe and North America. In 2007, Novo A/S expanded its activities by establishing Novo Seeds, which provides financial support for early-stage life-science projects and biotechnology companies in Scandinavia. Novo Seeds invests on commercial terms in projects and companies in exchange for ownership or other rights to the company or its projects. In 2013, Novo Seeds invested DKK 92 million ( 12.3 million) in 14 companies. Since 2009, Novo A/S has also invested in more mature companies than those in the venture portfolio: companies with products at the clinical development stage or already on the market. The focus of Novo s future large investment activities will be directed towards well-established, cash-flow-positive companies with strongly positioned products and attractive long-term prospects. In 2013, Novo A/S paid DKK 4 billion ( 536 million) to acquire Xellia Pharmaceuticals. In 2012, Novo A/S acquired approximately 25% of the share capital in Chr. Hansen Holding A/S for DKK 4.2 billion ( 563 million). During the past nine years, and in parallel with its investment activities in the life sciences, Novo A/S has expanded its financial investment activities and has built up a broad, global portfolio. The main purpose is to spread the risk associated with the assets of the Novo Nordisk Foundation and to accumulate a substantial high-returning liquidity reserve. The investment universe comprises shares in listed and unlisted securities, bonds, corporate debt, emerging market bonds, infrastructure and real estate. The value of the financial investments at the end of 2013 was DKK 19.7 billion ( 2.64 billion). 7

11 SELECTED FINANCIAL HIGHLIGHTS FOR NOVO A/S Millions of Danish kroner Operating profit 10,811 10,201 4,325 Net profit for the year 10,784 10,198 4,337 Investments in subsidiaries* 5,985 3,714 3,819 Life-science investments 7,300 4,569 4,149 Securities 19,778 17,398 13,021 Total assets 42,412 33,266 23,165 Total equity 42,101 33,266 23,068 Dividends from subsidiaries 2,752 2,228 1,663 Equity ratio 99.3% 99.7% 99.6% *Valued at historical cost price. For further information, please see Novo s Annual Report 2013 at 8

12 RESULTS OF THE NOVO NORDISK FOUNDATION GROUP Novo Nordisk A/S Novo Nordisk is a global healthcare company with 90 years of innovation and leadership in diabetes care. The company also has leading positions within haemophilia care, growth hormone therapy and hormone replacement therapy. The company s key contribution is to discover and develop innovative biological medicines and make them available to patients throughout the world. This purpose is stated in the Novo Nordisk Way, which describes the ambitions and the values that characterize the company. The Novo Nordisk Way also emphasizes the importance of being accountable for financial, social and environmental performance in accordance with the Triple Bottom Line business principle that is anchored in the company s Articles of Association. ROBUST FINANCIAL PERFORMANCE 2013 was a year of mixed fortunes for Novo Nordisk, marked by steady progression towards long-term financial, social and environmental targets, whereas the Complete Response Letter for Tresiba in the United States was a disappointment. Sales increased by 12% measured in local currencies and by 7% in Danish kroner in 2013 compared with Operating profit increased by 7% to DKK 31,493 million. In local currencies, the growth was 15%. Sales of diabetes care products increased by 12% measured in local currencies and by 8% in Danish kroner, to DKK 65,456 million. Novo Nordisk is the world leader in diabetes care and now holds a global value market share of 27% compared with 26% at the same time the previous year. The diabetes care market has increased by about 11% annually in the past decade. Sales of biopharmaceutical products increased by 12% measured in local currencies and by 6% in Danish kroner, to DKK 18,116 million. North America and International Operations primarily drove sales growth. PROGRESS IN RESEARCH AND DEVELOPMENT Tresiba (insulin degludec), the once-daily new-generation insulin with an ultra-long duration of action, has been launched in eight countries. In response to the Complete Response Letter on Tresiba from the US 9

