RESULTS FOR THE YEAR (Tables)

12 Months Ended

Dec. 31, 2017

Analysis of income and expense [abstract]

GROSS-TO-NET SALES RECONCILIATION




DKK million	2017		2016		2015
Gross sales	216,174		198,924		182,779

US Managed Care and Medicare	(53,077	)	(40,874	)	(33,235	)
US wholesaler charge-backs	(28,324	)	(25,416	)	(22,030	)
US Medicaid rebates	(12,491	)	(10,862	)	(9,838	)
Other US discounts and sales returns	(5,771	)	(5,147	)	(4,685	)
Non-US rebates, discounts and sales returns	(4,815	)	(4,845	)	(5,064	)

Total gross-to-net sales adjustments	(104,478	)	(87,144	)	(74,852	)
Net sales	111,696		111,780		107,927

Provisions for Sales Rebates




DKK million	2017		2016		2015

At the beginning of the year	19,971		16,508		11,002
Additional provisions, including increases to existing provisions	63,772		56,954		45,190
Amount used during the year	(61,017	)	(53,217	)	(40,958	)
Adjustments, including unused amounts reversed during the year	(117	)	(822	)	—
Effect of exchange rate adjustment	(2,393	)	548		1,274

At the end of the year	20,216		19,971		16,508

PROVISIONS



DKK million	Provisions for sales rebates		Provisions for legal disputes		Provisions for product returns		Other provisions¹		2017 total		2016 total


At the beginning of the year	19,971		1,915		767		1,178		23,831		19,824
Additional provisions, including increases to existing provisions	63,772		743		314		384		65,213		58,688
Amount used during the year	(61,017	)	(455	)	(274	)	(230	)	(61,976	)	(53,991	)
Adjustments, including unused amounts reversed during the year	(117	)	(287	)	54		(56	)	(406	)	(1,291	)
Effect of exchange rate adjustment	(2,393	)	(135	)	(14	)	(63	)	(2,605	)	601

At the end of the year	20,216		1,781		847		1,213		24,057		23,831

Non-current liabilities	—		1,781		508		1,013		3,302		3,370
Current liabilities	20,216		—		339		200		20,755		20,461


1.	Other provisions consist of various types of provision, including obligations in relation to employee benefits such as jubilee benefits, company-owned life insurance etc. Assets offsetting obligations related to company-owned life insurance are presented as part of Other financial assets.

Information by Business Segment

BUSINESS SEGMENTS



DKK million	2017			2016		2015		2017			2016		2015		2017			2016		2015
Segment sales	Diabetes care and obesity							Biopharmaceuticals							Total

New-generation insulin		8,647		4,459		1,438
- of which Tresiba^®		7,327		4,056		1,278
Total modern insulin		44,400		47,510		50,164
NovoRapid^® / NovoLog^®		20,025		19,945		20,720
NovoMix^® / NovoLog^® Mix		10,257		10,482		11,144
Levemir^®		14,118		17,083		18,300
Human insulin		10,072		11,090		11,231
Total insulin		63,119		63,059		62,833
Victoza^®		23,173		20,046		18,027
Other diabetes care		4,023		4,267		4,270
Total diabetes care		90,315		87,372		85,130
Obesity (Saxenda^®)		2,562		1,577		460

Diabetes care and obesity total sales		92,877		88,949		85,590

Haemophilia									10,469		10,472		10,647
- of which NovoSeven^®									9,206		9,492		10,064
- of which NovoEight^®									1,103		851		477
Growth disorders									6,655		8,770		7,820
Other biopharmaceuticals									1,695		3,589		3,870

Biopharmaceuticals total sales									18,819		22,831		22,337
Segment key figures

Total net sales		92,877		88,949		85,590			18,819		22,831		22,337			111,696		111,780		107,927
Cost of goods sold		15,014		14,337		13,725			2,618		2,846		2,463			17,632		17,183		16,188

