Welcome letter
Action defines leadership
By Lars Rebien Sørensen, President and CEO & Sten Scheibye, Chairman of the Board of Directors.
Today, one-tenth of the world’s population – more than 550 million individuals – has diabetes or the prestages of diabetes, and the numbers are growing day by day. This will prove to be the most significant public health challenge of the 21st century.
Put into this perspective, the mission of Novo Nordisk to change diabetes could not be more appropriate. It is therefore with great humility and satisfaction that we reflect on what we accomplished in 2006.
A few years ago a young woman gave voice to her dream: What if the world’s eyes were opened to the stark facts that diabetes is a chronic, debilitating and costly disease, that diabetes kills at least as many people as HIV/AIDS? A disease that it not only affects those families whose members have to come to terms with diabetes as part of their lives and need life-long medical treatment and care, but also has huge social and economic implications for the global society.
If that happened, wouldn’t it make a world of difference?
A few weeks ago the United Nations passed a resolution making World Diabetes Day a United Nations Day to be observed by the Member States, organisations and people around the world as an occasion to raise public awareness of diabetes and its consequences. This is an important milestone on the way to making that dream come true. Clare Rosenfeld, the young woman mentioned above, was seven years old when she was diagnosed with type 1 diabetes. Since the age of 12 she has been campaigning to bring attention to what diabetes does to people, and – more importantly – the urgency to defeat it. To make proper care available to everyone who needs it. And to relentlessly pursue every possible avenue to prevent it.
A movement gaining momentum
The successful ‘Unite for Diabetes’ campaign, effectively orchestrated by the International Diabetes Federation, will stand as a milestone for this effort. It was sparked by Clare Rosenfeld’s bold vision, and, thanks to the tireless efforts of hundreds of people, the diabetes community has come across as a powerful coalition with a voice that resonates
with policy-makers throughout the world.
Novo Nordisk is proud to be a part of this movement. Our aspiration is to defeat diabetes by finding better methods of diabetes prevention, detection and treatment. We work actively to promote collaboration between all parties in the healthcare system to achieve common goals. In the fight against diabetes, industry can take the lead, offer itself
as a partner and be a catalyst for change, but governments must do their part to achieve sustainable impact.
The leadership challenge
Stopping the pandemic growth of diabetes and securing access to proper care for all who need it are daunting tasks – but not insurmountable. We will change the future of diabetes. To be successful, we need to bring the best of our competences, technologies and collective resources to bear. We need to continually improve performance and stay focused on targets. We also need to find other ways to stimulate creativity, challenge assumptions, and imagine bold, new possibilities. That is the task at hand for the people at Novo Nordisk and our partners.
At Novo Nordisk we are determined to sustain our leadership. But the leadership challenge is one that is ever-present on our agenda and we will stay vigilant to retain and reinforce our position.
In 2006, we paid particular attention to five key business challenges: quality, competition, innovation, organisational development and business ethics.
The quality imperative
The quality of our products and services and the way we all perform in our jobs are crucial for the prosperity of our company and, increasingly, as a differentiating factor as well. Our customers’ lives depend on the safety and efficacy of our products. It has therefore been reassuring and rewarding to see the continued strong focus on quality processes and activities. Product quality has remained high, with a declining complaint rate. And the level of regulatory compliance, as witnessed by the outcomes of numerous internal and external inspections, is also very high.
Tougher competition
Considering the magnitude of the diabetes challenge and the fact that current therapies alone cannot solve the problem, it is only natural that many companies see business opportunities in this field. For Novo Nordisk this means increased competition from established innovation-based pharmaceutical companies and from biosimilar manufacturers. To get our message across in this increasingly ‘noisy’ environment, we need to speak louder and expand our presence globally. In other words, the costs of doing business are going up. In the course of the year we have managed to improve our market position in all therapy areas and in all markets, which has helped us to achieve our goals.
The innovation challenge
Discovering new therapies for unmet medical needs in serious illnesses is what dreams are made of. There are still plenty of improvements to be made in each of the therapy areas in which Novo Nordisk has unique expertise. It has been encouraging to see the progress of our early research pipeline, giving great hopes of being able to retain our leadership within diabetes, haemostasis and growth disorders, while at the same time potentially opening up new fields such as inflammation and oncology. Furthermore, we are expanding our late-stage clinical activities to a level never seen before in our company. Product innovation is crucial for long-term value creation. And it is accompanied by innovation in many other parts of our company, including new manufacturing processes, the provision of shared services, administrative procedures, ways of interacting with our stakeholders, and many more. Innovation is made up of small and big strides alike that improve our productivity and long-term competitiveness, and give hope to and improve the lives of our customers. Just as importantly, it is a key factor in making our company an exciting place to work.
Transformational growth
Globalisation is a huge opportunity for our company to gain access to more markets, to recruit new talents, and to source our products and services from where they can be most efficiently produced. This requires a clear strategy that determines how and where functions are best performed. We believe that certain jobs, particularly in Denmark,
will be more specialised, and at the same time we anticipate that job creation will predominantly take place abroad. This transformation is ongoing in our company; thousands of people are upgrading their competences for the benefit of Novo Nordisk and to secure their future employability.
Global growth underlines the need for a clear values-oriented company culture. The Novo Nordisk Way of Management and our Vision set the direction for where Novo Nordisk wants to go and how we are going to get there. It aims to inspire everyone at Novo Nordisk to make their contribution to shaping the future of the company.
These business principles find a lot of resonance across the organisation and help us make the company stand out both as a business partner and as an employer.
Ethical business conduct
Remaining a trusted business partner requires transparency in all aspects of our business. We disclose our activities in clinical trials. We have procedures in place and offer training for everyone within purchasing, marketing practices and management. From 2007 we will ensure that governance of third-party contracts lives up to the current standards described in our Business Ethics Policy. This is a long-term process aimed at protecting our company’s reputation and the integrity of our people.
Competitive business results
Being focused is a particular strength of Novo Nordisk. We will achieve competitive business results so that we can build a sustainable business. Strong business growth combined with productivity improvements in manufacturing, administration and corporate functions has allowed us to increase our investment in research and development as well as our presence in the marketplace to strengthen our long-term prospects. Most notably we have been able to better utilise our plants and equipment with the result that we have expanded our capacity, decreased our unit costs, sustained quality and postponed
significant future capital expenditures.
This achievement is in spite of adverse developments in Novo Nordisk’s basket of currencies versus Danish kroner, emphasising that financial performance in 2006 was very strong. Sales growth exceeded our expectations and, combined with the substantial productivity improvements, has allowed us to invest for the future while still improving
our return on invested capital in line with our long-term financial goals.
Consequently, we note with great pleasure that our shareholders have seen a significant appreciation of their holdings in Novo Nordisk – and we are grateful for their continued commitment and trust in the company.
Novo Nordisk enters 2007 as a very healthy business, well-positioned for future growth and prosperity. This is the result of the efforts of 23,613 Novo Nordisk people working together on a mission. It is thanks to their imagination, ingenuity, dedication and hard work that Novo Nordisk continues to be a very special company.
And it is through examples like Clare Rosenfeld that we all at Novo Nordisk find a strong sense of direction and mobilise personal leadership, which makes our jobs truly rewarding.
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.