13 Food and Drug Administration, Novo Nordisk initiated a cardiovascular outcomes trial in October. It is double-blind, uses insulin glargine as the comparator and will include 7500 people with type 2 diabetes who have an existing or high risk of cardiovascular diseases. A great accomplishment in 2013 was the filing for regulatory approval of a 3-mg dose of liraglutide, the once-daily human GLP-1 analogue, as a treatment for obesity with the regulatory agencies in both the United States and the European Union. people with diabetes worldwide, showing a 7% increase compared with Of the 382 million people living with diabetes, it is estimated that just over half of them are diagnosed, and many of those diagnosed do not receive medical treatment. Novo Nordisk s global strategy on access to diabetes care aims to provide better care for those who need it and currently do not have access to proper diabetes care. The long-term goal is to reach 40 million people in 2020 with diabetes care products and thereby enable more people with diabetes to live better lives. Further important headway was made in biopharmaceuticals. In January 2014, following approval by the European Commission in November 2013, Germany was the first country to launch NovoEight, a recombinant coagulation factor VIII product, for the treatment and prophylaxis of bleeding among people with haemophilia A. NovoEight was also approved in Japan in January CLOSING THE GAP BETWEEN HEALTH NEEDS AND HEALTHCARE Novo Nordisk estimates that it provides therapeutic treatments for more than 24 million 10

14 SELECTED FINANCIAL HIGHLIGHTS FOR NOVO NORDISK A/S Millions of Danish kroner Sales in diabetes care 65,456 60,887 50,425 Sales in biopharmaceuticals 18,116 17,139 15,921 Total net sales 83,572 78,026 66,346 Operating profit 31,493 29,474 22,374 Net profit for the year 25,184 21,432 17,097 Equity 42,569 40,632 37,448 Total assets 70,337 65,669 64,698 Key ratios Net profit margin 30.1% 27.5% 25.8% Return on equity 60.5% 54.9% 46.0% Equity ratio 60.5% 61.9% 57.9% For further information, please see the Novo Nordisk Annual Report 2013 at 11

15 RESULTS OF THE NOVO NORDISK FOUNDATION GROUP NovoZYMES A/S Novozymes is the world leader in bioinnovation and produces industrial enzymes, microorganisms and biopharmaceutical ingredients. The company provides businessto-business biological solutions used in the manufacture of numerous products in industries such as household care, bioenergy, agriculture, food and beverages, biopharma, leather, pulp and paper, textiles and wastewater. The major part of Novozymes business deals with enzymes. The company constantly strives to grow its business and expand its markets by bringing new innovations to market and launching new platforms. Novozymes biosolutions enable its customers globally to create more with less and improve performance, while saving energy and generating less waste. STRONG EARNINGS GROWTH IN 2013, DECENT SALES GROWTH In an eventful 2013, Novozymes delivered a good finish to the year and ended at the high end of its guided range for sales growth and above that for earnings. Total sales in 2013 were DKK 11,746 million, an increase of 5% compared with Exchange rates had a significant negative impact on sales, and sales in local currencies were up by 8%. Acquisitions contributed approximately 1 percentage point to sales growth and, organically, sales grew by 7%. All sales areas contributed to this growth, with sales to the household care and bioenergy industries as the most significant contributors. Earnings before interest and taxes grew by 6% to DKK 2901 million, up from DKK 2745 million in The earnings before interest and taxes margin was 24.7%, an increase of 0.3 percentage points from 24.4% the previous year. A majority of the sustainability targets were met in 2013, but Novozymes was unable to meet its targets for diversity and for water and energy efficiency. Action has been taken to address this, and sustainability will remain a priority in 2014 as Novozymes seeks to overcome these challenges. PARTNERSHIPS FOR PROGRESS In 2013, Novozymes focused its efforts on finding new opportunities by seeking closer working relationships with customers 12

