UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
	OR
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2019
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	OR
o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 333-82318

NOVO NORDISK A/S

(Exact name of Registrant as specified in its charter)

Not applicable	The Kingdom of Denmark
(Translation of Registrant’s name into English)	(Jurisdiction of incorporation or organization)

Novo Allé 1

DK-2880 Bagsværd

Denmark

(Address of principal executive offices)

Karsten Munk Knudsen

Executive Vice President and Chief Financial Officer

Tel: +45 4444 8888

E-mail: kmkn@novonordisk.com

Novo Allé, DK-2880 Bagsværd, Denmark

(Name, Telephone, E-mail and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class:	Trading Symbol(s):	Name of each exchange on which registered:
B shares, nominal value DKK 0.20 each	NVO	New York Stock Exchange*
American Depositary Receipts, each representing one B Share		New York Stock Exchange

* Not for trading, but only in connection with the registration of American Depositary Receipts, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report:

A shares, nominal value DKK 0.20 each:	537,436,000
B shares, nominal value DKK 0.20 each:	1,862,564,000

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes xNo o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes oNo x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes xNo o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes xNo o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer o Non-accelerated filer oEmerging growth company o

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filling:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

U.S. GAAP oInternational Financial Reporting Standards as issued by the International Accounting Standards Board x Other o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 o Item 18 o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

TABLE OF CONTENTS

TABLE OF CONTENTS

INTRODUCTION		2
Part I
ITEM 1	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS	3
ITEM 2	OFFER STATISTICS AND EXPECTED TIMETABLE	3
ITEM 3	KEY INFORMATION	3
ITEM 4	INFORMATION ON THE COMPANY	5
ITEM 4A	UNRESOLVED STAFF COMMENTS	10
ITEM 5	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	11
ITEM 6	DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES	14
ITEM 7	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	23
ITEM 8	FINANCIAL INFORMATION	25
ITEM 9	THE OFFER AND LISTING	26
ITEM 10	ADDITIONAL INFORMATION	26
ITEM 11	QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS	28
ITEM 12	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	29
Part II
ITEM 13	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	30
ITEM 14	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	30
ITEM 15	CONTROLS AND PROCEDURES	30
ITEM 16A	AUDIT COMMITTEE FINANCIAL EXPERTS	30
ITEM 16B	CODE OF ETHICS	31
ITEM 16C	PRINCIPAL ACCOUNTANT FEES AND SERVICES	31
ITEM 16D	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	31
ITEM 16E	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	32
ITEM 16F	CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT	32
ITEM 16G	CORPORATE GOVERNANCE	33
ITEM 16H	MINE SAFETY DISCLOSURE	34
Part III
ITEM 17	FINANCIAL STATEMENTS	35
ITEM 18	FINANCIAL STATEMENTS	35
ITEM 19	EXHIBITS	39
SIGNATURES		43

1

Novo Nordisk Form 20-F 2019

INTRODUCTION

INTRODUCTION

In this Form 20-F the terms ‘the Company’, ‘Novo Nordisk’ and ‘the Group’ refer to the parent company Novo Nordisk A/S together with its consolidated subsidiaries. The term ‘Novo Nordisk A/S’ is used when addressing issues specifically related to this legal entity.

Pursuant to Rule 12b-23(a) of the Securities Exchange Act of 1934, as amended, certain information for the 2019 Form 20-F of Novo Nordisk A/S set out herein is being incorporated by reference from the Company's statutory Annual Report 2019 and Annual Report 2018, including the consolidated financial statements of Novo Nordisk A/S (hereafter “Annual Report 2019” and “Annual Report 2018”, respectively). Therefore, the information in this Form 20-F should be read in conjunction with our Annual Report 2019 and Annual Report 2018, which were furnished to the SEC on Form 6-K on February 5, 2020 and on February 4, 2019, respectively.

The Company publishes its financial statements in Danish kroner (DKK).

Forward-looking statements

The information set forth in this Form 20-F contains forward-looking statements as the term is defined in the U.S. Private Securities Litigation Reform Act of 1995.

Words such as ‘believe’, ‘expect’, ‘may’, ‘will’, ‘plan’, ‘strategy’, ‘prospect’, ‘foresee’, ‘estimate’, ‘project’, ‘anticipate’, ‘can’, ‘intend’, ‘target’ and other words and terms of similar meaning in connection with any discussion of future operating or financial performance identify forward-looking statements. Examples of such forward-looking statements include, but are not limited to:

• statements of targets, plans, objectives or goals for future operations, including those related to Novo Nordisk’s products, product research, product development, product introductions and product approvals as well as cooperation in relation thereto,

• statements containing projections of or targets for revenues, costs, income (or loss), earnings per share, capital expenditures, dividends, capital structure, net financials and other financial measures,

• statements regarding future economic performance, future actions and outcome of contingencies such as legal proceedings, and

• statements regarding the assumptions underlying or relating to such statements.