Sales and distribution costs		25,475		24,387		24,926			2,865		3,990		3,386			28,340		28,377		28,312
Research and development costs		11,358		11,481		10,475			2,656		3,082		3,133			14,014		14,563		13,608
Administrative costs		3,143		3,128		3,051			641		834		806			3,784		3,962		3,857
Other operating income, net		466		486		488			575		251		618			1,041		737		1,106
Income from partial divestment of NNIT A/S (not allocated to segments)		—		—		—			—		—		—			—		—		2,376
Operating profit		38,353		36,102		33,901			10,614		12,330		13,167			48,967		48,432		49,444
Operating margin		41.3	%	40.6	%	39.6	%		56.4	%	54.0	%	58.9	%		43.8	%	43.3	%	45.8	%

Depreciation, amortisation and impairment losses expensed		2,536		2,674		2,514			646		519		445			3,182		3,193		2,959
Additions to Intangible assets and Property, plant and equipment		7,565		6,144		4,991			2,226		2,123		1,415			9,791		8,267		6,406

Assets allocated to business segments		61,542		55,081		46,444			14,994		14,798		11,759			76,536		69,879		58,203
Non-allocated assets¹																25,819		27,660		33,596
Total assets																102,355		97,539		91,799


1.	The part of total assets that remains unallocated to either of the two business segments includes Investment in associated company, Deferred income tax assets, Other financial assets, Tax receivables, Marketable securities, Derivative financial instruments and Cash at bank.



DKK million	2017	2016	2015

Diabetes care and obesity	11,358	11,481	10,475
Biopharmaceuticals	2,656	3,082	3,133

Total	14,014	14,563	13,608

Geographical Areas

GEOGRAPHICAL AREAS (CONTINUED)



2017		2016		2015		2017			2016		2015		2017			2016		2015		2017			2016		2015


International Operations (continued)
Region AAMEO						Region China							Region Japan & Korea							Region Latin America



451		279		162			2		—		—			992		769		495			407		279		203
261		181		122			2		—		—			739		711		491			377		253		183
5,725		5,284		5,099			5,500		4,969		4,312			1,518		1,787		1,713			797		699		983
2,261		1,995		1,825			1,253		1,059		866			941		998		888			335		266		326
2,503		2,291		2,297			3,555		3,363		3,036			444		619		632			113		104		161
961		998		977			692		547		410			133		170		193			349		329		496
2,201		2,494		2,431			3,096		3,361		3,537			232		302		324			836		819		831
8,377		8,057		7,692			8,598		8,330		7,849			2,742		2,858		2,532			2,040		1,797		2,017
858		715		584			309		255		213			590		623		470			500		438		352
475		505		613			1,566		1,697		1,594			376		434		354			58		52		80
9,710		9,277		8,889			10,473		10,282		9,656			3,708		3,915		3,356			2,598		2,287		2,449
190		46		—			—		—		—			—		—		—			277		57		—

9,900		9,323		8,889			10,473		10,282		9,656			3,708		3,915		3,356			2,875		2,344		2,449

1,163		1,101		1,319			216		158		195			681		737		643			558		1,022		877
1,097		1,082		1,310			215		158		195			497		559		524			543		1,022		877
52		11		—			1		—		—			169		170		118			15		—		—
676		906		818			15		15		15			1,579		1,469		1,339			263		221		348
279		250		246			5		3		5			104		104		97			3		6		21

2,118		2,257		2,383			236		176		215			2,364		2,310		2,079			824		1,249		1,246
12,018		11,580		11,272			10,709		10,458		9,871			6,072		6,225		5,435			3,699		3,593		3,695
3.8	%	2.7	%	15.1	%		2.4	%	5.9	%	22.0	%		(2.5	%)	14.5	%	10.8	%		3.0	%	(2.8	%)	33.7	%

566		525		353			1,884		2,095		2,291			146		161		153			668		759		602
3,468		3,164		2,620			1,541		1,773		1,541			279		305		466			862		1,084		1,036
(823	)	(817	)	(786	)		—		—		—			(5	)	(5	)	(5	)		(211	)	(194	)	(211	)
5,876		4,937		4,160			5,927		5,697		5,603			1,304		1,248		1,338			3,036		3,566		3,278