16 RESULTS OF THE NOVO NORDISK FOUNDATION GROUP NOVOZYMES A/S and expanding its reach through new partnerships, such as The BioAg Alliance with Monsanto, and with M&G Chemicals and Raízen. The long-term strategic alliance with Monsanto will revolutionize the research, devel opment and commercialization of biosolutions for agriculture, eventually bringing more choices and changes to farming globally. The inauguration of the world s first advanced biofuel facility in Crescentino, Italy, by Novozymes strategic partner Beta Renewables, marked the beginning of a new era for advanced biofuels, proving that cellulosic ethanol is no longer a distant dream. SUSTAINABILITY AN INTRINSIC PART OF THE BUSINESS Sustainability is integrated into Novozymes business across all relevant functions, giving it a competitive advantage in the industry. The company focuses on increasing CO 2 efficiency by improving its production processes and helping customers achieve further CO 2 savings by applying its products. In 2013, the worldwide application of Novozymes products helped its customers reduce their CO 2 emissions by an estimated 52 million tonnes. Novozymes was named as Biotechnology Industry Leader for the 12th time and awarded a Gold Class rating in RobecoSAM s Sustainability Yearbook NOVOZYMES RISK PROFILE Novozymes has identified risks relating to the market, customers and environmental and social aspects, among other things, and has implemented measures to limit these. One example: Novozymes introduces innovative solutions that customers need to give them a competitive advantage in their respective markets. If Novozymes fails to deliver the right products, the competitors benefit. Novozymes works closely with its key customers to minimize this risk by working together on development projects that make it possible to identify which new products should be given priority, thereby ensuring that the products launched meet the actual needs of their customers. Due to Novozymes international operations, the income statement and balance sheet are exposed to a number of financial risk factors. Financial risks are managed centrally, and financial instruments are used to hedge existing assets and liabilities and expected future net cash flow. 13

17 SELECTED FINANCIAL HIGHLIGHTS for NOVOZYMES A/S Millions of Danish kroner Revenue 11,746 11,234 10,510 Operating profit (earnings before interest and taxes) 2,901 2,745 2,340 Net profit 2,201 2,016 1,828 Shareholders equity 11,066 9,568 8,824 Total assets 16,506 15,113 13,842 Key ratios Net profit margin 18.7% 17.9% 17.4% Return on equity 21.3% 21.9% 21.9% Equity ratio 67.0% 63.3% 63.7% For more information, please visit Novozymes Annual Report 2013 at 14

18 THE NOVO NORDISK FOUNDATION GROUP AND SOCIETY 3 OUR COMMON FUTURE Throughout its history, social responsibility has been at the heart of the Novo Nordisk Foundation s activities. Nobel Prize winner August Krogh laid the basis for this in 1922 when he made a rights agreement with Canadian colleagues to produce insulin in Denmark and the other Nordic countries. The agreement stipulated that part of the profit should be used to support free and independent research and that insulin would be made widely available to benefit as many people as possible. Since then, the Foundation and its predecessors have given money for research and for humanitarian and social purposes. Expanding activities and an ever-greater impact on its surroundings also brings responsibilities. Through its support for research, the Foundation focuses on contributing to sustainable development that can help to solve some of the present global challenges while simultaneously addressing the needs of future generations. The Foundation bases its grant activities on a set of values that comprises four cornerstones. Based on these, the Foundation has established a procedure for its awarding grants. The Foundation has also adopted a Charter: common values with which all companies in the Novo Group must comply. The two largest companies in the Novo Nordisk Foundation Group, Novo Nordisk A/S and Novozymes A/S, participate in the United Nations Global Compact. Both companies have their own policies on corporate social responsibility and publish independent reports on their activities in this area. Social responsibility is integrated into the activities of the Novo Nordisk Foundation Group. This chapter describes how the Foundation incorporates social responsibility in relation to each of its two main purposes, commercial activities and awarding grants, and how this influences society. The chapter focuses on the initiatives that benefit society economically, socially or environmentally as well as initiatives that create an inspiring and healthy working environment for personnel in the Group. The chapter thus presents: 1) the Foundation s policies on corporate social responsibility; 2) how the Foundation puts these policies into practice; and 3) the quantifiable results the Foundation achieves as a result of the initiatives. 15