With reference to our Annual Report 2019 and Annual Report 2018, examples of forward-looking statements can be found under the headings, ‘2019 performance and 2020 outlook’ in our Annual Report 2019 and ‘2018 performance and 2019 outlook’ in our Annual Report 2018, and elsewhere.

These statements are based on current plans, estimates and projections. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific. Novo Nordisk cautions that a number of important factors, including those described in our Annual Report 2019 and Annual Report 2018, could cause actual results to differ materially from those contemplated in any forward-looking statements.

Factors that may affect future results include, but are not limited to, global as well as local political and economic conditions, including interest rate and currency exchange rate fluctuations, delay or failure of projects related to research and/or development, unplanned loss of patents, interruptions of supplies and production, product recalls, unexpected contract breaches or terminations, government-mandated or market-driven price decreases for Novo Nordisk’s products, introduction of competing products, reliance on information technology, Novo Nordisk’s ability to successfully market current and new products, exposure to product liability and legal proceedings and investigations, changes in governmental laws and related interpretation thereof, including on reimbursement, intellectual property protection and regulatory controls on testing, approval, manufacturing and marketing, perceived or actual failure to adhere to ethical marketing practices, investments in and divestitures of domestic and foreign companies, unexpected growth in costs and expenses, failure to recruit and retain the right employees, and failure to maintain a culture of compliance.

For an overview of some, but not all, of the risks that could adversely affect our results or the accuracy of forward-looking statements in this document, reference is made to the overview of risk factors in ‘Managing risks to protect value’ on pages 29-31 of our Annual Report 2019.

Unless required by law, Novo Nordisk is under no duty and undertakes no obligation to update or revise any forward-looking statement after the date of this document, whether as a result of new information, future events or otherwise.

Enforceability of civil liabilities

The Company is a Danish corporation and a majority of its directors and officers, as well as certain experts named herein, are non-residents of the United States. A substantial portion of the assets of Novo Nordisk A/S, its subsidiaries and such persons are located outside the United States. As a result, it may be difficult for shareholders of the Company to effect service within the United States upon directors, officers and experts who are not residents of the United States or to enforce judgments in the United States. In addition, there can be no assurance as to the enforceability in Denmark against the Company or its respective directors, officers and experts who are not residents of the United States, or in actions for enforcement of judgments of United States courts, of liabilities predicated solely upon the federal securities laws of the United States.

2

Novo Nordisk Form 20-F 2019

ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

PART I

ITEM 1        IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable.

ITEM 2        OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3        KEY INFORMATION

A. SELECTED FINANCIAL DATA

Selected financial data
IFRS figures in DKK millions, except share and American Depositary Receipts (‘ADR’) data	2015		2016		2017		2018		2019
Income statement data
Net sales	107,927		111,780		111,696		111,831		122,021
Operating profit*	49,444		48,432		48,967		47,248		52,483
Net profit*	34,860		37,925		38,130		38,628		38,951
Earnings per share
Earnings per share/ADR	13.56		14.99		15.42		15.96		16.41
Diluted earnings per share/ADR	13.52		14.96		15.39		15.93		16.38
Balance sheet data
Total assets*	91,799		97,539		102,355		110,769		125,612
Net assets*	46,969		45,269		49,815		51,839		57,593
Capital stock	520		510		500		490		480
Treasury stock	(10	)	(9	)	(11	)	(11	)	(10	)
Dividends per share/ADR**	6.40		7.60		7.85		8.15		8.35
Dividends per share/ADR in USD**	0.94		1.08		1.26		1.25		1.25
Number of shares	2,600		2,550		2,500		2,450		2,400

*) The Group has applied IFRS 16 'Leases' for the first time on 1 January 2019. Amounts for 2015-2018 have not been restated. Please refer to note 1.2 in our Annual Report 2019 for further information.

**) Total dividend for the financial year 2019 including proposed final dividend of DKK 5.35 per share and interim dividend paid in August 2019 of DKK 3.00 per share. For USD translation the exchange rate at December 30, 2019 from Danmarks Nationalbank (The Central Bank of Denmark) is used (USD 1 = DKK 6.68)

Reference is made to ‘Consolidated financial statements 2019’, pages 41-76 in our Annual Report 2019 for further data.

B. CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D. RISK FACTORS

For information on risk factors, reference is made to our Annual Report 2019 ‘Managing risks to protect value’ on pages 29-31. Outlined in greater details below, we are subject to cybersecurity risks, to the risks associated with the United Kingdom’s planned exit from the European Union and to the risk of epidemics or other public health crises.

The potential risk on our business as a result of cybersecurity breaches

We rely on our IT systems to protect our intellectual property, business confidential information, and personal data. Therefore, disruption as a result of cybersecurity breaches could negatively impact the Company’s business and operations or financial results.

3

Novo Nordisk Form 20-F 2019

ITEM 3 KEY INFORMATION

IT systems act as a backbone for the Company. They support processes in research & development, manufacturing, sales and supply, and business administration. As we are a global company, the size and complexity of our IT systems are significant, and our IT infrastructure and networks are spread across the geographic regions in which we operate. The Company has made, and expects to continue to make, significant hardware, software and resourcing investments in our IT security and personal data protection programmes. Despite these investments, the dedicated cybersecurity teams who operate our global IT security infrastructure may be unable to respond sufficiently to the multitude of threats facing us or may fail to prevent service interruptions or security breaches resulting from attacks by malicious third parties. The cyber threat landscape continues to change and evolve over time, and includes threats ranging from IT-based malware of varying sophistication, to social engineering attacks, to the unintended or inadvertent click by an employee on a malicious website. Many of these threats have the potential to cause significant

downtime of critical IT systems or the unintended disclosure of confidential information and personal data. From time to time, we experience IT security and personal data breaches, including incidents as a result of malware and third party vendor actions. Although we have not previously experienced material losses as a result of such incidents, we cannot guarantee that we will be able to prevent similar incidents from recurring or adversely affecting our business in the future.

We are subject to data privacy regulation in the EU (including the General Data Protection Regulation) and to privacy laws in many other jurisdictions where we do business that impose obligations and restrictions on the collection and use of personal data. In the ordinary course of the Company’s business, it collects and stores sensitive data, including personal data and personally identifiable information of customers, employees and other third parties. Any unauthorized access, disclosure, or other loss of personal data could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and significant regulatory penalties, disrupt the Company’s operations and damage the Company’s reputation.

Our focus is not limited to the operations of our own IT systems and infrastructure. Many third party vendors support our business processes and require access to sensitive information in the course of their work supporting the Company’s operations. Despite clear guidance, supporting processes and requirements and audits of the Company’s third party vendors, the risk that such vendors could be susceptible to cybersecurity or personal data breaches continues to be present. Any such breach could result in the unauthorized access, disclosure, or other loss of proprietary, personal or other sensitive information, or other disruption to the Company’s business and operations.

The extent of the impact on our business as a result of the United Kingdom’s decision to end its membership in the European Union remains uncertain

Following the vote of a majority of the United Kingdom (the “UK”) electorate in a referendum held on June 23, 2016, in March 2017, the government of the UK (the “UK Government”) triggered Article 50 of the Lisbon Treaty and left the European Union (the “EU”) on 31 January 2020 (“Brexit”).

The extent of the impact on the Company’s operations in the UK will depend significantly on the trade negotiations between UK and EU and the length of the transition period. There is significant uncertainty regarding the future relationship between the United Kingdom and the EU. Lack of clarity about future UK laws and regulations as the UK determines which EU-derived laws and regulations to replace or replicate as part of a withdrawal, including healthcare and pharmaceutical regulations; financial laws and regulations; tax and free trade agreements; intellectual property rights; supply chain logistics; environmental, health, and safety laws and regulations; immigration laws; and employment laws, and this could increase costs, depress economic activity, and restrict the flow of goods and services between the UK and the EU. NN is working closely with the UK Government to determine and mitigate impacts on our supply chain logistics. Mitigating steps already taken include changes to supply routes, changing or transferring the Company’s notified body for devices to an entity located in an EU member state, and duplicating and transferring Company licenses. If the UK leaves the EU customs union, NN expects to be liable for customs duties and declarations on purchase orders fulfilled in the UK. NN has already incurred (and expects to incur further) costs associated with the handling and storage of additional stock delivered, or to be delivered, to the UK. The additional stock is currently expected to remain at higher levels for the foreseeable future. Until the trade negotiations are finalized, however, it is difficult to assess the overall effect that Brexit will have on our operations and hence the expected costs to be incurred and the ultimate impact of Brexit on our business and financial results remains uncertain.

In addition, to the risks identified above, we may be subject to other material risks that as of the date of this report are not currently known to us or that we deem less material at this point in time.