GEOGRAPHICAL AREAS



	2017			2016		2015		2017			2016		2015		2017			2016		2015		2017			2016		2015


DKK million	North America Operations														International Operations
	Total							Of which US							Total							Region Europe


Sales by business segment:
New-generation insulin		5,152		2,246		33			5,132		2,246		33			3,495		2,213		1,405			1,643		886		545
- of which Tresiba^®		4,982		2,246		33			4,970		2,246		33			2,345		1,810		1,237			966		665		441
Total modern insulin		22,364		26,043		28,708			21,651		25,337		27,945			22,036		21,467		21,456			8,496		8,728		9,349
NovoRapid^® / NovoLog^®		10,960		11,427		12,576			10,574		11,058		12,184			9,065		8,518		8,144			4,275		4,200		4,239
NovoMix^® / NovoLog^® Mix		1,790		2,080		2,837			1,743		2,032		2,779			8,467		8,402		8,307			1,852		2,025		2,181
Levemir^®		9,614		12,536		13,295			9,334		12,247		12,982			4,504		4,547		5,005			2,369		2,503		2,929
Human insulin		1,937		2,011		2,094			1,766		1,827		1,884			8,135		9,079		9,137			1,770		2,103		2,014
Total insulin		29,453		30,300		30,835			28,549		29,410		29,862			33,666		32,759		31,998			11,909		11,717		11,908
Victoza^®		17,465		14,624		13,014			16,929		14,146		12,570			5,708		5,422		5,013			3,451		3,391		3,394
Other diabetes care		943		930		950			782		776		785			3,080		3,337		3,320			605		649		679
Total diabetes care		47,861		45,854		44,799			46,260		44,332		43,217			42,454		41,518		40,331			15,965		15,757		15,981
Obesity (Saxenda^®)		1,993		1,446		459			1,828		1,366		452			569		131		1			102		28		1

Diabetes care and obesity total		49,854		47,300		45,258			48,088		45,698		43,669			43,023		41,649		40,332			16,067		15,785		15,982

Haemophilia		5,023		4,934		5,208			4,852		4,710		5,086			5,446		5,538		5,439			2,828		2,520		2,405
- of which NovoSeven^®		4,609		4,589		5,021			4,451		4,378		4,914			4,597		4,903		5,043			2,245		2,082		2,137
- of which NovoEight^®		315		254		110			315		254		110			788		597		367			551		416		249
Growth disorders		2,550		4,498		3,625			2,543		4,495		3,625			4,105		4,272		4,195			1,572		1,661		1,675
Other biopharmaceuticals		582		2,510		2,765			348		2,291		2,559			1,113		1,079		1,105			722		716		736

Biopharmaceuticals total		8,155		11,942		11,598			7,743		11,496		11,270			10,664		10,889		10,739			5,122		4,897		4,816
Total sales by business and geographical segment		58,009		59,242		56,856			55,831		57,194		54,939			53,687		52,538		51,071			21,189		20,682		20,798
Total sales growth as reported		(2.1	%)	4.2	%	31.8	%		(2.4	%)	4.1	%	32.9	%		2.2	%	2.9	%	11.8	%		2.5	%	(0.6	%)	3.2	%

Property, plant and equipment		7,318		4,599		3,049			7,298		4,599		3,047			27,929		25,580		22,496			24,665		22,040		19,097
Trade receivables, net		10,742		10,604		6,619			10,517		10,426		6,456			9,423		9,630		8,866			3,273		3,304		3,203
Allowance for doubtful trade receivables		(32	)	(41	)	(25	)		(32	)	(41	)	(25	)		(1,262	)	(1,182	)	(1,166	)		(223	)	(166	)	(139	)
Total assets		20,612		18,684		12,830			20,180		18,349		12,594			81,743		78,855		78,969			65,600		63,407		64,590