19 16

20 THE NOVO NORDISK FOUNDATION GROUP AND SOCIETY GRANT ACTIVITIES The Foundation awards grants for research in public institutions, primarily within biomedicine and biotechnology. The Foundation also awards grants for other research purposes and for developing innovative applicationoriented research discoveries with commercial potential. In addition, the Foundation supports humanitarian and social causes, including the operation of the research hospital of Novo Nordisk A/S. The Foundation awards its grants based on four core values the four cornerstones. Commitment In awarding grants, we strive to contribute significantly to research and development that improves the health and welfare of people, and we believe that research benefits the development of society. Professionalism In awarding grants, we consult with experts to ensure that the research we support is of the highest international quality with the aim of generating new in-depth knowledge and innovation. Respect In awarding grants, we take an international perspective; we support free and independent research and publishing freedom. Trust In awarding grants, we trust that researchers will strive to ensure that the results of their research will benefit as many people as possible. The Foundation s grants are unconditional. The research results and any patents belong to the researchers and the public research institutions that employ the researchers. No company in the Novo Group has preferential access to the research results funded by grants from the Foundation. The following pages summarize the societal value of the Foundation s grants in terms of their economic impact and their social and environmental impact. ECONOMIC IMPACT The positive trend in the financial results of companies in the Novo Group will enable the Foundation to increase its annual grants significantly in the coming years. In 2013, the Board of the Foundation decided to increase its total annual payout incrementally from about DKK 800 million ( 117 million) to DKK 1.5 billion ( 201 million) by The figure on the opposite page shows how much the Foundation has awarded and paid out in grants for each year since The columns show how much the Foundation has awarded, with the curve showing the amount paid out each year. Since some grants extend over periods up to 10 years, the money for such grants is paid out over several years rather than as a lump sum in the year the grant is awarded. 17

21 GRANTS AWARDED AND PAID OUT BY THE NOVO NORDISK FOUNDATION, Billions of Danish kroner The columns show the amounts awarded. The curve shows the amounts paid out

22 THE NOVO NORDISK FOUNDATION GROUP AND SOCIETY GRANT ACTIVITIES The Foundation receives about 1100 applications for grants each year. Grants are awarded for research of the highest international quality, and the Foundation therefore uses experts from Denmark and other countries to assess and select the best projects. All the Foundation s grant recipients are informed of the Foundation s cornerstones for grants. Practices The Foundation strives for transparency in its activities, and its website describes all current thematic grants and humanitarian and social causes supported by the Foundation, including the amounts. The Foundation also publicizes the project titles and the names of all the researchers awarded a grant based on applications submitted to one of the Foundation s committees. The Foundation has two main categories of research grants: thematic grants, in which the Board of the Foundation decides the overall theme and international experts assess the projects submitted by peer review. The grants the Foundation s committees award are processed in a fixed cycle, in which applications are solicited for the grants (such as scholarships or project grants) within one research field with specified deadlines. The Foundation allocates money for each committee for grants for the best projects and the most qualified applicants within its research field. After the application deadline expires, the committee members assess all the applications and decide which projects will receive grants. The committee members also assess the final scientific report when a project ends to evaluate whether the Foundation s funds have been used responsibly and in accordance with the purposes stated in the original application. grants awarded in open competition based on applications submitted in response to open calls, assessed by the Foundation s 10 committees that include 45 experts of a high international calibre; and. 19

23 Examples of thematic grants are the Novo Nordisk Foundation funding a biobank and four research centres in the respective fields of metabolism, proteins, stem cells and biosustainability. The Danish National Biobank was established at Statens Serum Institut. The first three research centres were established at the University of Copenhagen and the last one at the Technical University of Denmark. Since 2007, the Foundation has awarded a total of DKK 3.1 billion ( 420 million) to this research cluster. Finally, the Foundation, in accordance with its Articles of Association, is responsible for funding the Steno Diabetes Center (see the section below on social and environmental impact). Through its funding, the Foundation takes a focused approach to research within biomedicine and biotechnology that is strategically important for Denmark. This research generates new knowledge, which is required for economic growth, makes Danish society robust and increases its competiveness. The Foundation believes that the grants help to retain, create and develop dynamic research environments, including talented fellows and researchers who will be the employees of the future in companies and research institutions. In partnership with Novo A/S, the Foundation provides funding that enables researchers in the Nordic countries to identify the commercial potential of their research discoveries. The focus is on commercializing new diagnostic methods, therapies, medical devices and technologies that can result in establishing new biotechnology companies. The research grants provided by the Foundation over a five-year period have directly or indirectly generated an estimated 1000 jobs in science. In 2013, the Foundation awarded grants totalling DKK 689 million ( 92 million) and paid out DKK 784 million ( 105 million). The overhead ratio for administering grants comprises 6.8% of the grants paid out and 7.7% of the grants awarded. The equivalent figures in 2012 were 6.8% and 3.4%, respectively. The overhead ratio in 2013 includes employee salaries, rebuilding and expanding the Foundation s offices, rent, consultancy fees, travel expenses and honorariums for committee and Board members. In particular, the increase this year can be attributed to the Foundation expanding and refurbishing its offices and recruiting more employees. 20