Our financial and operating performance may be adversely affected by epidemics or other public health crises.

Our financial and operating performancecould be materially and adversely affected by the outbreak of epidemics or other public health crises. For example, in late December 2019 a notice of pneumonia of unknown cause originating from Wuhan, Hubei province was reported to the World Health Organisation. A novel coronavirus (nCoV) was identified, with cases soon confirmed in multiple provinces in China, as well as in other countries. The Chinese government has placed Wuhan and multiple other cities in Hubei province under quarantine, with approximately 60 million people affected. Local governments in China are also issuing local policies and guidance including with respect to work arrangements after the Chinese New Year holiday, and travel to and from China has been suspended or restricted by certain air carriers and foreign governments.

The risks to the Company of epidemics and other public health crises, such as the on-going novel coronavirus, include risks to employee health and safety, and reduced sales due to fewer promotional activities and less healthcare spending on chronic diseases as resources are diverted to epidemiology management. Our business could also experience a slowdown or temporary suspension in production in geographic locations impacted. Any prolonged restrictive measures put in place in order to control an outbreak of contagious disease or other adverse public health development, in China or any of our targeted markets, may have a material and adverse effect on our business operations.

4

Novo Nordisk Form 20-F 2019

ITEM 4 INFORMATION ON THE COMPANY

ITEM 4        INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

Novo Nordisk A/S was formed in 1989 by a merger of two Danish companies, Nordisk Gentofte A/S and Novo Industri A/S. Novo Industri A/S was the continuing company and its name was changed to Novo Nordisk A/S. The business activities of Nordisk Gentofte were established in 1923 by August Krogh, H. C. Hagedorn and A. Kongsted, and the business activities of Novo Industri A/S were established in 1925 by Harald and Thorvald Pedersen. From the beginning, the business of both companies was production and sale of insulin for the treatment of diabetes.

Novo Nordisk’s B shares are listed on Nasdaq Copenhagen (NOVO-B). Its American Depositary Receipts (ADR) are listed on the New York Stock Exchange (NVO).

Legal name:	Novo Nordisk A/S
Commercial name:	Novo Nordisk
Domicile:	Novo Allé 1, DK-2880 Bagsværd, Denmark
	Tel: +45 4444 8888
	Website: novonordisk.com
	(The contents of this website are not incorporated by reference into this Form 20-F.)
Date of incorporation:	November 28, 1931
Legal form of the Company:	A Danish public limited liability company
Legislation under which
the Company operates:	Danish law
Country of incorporation:	Denmark

Important events in 2019

Reference is made to ´Introducing Novo Nordisk`, pages 1-7 and ´2019 performance and 2020 outlook`, pages 20-28 in our Annual Report 2019 for a description of important events in 2019.

Capital expenditure in 2019, 2018 and 2017

The total capital expenditure for property, plant and equipment was DKK 8.9 billion in 2019 compared with DKK 9.6 billion in 2018 and DKK 7.6 billion in 2017. Capital expenditure was primarily related to investments in a new production facility for diabetes active pharmaceutical ingredients in Clayton, North Carolina, USA, expansion of production facilities in Kalundborg, Denmark, expansion of production facilities in Chartres, France and a new diabetes filling capacity in Hillerød, Denmark, all financed with cash flow from operating activities. In addition, Novo Nordisk acquired an existing tablet factory in August 2019 located near Durham, North Carolina, to strengthen the establishment of the Company's local U.S. supply chain for Rybelsus^® and other future oral products. No significant divestments took place in the period from 2017–2019.

Capital expenditure is expected to be around DKK 6.5 billion in 2020, primarily related to investments in additional capacity for active pharmaceutical ingredient production within diabetes and an expansion of the diabetes filling capacity. The investments are expected to be financed with cash flow from operating activities.

Public takeover offers in respect of the Company’s shares

No such offers occurred during 2019 or 2020 to date.

B. BUSINESS OVERVIEW

Novo Nordisk is a global healthcare company and a world leader in Diabetes care. The Company has one of the broadest diabetes product portfolios in the industry, including new generation insulin, a full portfolio of modern insulin as well as a portfolio of GLP-1 receptor agonists administered both via subcutaneous injection and as a tablet. In addition, Novo Nordisk also has a leading position within haemophilia care and growth hormone therapy, and Novo Nordisk’s first product to treat obesity, Saxenda^®, was launched in the United States in April 2015 and has now been launched in an additional 45 countries. Novo Nordisk manufactures and markets pharmaceutical products and services that make a significant difference to patients, the medical profession and society. Headquartered in Denmark, Novo Nordisk employs approximately 43,300 employees in 80 countries and markets its products in approximately 170 countries.