Research and Development Costs

RESEARCH AND DEVELOPMENT COSTS



DKK million	2017		2016		2015

Internal and external Research and development costs	7,430		7,494		7,352
Employee costs (note 2.4)	5,848		6,149		5,584
Amortisation and impairment losses, intangible assets (note 3.1)	211		427		247
Depreciation and impairment losses, property, plant and equipment (note 3.2)	525		493		425

Total Research and development costs	14,014		14,563		13,608
As percentage of sales	12.5	%	13.0	%	12.6	%

Employee Costs and Remuneration to Executive Management and Board of Directors

EMPLOYEE COSTS



DKK million	2017		2016		2015

Wages and salaries	23,869		24,651		23,289
Share-based payment costs (note 5.1)	292		368		442
Pensions – defined contribution plans	1,800		1,829		1,715
Pensions – defined benefit plans	165		145		154
Other social security contributions	1,910		1,853		1,783
Other employee costs	2,102		2,110		2,117

Total employee costs for the year	30,138		30,956		29,500
Employee costs capitalised as intangible assets and property, plant and equipment	(1,435	)	(1,258	)	(957	)
Change in employee costs capitalised as inventories	(91	)	(127	)	(191	)

Total employee costs in the Income statement	28,612		29,571		28,352

Included in the Income statement:
Cost of goods sold	7,854		7,841		7,239
Sales and distribution costs	11,994		12,447		12,231
Research and development costs	5,848		6,149		5,584
Administrative costs	2,505		2,721		2,658
Other operating income, net	411		413		640

Total employee costs in the Income statement	28,612		29,571		28,352

REMUNERATION TO EXECUTIVE MANAGEMENT AND BOARD OF DIRECTORS



DKK million	2017	2016	2015

Salary and cash bonus	74	77	89
Pension	18	20	22
Benefits⁴	6	10	7
Share-based incentive⁵	7	11	44
Severance payments^1,4	0	66	73

Executive Management in total^1,2,3	105	184	235
Fee to Board of Directors	16	14	12
Total	121	198	247


1.	Please refer to note 5.1 and ’Remuneration’, pp 50-53 (unaudited), for further information.

President and CEO Lars Rebien Sørensen retired from Novo Nordisk on 31 December 2016. The 2016 remuneration for Lars Rebien Sørensen is included in the above table together with a severance payment of DKK 65.7 million. EVPs Jerzy Gruhn and Jesper Højland stepped down from Novo Nordisk´s Executive Management in 2016. The 2016 remuneration for Jerzy Gruhn and Jesper Høiland is included in the above table. EVP Kåre Schultz left Novo Nordisk on 30 April 2015. The 2015 remuneration for Kåre Schultz is included in the above table together with a severance payment of DKK 72.7 million.


3.	Total remuneration for registered members of Executive Management and the Board of Directors amounts to DKK 90 million (DKK 152 million in 2016 and DKK 120 million in 2015).


4.	Benefits are included in Other employee costs, and severance payments are included in Wages and salaries in the table above.


5.	Until 2017 the cost of the programme was expensed when shares was granted as the pool was fixed. From 2017 onwards, the programme will be expensed equally over the grant year and the subsequent 3 years of vesting as the number of shares will be reduced if a participant terminates employment with Novo Nordisk.

Income Taxes Expensed and Paid

INCOME TAXES EXPENSED



DKK million	2017		2016		2015

Current tax on profit for the year	10,562		8,981		9,648
Deferred tax on profit for the year	182		3,014		(1,130	)


Tax on profit for the year	10,744		11,995		8,518
Adjustments recognised for current tax of prior years	(425	)	(3,191	)	3
Adjustments recognised for deferred tax of prior years	231		1,069		102

Income taxes in the Income statement	10,550		9,873		8,623

Current tax on Other comprehensive income for the year	(2	)	(28	)	—
Deferred tax on Other comprehensive income for the year	1,043		(296	)	87