24 THE NOVO NORDISK FOUNDATION GROUP AND SOCIETY GRANT ACTIVITIES SOCIAL AND ENVIRONMENTAL IMPACT The Foundation wants to support sustainable research practice through its grants. In this context, sustainability should not just be interpreted as considering climate and the environment but also treating people and animals optimally and in accordance with laws and regulations to benefit everyone. The Foundation has formulated a set of standards for good research practice to which a grant recipient must agree when accepting a grant. The standards for good research practice cover four main points that are summarized briefly below. Laws and regulations A grant recipient must comply with the generally recognized standards for good research practice, the national and international rules on animal welfare as well as the regulations on the safety and rights of patients and healthy volunteers in clinical trials. Further, a grant recipient must not simply comply with all laws and regulations on bribery and corruption in the country in which the research project takes place but must also refrain from engaging in such activities.. Labour practices An employee on a project must be paid, as a minimum, in accordance with the applicable collective agreement; must have working hours and holiday in accordance with the national rules; must be treated with respect and dignity; and must not be subject to discrimination. Working environment A grant recipient s institution must ensure that the employees working on a project have a safe and healthy workplace. Environment A grant recipient must minimize adverse effects on the environment when conducting the research. This must be achieved by complying with environmental laws; establishing systems to ensure safe handling, storage etc. of materials used, utensils, waste etc.; avoiding contamination of the local environment; and improving environmental performance continually. The Novo Nordisk Foundation s website ( provides 21

25 further information about the Foundation s standards for good research practice. Practices When submitting an application on the Foundation s electronic application system, applicants must confirm that they have read and accepted the Foundation s standards for good research practice. Before submitting an application, applicants must actively confirm that they commit to using any grant responsibly and for the purposes stated in the application. Grant recipients declare that they will use and account for the funds granted in accordance with good accounting practices and be subject to audit. The Foundation may commission an independent audit of the accounts to determine whether the funds granted have been used for the intended purposes. Further, if the Foundation requests it, a grant recipient must submit a brief report on the progress of the project confirming that the grant recipient has used the funds awarded for the purposes described in the application. Any funds not used must be returned to the Foundation. If the Foundation determines that a grant recipient has or may have violated the Foundation s standards for good research practice, the grant recipient is asked to respond to the allegations. If the Foundation considers the grant recipient to have violated the standards, it may suspend payments associated with a grant and may require that the grant recipient refund payments already made. To ensure efficiency and to protect the environment, the Foundation strives to have paperless applications and administration. Applications are submitted through the Foundation s electronic application system, and the subsequent expert and administrative processing of the applications is carried out electronically. A BETTER LIFE Although the Foundation s primary grant area is research, the Foundation also supports humanitarian and social causes that improve people s lives. The Foundation ensures that the humanitarian organizations it supports focus on people s health and welfare, are recognized and submit publicly available audited accounts. The Foundation weights the social causes it supports in favour of projects that promote the welfare of people in Denmark. The grant recipients submit reports on these grants to the Foundation. Practices In accordance with the Articles of Association, the Foundation provides grants for operating the Steno Diabetes Center. The Center is a specialist hospital carrying out treatment, prevention, research and education within diabetes. In addition to paying for operating the hospital, the Foundation 22