Reference is made to the section ‘Our business’ on pages 8-28 in our Annual Report 2019.

5

Novo Nordisk Form 20-F 2019

ITEM 4 INFORMATION ON THE COMPANY

Segment information

Novo Nordisk is engaged in the discovery, development, manufacturing and marketing of pharmaceutical products and has two business segments: (i) Diabetes and Obesity care and (ii) Biopharm. The Diabetes and Obesity care segment covers insulin, GLP-1 and related delivery systems, oral antidiabetic products (OAD), obesity and other serious chroninc diseases. The Biopharm segment covers the therapy areas of haemophilia, growth disorders and hormone replacement therapy.

Seasonality

Sales of individual products in individual markets may be subject to fluctuations from quarter to quarter. However, the Company’s consolidated operating results have not been subject to significant seasonality.

Raw materials

The impact on the overall profitability of Novo Nordisk from variations in raw material prices is unlikely to be significant. There is no raw material supply shortage that is expected to significantly impact the Company’s ability to supply any significant market. The Company’s production is largely based on common and readily available raw materials with relatively low price volatility. Certain specific raw materials are, however, less available. For these raw materials, it is the policy of Novo Nordisk to develop close and long-term relationships with key suppliers as well as to secure at least dual sourcing whenever possible and, when relevant, operate with a predefined minimum safety level of raw material inventories.

Market and competition

Novo Nordisk’s insulin and other pharmaceutical products are marketed and distributed through subsidiaries, distributors and independent agents with responsibility for specific geographical areas. In 2019, Novo Nordisk reported based on a regional structure comprising North America Operations (the United States and Canada) and International Operations. International Operations covers all countries except those within North America and is organized in the following five regions: Region Europe; Region Latin America; Region AAMEO (Africa, Asia, Middle East & Oceania); Region Japan & Korea; and Region China. For 2019, the most important markets in terms of sales were the United States, China, Japan, the major European countries and Canada.

Market conditions within the pharmaceutical industry continue to change, including efforts by both private and governmental entities to reduce or control costs generally and in specific therapeutic areas. Most of the countries in which Novo Nordisk sells insulin subsidize or control pricing and in most markets insulin and GLP-1 are prescription drugs.

In recent years, there has been a general trend in the United States of payers managing the cost of diabetes care by exerting pressure on the price of Novo Nordisk’s and competitors' products. As the population of people with diabetes has increased, competition in the diabetes care area has also intensified, with additional competitors entering the market. In spite of this external pressure, Novo Nordisk has maintained the leading position in the overall diabetes care market through the quality and innovative value of the Company’s diabetes care products. In the United States, pharmacy benefit managers and managed care organizations have continued to leverage their increasing size and control to demand higher rebates which has impacted the price level and overall value of the market. Furthermore, competition has intensified and contributed to the downward pressure on manufactures' net prices, especially in the basal insulin segment following the launch of a biosimilar glargine in December 2016.

The Company enters into numerous contracts with customers, suppliers, agents and industry partners. Some of the most important contracts include: commercial contracts with pharmacy benefit managers, managed care organizations and healthcare providers, in- and out-licensing of patent rights, large tender orders and long-term sub-supplier agreements.

Due to the increasing number of people with diabetes, the pharmaceutical market for treatment of diabetes continues to grow. Several of the major international pharmaceutical companies have entered the diabetes market, specifically in the area of oral products for treatment of type 2 diabetes. In the global insulin market, Novo Nordisk, Eli Lilly and Sanofi are the most significant companies measured by market share.

Tresiba^®, the Company's latest generation of basal insulin, was launched broadly in the United States in January 2016 and maintains wide commercial and Medicare Part D formulary coverage. In 2018, Tresiba^® obtained approval to update its labelling in the United States to include data from the DEVOTE study which showed a 40% reduction in the risk of severe hypoglycaemia vs. glargine U100. In countries outside the United States, Tresiba^® has shown solid penetration in markets with reimbursement at a similar level to insulin glargine U100, whereas penetration remains modest in markets with restricted market access. In September 2017, Novo Nordisk obtained the approval of Tresiba^® in China and the product was launched in China, without reimbursement and with limited market access, however, it was added to the country’s National Reimbursement Drug List (NRDL) in 2019 with effect from January 2020. Tresiba^® has been launched in 86 countries.

Xultophy^® (IDegLira), a once-daily single-injection combination of insulin degludec (Tresiba^®) and liraglutide (Victoza^®), has now been launched in 37 countries, including the United States. Xultophy^® has delivered strong growth in markets with a preference for fixed-dose combination products.