Tax on other comprehensive income for the year, (income)/expense	1,041		(324	)	87



DKK million	2017		2016		2015

Income taxes paid in Denmark for current year	6,798		5,506		5,926
Income taxes paid outside Denmark for current year	2,639		2,645		3,040
Income taxes paid/ repayments relating to prior years	(336	)	(5,252	)	408

Total income taxes paid	9,101		2,899		9,374

Computation of Effective Tax Rate



DKK million	2017		2016		2015

Computation of effective tax rate:
Statutory corporate income tax rate in Denmark	22.0	%	22.0	%	23.5	%
Deviation in foreign subsidiaries’ tax rates compared with the Danish tax rate (net)	0.0	%	0.2	%	(2.9	%)
Non-taxable income from the partial divestment of NNIT A/S	—		—		(1.3	%)
Non-taxable income less non-tax-deductible expenses (net)	0.1	%	0.1	%	0.1	%
Others, including adjustment of prior years	(0.4	%)	(1.6	%)	0.4	%

Effective tax rate	21.7	%	20.7	%	19.8	%

Deferred Income Tax Assets and Liabilities and Specification of Tax Loss Carry-Forwards

DEVELOPMENT IN DEFERRED INCOME TAX ASSETS AND LIABILITIES



DKK million	Property, plant and equipment		Intangible assets		Inventories		Provisions and other liabilities		Other²		Offset within countries		Total

2017
Net deferred tax asset/(liability) at 1 January	(966	)	(359	)	1,176		2,005		814		—		2,670
Income/(charge) to the Income statement	61		(132	)	(192	)	(182	)	32				(413	)
Income/(charge) to Other comprehensive income	—		—		(151	)	(26	)	(866	)			(1,043	)
Income/(charge) to Equity¹	—		—		—		—		17				17
Effect of exchange rate adjustment	37		(9	)	—		(139	)	(25	)			(136	)

Net deferred tax asset/(liability) at 31 December	(868	)	(500	)	833		1,658		(28	)	—		1,095

Classified as follows:
Deferred tax asset at 31 December	237		57		2,194		1,748		318		(2,613	)	1,941
Deferred tax liability at 31 December	(1,105	)	(557	)	(1,361	)	(90	)	(346	)	2,613		(846	)

1. Deferred tax related to value adjustment of restricted stock units. In addition, DKK 1 million related to current tax has also been charged to Equity. The net charge to Equity is DKK 18 million. 2. Other includes hedging and tax loss carry forwards, etc.
2016
Net deferred tax asset/(liability) at 1 January	(765	)	(337	)	3,593		2,559		1,750		—		6,800
Income/(charge) to the Income statement	(188	)	(23	)	(2,390	)	(632	)	(850	)			(4,083	)
Income/(charge) to Other comprehensive income	—		—		(27	)	54		269				296
Income/(charge) to Equity³	—		—		—		—		(355	)			(355	)
Effect of exchange rate adjustment	(13	)	1		—		24		—				12

Net deferred tax asset/(liability) at 31 December	(966	)	(359	)	1,176		2,005		814		—		2,670

Classified as follows:
Deferred tax asset at 31 December	183		96		2,400		2,081		930		(3,007	)	2,683
Deferred tax liability at 31 December	(1,149	)	(455	)	(1,224	)	(76	)	(116	)	3,007		(13	)

3. Deferred tax related to value adjustment of restricted stock units. In addition, DKK 440 million related to current tax has also been charged to Equity. The net charge to Equity is DKK 85 million.

SPECIFICATION OF TAX LOSS CARRY-FORWARDS AT 31 DECEMBER



DKK million	2017	2016
Recognised deferred tax on tax loss carry forwards	24	39
Unrecognised tax base of tax loss carry-forwards	364	235
Classified as follows:
Expiry within one year	—	19
Expiry within two to five years	16	—
Expiry after more than five years	348	216

Average number of full-time employees

Year-end number of full-time employees