26 THE NOVO NORDISK FOUNDATION GROUP AND SOCIETY GRANT ACTIVITIES also supports the Steno Health Promotion Center, which addresses one of the greatest diabetes-related challenges: changing people s lifestyles. The Foundation also supports the STAR education programme, which aims to improve the treatment of people with diabetes in such countries as China, India and Indonesia through teaching and disseminating knowledge about the latest research. In 2013, the Foundation also awarded a grant to Steno Diabetes Center to cover the start-up costs of the Steno-REACH diabetes education programme for health professionals in lowand medium-income countries. The Foundation also provides annual support based on applications to numerous well-known humanitarian and social organizations working nationally and internationally. In 2013, grants were awarded to the Red Cross, the Danish Refugee Council, Save the Children Denmark and others. THE FOUNDATION AS A WORKPLACE The management of the Foundation is aware of the responsibility the Foundation has for its employees as an employer. The Foundation strives to be an attractive workplace at which employees thrive both professionally and privately to benefit the Foundation, the individual employee and society. A key element of the Foundation s policy involves c reating a healthy, safe and flexible working environment for its employees. Similar to the four cornerstones covering grants, the Foundation has four cornerstones covering its employees the Foundation s team. These are designed to ensure a wellfunctioning workplace with clear objectives for the work and to ensure that the employees develop their professional competencies optimally and treat their fellow employees and collaborators in a trusting and respectful way. The cornerstones are commitment, professionalism, respect and trust. Commitment In our team, we are open and dedicated, we are curious and eager to learn and we focus on generating outstanding results. Professionalism In our team, we work to allow each individual to develop his or her potential, we are conscientious, we have high integrity and we are always ready to do our work in the best possible way. 23

27 Respect In our team, we meet in mutual trust while understanding each other s qualities and we have straightforward dialogue characterized by openness, honesty and credibility. Trust In our team, we are targeted and result oriented, and we value freedom with responsibility. Practices The Foundation expects its employees to comply with the cornerstones for the team in their activities; to provide annual feedback on whether the values are being implemented in the Foundation in practice; and to comply with the relevant guidelines for the working environment and other areas. To ensure that the Foundation s employees have good opportunities for balancing their work and private life and thereby for developing their professional competencies optimally, the Foundation offers incentives including: the opportunity to work from home; the opportunity to take time off to care for a sick child; an annual dialogue between each employee and their supervisor; and fringe benefits that focus on health. To ensure a healthy workplace and to minimize sick leave, the Foundation has a committee monitoring the working environment. The Foundation carries out an annual workplace assessment and regular anonymous surveys of employee satisfaction. The questions in the satisfaction surveys cover such areas as: well-being, loyalty and commitment, image, senior management, employee development, daily work and salary and employment terms and conditions. The 2013 workplace assessment revealed a high degree of satisfaction with the Foundation as a place to work. The last employee satisfaction survey was carried out in 2011, and this also revealed high satisfaction with the Foundation as a workplace. The Foundation holds an annual two-day staff seminar combining professional content and social interaction. 24

28 THE NOVO NORDISK FOUNDATION GROUP AND SOCIETY COMMERCIAL ACTIVITIES The ambition of the Foundation is that the companies in the Novo Group (Novo A/S, Novo Nordisk A/S and Novozymes A/S) create world-class business results and position themselves as internationally recognized and significant actors in improving how disease is combated and how to use natural resources intelligently. The Foundation has therefore laid down a common set of values in its Charter for Companies in the Novo Group. Present and future companies in the Novo Group must demonstrate willingness, ability and resolve to meet the following criteria. Company products and services make a significant difference in improving the way people live and work. The company is perceived to be an innovator in technology, in products, in services and/or in market approach. The company is among the best in its business and a challenging place to work. The company delivers competitive financial performance. Companies in the Novo Group commit to: value-based management open and honest dialogue with stakeholders continuous improvement of: 1. Financial performance 2. Environmental performance 3. Social performance reporting in accordance with relevant, internationally approved conventions. Companies in the Novo Group have established their own policies on corporate social responsibility based on the Charter and publish independent reports about their activities in this field. Reporting includes measuring trends and results in accordance with the Danish Financial Statements Act. Novo Nordisk A/S and Novozymes A/S have also used the Charter as the basis for developing their own visions and senior management values: the Novo Nordisk Way (Novo Nordisk A/S) and Touch the World (Novozymes A/S). Both companies have committed themselves for many years to the United Nations Global Compact, the largest global 25