Ryzodeg^®, a soluble formulation of insulin degludec and insulin aspart, has now been launched in 30 countries. In markets where the premix insulin segment is preferred, the uptake of Ryzodeg^® has been very positive.

The novel mealtime insulin Fiasp^®, fast-acting insulin aspart, received marketing authorization from the European Commission in 2017 and approvals were also received in Norway, Iceland and Canada. In September 2017, Novo Nordisk received approval for Fiasp^® in the United States and the product was launched there in February 2018. Globally, Fiasp^® has now been launched in 33 countries.

6

Novo Nordisk Form 20-F 2019

ITEM 4 INFORMATION ON THE COMPANY

Moreover, the use of glucagon-like peptide-1 (GLP-1) as a treatment option for people with Type 2 diabetes has continued to increase resulting in significant growth of the GLP-1 market. Novo Nordisk, Eli Lilly and Astra Zeneca are the most significant companies in the global GLP-1 market measured by market share. Novo Nordisk is the global market leader in the GLP-1 segment with a 47.5% value market share as at December 31, 2019 (Source: IQVIA, November 2019 data MAT).

In February 2018, Novo Nordisk launched the once-weekly GLP-1 product, Ozempic^®, for the treatment of adults with Type 2 diabetes in the United States and Canada. Ozempic^® has also been marketed in 24 countries in International Operations, predominantly in Europe, and the roll-out will continue in 2020. Ozempic^® has achieved a 37% NBRx (New-to-Brand Prescriptions) market share in the United States as at December 31, 2019, and global sales in 2019 of DKK 11.2 billion.

In September 2019, the FDA approved Rybelsus^®, the first and only GLP-1 analog in a tablet for the treatment of adults with Type 2 diabetes in the United States. Novo Nordisk is launching Rybelsus^® broadly in the United States during 2020 as access is expected to be built gradually and outside the United States after regulatory approval has been achieved.

Patents

To maintain and expand competitiveness, Novo Nordisk strives for the strongest possible protection for those inventions that are created during the development of new products. Novo Nordisk anticipates that the expiration of certain patents could impact sales within the coming years. However, through continued investments in research and development, Novo Nordisk strives to bring novel and innovative products to the market and thereby sustain strong patent protection in the future, as new generations of products replace currently marketed products.

For patent information on all Novo Nordisk’s marketed products, reference is made to the section ‘Pipeline overview’ on pages 14-15 in our Annual Report 2019.

In addition to the compound patents discussed in ‘Pipeline overview’ on pages 14-15 in our Annual Report 2019, the patent protection of our key products within each business segment is considered in the following section. For key products with recent patent expiration or with patent expiration occurring within the coming years, geographical sales splits are provided and factors that may influence the potential impact of competitive product launches are discussed.

Sales of key products with recent or upcoming patent expiration:

	Total sales in 2019 (in DKK million)	International Operations		Hereof										North America Operations		Hereof
Product				Region Europe		Region AAMEO		Region China		Region Japan & Korea		Region Latin America				USA
NovoLog®/NovoRapid®	18,060	54	%	23	%	15	%	10	%	4	%	2	%	46	%	44	%
NovoLog® Mix /NovoMix®	9,585	91	%	16	%	26	%	45	%	3	%	1	%	9	%	9	%
Levemir®	9,307	44	%	19	%	11	%	10	%	1	%	3	%	56	%	54	%
NovoSeven®	8,119	55	%	22	%	14	%	3	%	4	%	12	%	45	%	43	%
Norditropin®	7,275	58	%	20	%	10	%	0	%	24	%	4	%	42	%	42	%

Patent situation of key Diabetes care products

The total sales of NovoLog^®/NovoRapid^® were DKK 18,060 million in 2019 (DKK 18,763 million in 2018). The compound patent for NovoLog^®/NovoRapid^® has expired. The patent in Japan expired in December 2010 and the European patent expired in August 2011. In the United States NovoLog^®/NovoRapid^® was patent protected until December 2014. In addition to the compound patent, Novo Nordisk held a formulation patent on NovoLog^®/NovoRapid^®, which expired in December 2017 in the United States and in June 2017 in all other markets.

The total sales of NovoLog^® Mix/NovoMix^® were DKK 9,585 million in 2019 (DKK 9,480 million in 2018). The compound patent for NovoLog^® Mix /NovoMix^® has expired. In Japan the compound patent expired in June 2014, in the United States the compound patent expired in December 2014 and in Europe the compound patent expired on a country-by-country basis throughout 2014 and into 2015. In addition, Novo Nordisk held a formulation patent on NovoLog^® Mix /NovoMix^® in the United States, which provided coverage until December 2017.