29 initiative within corporate social responsibility. The Compact involves companies in solving some of the major social and environmental challenges resulting from globalization. More than 10,000 companies and organizations from more than 130 countries worldwide participate in the United Nations Global Compact. This includes a group of about 50 leading companies that have been invited to contribute further through Global Compact LEAD, an initiative of United Nations Secretary-General Ban Ki-moon. Both Novo Nordisk A/S and Novozymes A/S are members of LEAD, thereby setting an example for others. Novo A/S has defined its cornerstones based on the Charter, and these form the basis for the company s investments and its interactions internally and externally. These corner stones are as follows. Professionalism In our interactions, we will act in a proper manner emphasizing high integrity. Trust In our interactions, we emphasize building relationships based on mutual trust and respect. Similar to the chapter on the Foundation s grant activities, the following section assesses the societal value of the Foundation s commercial activities and their economic, social and environment impact. The companies websites provide comprehensive reports on the individual companies policies on corporate social responsibility. Insight In our interactions, we strive to provide deep knowledge and innovative solutions. Commitment In our interactions, we strive to achieve groundbreaking and long-term results. 26

30 THE NOVO NORDISK FOUNDATION GROUP AND SOCIETY COMMERCIAL ACTIVITIES ECONOMIC IMPACT Through its controlling and long-term shareholding in Novo Nordisk A/S and Novozymes A/S, the Novo Nordisk Foundation ensures that these publicly listed and globally operating companies are able to maintain their ties with Denmark and plan for the long term. The Novo Nordisk Foundation Group companies are subject to Danish corporate tax on their income. This means that the Foundation, in accordance with Danish law, may reduce its tax liability by deducting the amount paid in grants and may also deduct a further 25% of the amounts awarded so that its total assets are not eroded. Any remaining surplus is taxed thereafter. Practices In 2013, the activities of the Novo Nordisk Foundation Group resulted in taxes paid in Denmark of about DKK 10 billion ( 1.34 billion), including corporate tax, personal income tax and other taxes. By far the largest share of the Foundation s income via Novo A/S comprises dividends from Novo Nordisk A/S and Novozymes A/S based on profit primarily earned outside Denmark. In 2013, only 0.7% of the total turnover of the two companies, equivalent to DKK 645 million ( 86.5 million), was generated in Denmark. By comparison, the Foundation awarded grants of DKK 689 million ( 92 million) and paid out DKK 784 million ( 105 million) to support research and humanitarian and social causes, mostly research in public institutions. In 2013, Novo A/S invested DKK 1.5 billion ( 201 million) in 11 new and 31 existing innovative life-science companies that are all dedicated to researching, developing and commercializing new products. Through its investment in life-science companies, Novo A/S has created the basis for jobs in Denmark and abroad, with at least 1000 created in Denmark. In 2013, Novo A/S also invested DKK 4 billion ( 536 million) in Xellia Pharma ceuticals, a specialized pharmaceutical company with many years of experience in developing and producing drugs for treating antibiotic-resistant bacterial infections. Xellia has 850 employees. In 2013, Novo Nordisk A/S employed about 16,000 people in Denmark and Novozymes A/S about For both companies, this comprises about 40% of the total number they employ globally. 27

31 THE NOVO NORDISK FOUNDATION GROUP AND SOCIETY COMMERCIAL ACTIVITIES SOCIAL AND ENVIRONMENTAL IMPACT Companies in the Novo Group are very interested in and invest major resources in making a positive global social and environmental impact. Novo A/S calls this a responsible investment process. Novo Nordisk A/S and Novozymes A/S strive to improve their social and environmental impact in accordance with their value-based business principles and the United Nations Global Compact 10 principles for responsible businesses. The 10 principles cover human rights, labour, the environment and climate and combating corruption. Practices Before Novo A/S invests in a company, it investigates whether the company s activities conflict with the Charter for Companies in the Novo Group. When investing directly in a company, Novo A/S is responsible for ensuring that the companies in which it invests do not act irresponsibly in social or environmental terms. When investing through a third party, Novo A/S has a duty to ensure that this party does not act irresponsibly in social or environmental terms in taking decisions. Every investment is subjected to this process, and a potential investment is declined if a company or third party is considered not to fulfil the criteria. Novo A/S strives to act as an active and responsible shareholder and is represented on the boards of Novo Nordisk A/S and Novozymes A/S and, with few exceptions, on the boards of all the other companies in its portfolio. Both Novo Nordisk A/S and Novozymes A/S produce annual Communication on Progress reports that detail the initiatives the companies take to support and implement the Global Compact principles in their business activities. The companies annual reports outline the developments of the past year related to implementing the individual principles of the Global Compact. Both Novo Nordisk A/S and Novozymes A/S have won prizes for their reports on social responsibility. Novo Nordisk A/S, ranked number 7, is the only Danish company in the Global 100 Index. Novozymes A/S is number 1 in the biotechnology sector in the Dow Jones Sustainability Index and received a Gold Class rating in biotechnology in the internationally recognized RobecoSAM s Sustainability Yearbook 2014 for the fourth year in a row. Novozymes is also ranked number 2 in the Nordic Carbon Disclosure Leadership project. 28

32 THE NOVO NORDISK FOUNDATION GROUP AND SOCIETY COMMERCIAL ACTIVITIES In the 1920s, one aspect of August Krogh s agreement with his Canadian colleagues was that the insulin he had the rights to produce in the Nordic countries should be made widely available. Novo Nordisk A/S estimates that today the company provides medical treatments for about 24 million people with diabetes worldwide, a 7% increase compared with Of the 382 million people living with diabetes, just over half are estimated to be diagnosed, and many of those diagnosed do not receive medical treatment. Novo Nord isk s global access to diabetes care strategy aims to provide better care for those who need it and currently do not have access to proper diabetes care. The long-term goal is to reach 40 million people in 2020 with diabetes care products and thereby enable more people with diabetes to live better lives. Novo Nordisk A/S also has a pricing policy that involves the company offering insulin to 35 of the world s 49 lowest-income countries at prices not exceeding 20% of the average price in high - income countries. This means that people are treated with insulin for less than USD 0.17 per day. Another initiative is the Changing Diabetes in Children programme, a partnership between Novo Nordisk, the World Diabetes Foundation and local partners, including health ministries, to provide free insulin and care to children with type 1 diabetes in the world s poorest countries. Since 2010, 93 clinics have been established and more than 4150 local healthcare professionals have been educated to treat children with diabetes. More than 11,700 children in nine countries across Africa and South-East Asia have been enrolled in the programme. The initiative of Novo Nordisk A/S to increase global access to the respective treatments for diabetes and haemophilia also includes financial support for the World Diabetes Foundation, an independent foundation established by Novo Nordisk A/S in 2002, as well as the Novo Nordisk Haemophilia Foundation, which was established in In 2013, Novo Nordisk A/S donated DKK 64 million ( 8.6 million) to the World Diabetes Foundation and DKK 19 million ( 2.54 million) to the Novo Nordisk Haemophilia Foundation. Novozymes A/S has worked systematically over many years on business activities that also contribute to areas given priority by the United Nations for providing the world s poorest people with a better life and greater opportunities. Novozymes A/S increased its efforts again in 2013 and especially contributed to the development priorities of the United Nations through two initiatives, the United Nations Sustainable Energy for All initiative (SE4All) and Citizymes. In 2013, Novozymes A/S set a new corporate goal for the social impact in relation to the SE4All initiative. The goal in 2013 was for Novozymes to establish an initiative under SE4All based on sustainable biofuel. The SE4All initiative has three aims: to provide universal access to sustainable energy; to double the rate of improvement in energy efficiency; and 29