The total sales of Levemir^® were DKK 9,307 million in 2019 (DKK 11,195 million in 2018). The compound patents for Levemir^® expired in June 2019 in the United States, in May 2019 in Europe, and in September 2019 in Japan. In China, the compound patents expired in September 2014.

Today, biosimilar versions of insulin can be approved in the United States via the 505(b)(2) pathway, and in the future the 351(k) pathway in the Public Health Service Act is anticipated to be applicable. In the EU, a biosimilar pathway and guidelines are available for insulins, and the guideline for biosimilar products issued in Japan is also relevant for insulins. At present, a biosimilar to NovoRapid^®/NovoLog^® produced by a competitor is completing phase 3 clinical trials and could be launched in 2020. Furthermore, biosimilars to Levemir^®, NovoRapid^® and NovoMix^® have been filed for regulatory approval by a local competitor in China.

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Novo Nordisk Form 20-F 2019

ITEM 4 INFORMATION ON THE COMPANY

In February 2017, TEVA filed an Abbreviated New Drug Application (ANDA) for liraglutide, the active pharmaceutical molecule in Victoza^® for the treatment of type 2 diabetes and Saxenda^® for the treatment of obesity, to the U.S. Food and Drug Administration. Following a settlement between Novo Nordisk and Teva announced in March 2019 and the subsequent approval of Victoza^® for children and adolescents usage in the US, Teva is not expected to launch a generic version of Victoza^® until 2024. In August 2019 it was announced that Mylan had also filed an ANDA for liraglutide in the USA, and in December 2019, Mylan filed a petition for Inter Partes Review against a formulation patent covering Victoza® until February 2026. Novo Nordisk will continue to defend its intellectual property associated with Victoza^® and is pursuing this legal approach against Mylan.

Patent situation of key Biopharm products

The total sales of NovoSeven^® were DKK 8,119 million in 2019 (DKK 7,881 million in 2018). While the compound patent for NovoSeven^® has expired in all major markets, Novo Nordisk holds two formulation patents on the room temperature stable preparation of NovoSeven^®, which provides coverage of this formulation until 2023 and 2025, respectively, in all major markets.

The expiry of the compound patent has not impacted sales of NovoSeven^®. Novo Nordisk believes that this is due to the complexity of the NovoSeven^® protein, rendering regulatory pathways for a ‘biosimilar’ recombinant human coagulation Factor VIIa (rFVIIa) inapplicable in the United States, the EU and Japan.

In the EU, guidelines for the development of biosimilar products have been available since late 2005; however, to date these guidelines do not apply to coagulation factors because of their complexity. The guideline for biosimilar products in Japan includes requirements similar to those established in Europe.

To date, we have only seen approvals of competing biosimilar rFVIIa products in Russia, Kazakhstan, Azerbaijan, Uzbekistan and Iran. However, two phase 3 trials in patients with congenital haemophilia with inhibitors and FVII deficiency have been initiated with a competing product in Iran with the aim of obtaining approval in the EU. New information is regularly being compiled to assess whether the clinical programs for these compounds could contribute towards fulfilling regulatory requirements in the United States, the EU and Japan. As such, Novo Nordisk still believes that the expiry of its compound patent for NovoSeven^® will continue to have an insignificant impact on sales, results of operations and liquidity in the major geographical segments in the near term.

Total sales of Norditropin^® were DKK 7,275 million in 2019 (DKK 6,834 million in 2018). Today, Norditropin^® is not covered by a compound patent and the formulation used is covered by a formulation patent that expired in 2017 in the United States, Europe and Japan. However, the pen devices that patients use to inject growth hormone are covered by separate patents. Today, all Novo Nordisk growth hormone products are supplied in pen devices. While marketed growth hormone products in the United States are similar in terms of efficacy and safety profile and despite the presence of biosimilar growth hormone products on the market, Norditropin^® is differentiated by its high level of temperature stability and the FlexPro^® device in which it is offered. The expiry of our compound patent for Norditropin^® is not expected to significantly impact sales, results of operations and liquidity in any geographical segments in the near term.

Impact of regulation

As a pharmaceutical company, Novo Nordisk depends on government approvals related to production, development, marketing and reimbursement of its products. Important regulatory bodies include the U.S. Food and Drug Administration, the European Medicines Agency, the Japanese Ministry of Health, Labour and Welfare and the Chinese Food and Drug Administration. Treatment guidelines from non-governmental organizations such as the European Association for the Study of Diabetes and the American Diabetes Association may also impact the Company.

Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012

Pursuant to Section 13(r) of the Securities Exchange Act of 1934, ("Section 13(r)"), Novo Nordisk is obliged to provide disclosure if, during 2019, it or any of its affiliates have engaged in certain Iran-related activities or transactions with persons designated under Executive Order 13224 or Executive Order 13382. Novo Nordisk conducts limited business relating to pharmaceutical products and devices within the Diabetes care and Biopharm business segments in Iran. Set forth below is a description of the activities and transactions by Novo Nordisk’s subsidiaries that are required to be disclosed pursuant to Section 13(r). Novo Nordisk’s U.S. subsidiaries are not involved in any of Novo Nordisk’s activities in Iran.

Novo Nordisk Pars (“NN Pars”), a wholly-owned subsidiary of Novo Nordisk A/S located in Iran, contracts with five companies that may be controlled by the Government of Iran ("GOI") to distribute its products. NN Pars also sponsors educational programs and congresses organized by GOI-controlled medical universities, and hosts and/or engages as scientific delegates or lecturers/speakers health care professionals employed by these medical universities at similar programs in Iran and other locations. Additionally, NN Pars makes donations to GOI-controlled public health organizations focusing on diabetes awareness and policy. NN Pars receives payments from, and makes payments to, Iranian banks (some of which may be GOI-controlled) relating to the sales of pharmaceutical products and devices. NN Pars makes payments incidental to its ordinary business activities to Iranian government entities and entities that are or may be GOI-controlled, such as taxes, customs fees, insurance, product registration fees and telecommunications services expenses.

In 2018, NN Pars contracted with a GOI-controlled company to serve as a contract manufacturer for biopharm products. However, no transactions took place under the contract and it was terminated. Currently only a Memorandum of Understanding remains in effect, and no activity is currently expected with respect thereto.

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Novo Nordisk Form 20-F 2019

ITEM 4 INFORMATION ON THE COMPANY

In addition, in 2016, NN Pars purchased land from a GOI-controlled holding company in order to construct a manufacturing facility in Iran. NN engaged a non-GOI-controlled entity in 2018 for the delivery of utility and related services in connection with the construction of the facility, and this entity provided services to NN Pars during 2019. Novo Nordisk expects to invest approximately DKK 520 million over the course of five years, which started in 2015, to build the manufacturing facility, which will be used for assembly and packaging of insulin pens for use in Iran.

The German subsidiary of NNE A/S, a wholly-owned subsidiary of Novo Nordisk A/S, previously sold raw materials and spare parts for production of dialysis filters and leucocyte filters and syringes to a GOI-controlled company. This business relationship, however, was wound down during 2018. NNE A/S currently holds an open receivable from such GOI-controlled entity related to such sales. In 2018, the Iranian customer tried to pay the amounts due, but the payment, which was routed through a GOI-owned bank in Europe, was never received by NNE A/S’s subsidiary. It was held up in transit after the United States imposed sanctions on the bank, and the payment was ultimately returned in 2019 to a GOI-owned bank in Iran. Each of those two GOI-owned banks was designated by the U.S. Government in 2018 under Executive Order 13224. It is uncertain when NNE A/S will receive payment from the Iranian customer with respect to the outstanding receivable.

NNE A/S is a party to a contract with an Iranian blood fractionation company that Novo Nordisk has learned may be GOI-owned or controlled for the provision of certain engineering services to the Iranian customer. There were no activities conducted under this contract in 2019, but unpaid amounts remain due from the Iranian customer for services performed in prior years by NNE A/S’s affiliate. It is uncertain when NNE A/S will receive payment from the Iranian customer with respect to these unpaid amounts.

Novo Nordisk’s gross revenue related to transactions with GOI-owned or controlled entities in 2019 was not in excess of DKK 1,000 million. Novo Nordisk does not allocate its net profit on a country-by-country or activity-by-activity basis, other than as set forth in Novo Nordisk’s consolidated financial statements prepared in accordance with IFRS as issued by the IASB; however, Novo Nordisk estimates that its net profit attributable to the transactions with the GOI discussed above would not exceed a de minimis percentage of the Group’s total net profit in 2019.

The purpose of Novo Nordisk’s Iran-related activities is to provide access to important and life-saving pharmaceutical products such as insulin and haemophilia products to patients in Iran, and to improve the healthcare of the Iranian people in accordance with Novo Nordisk’s access to care strategy. For that purpose, Novo Nordisk intends to continue these activities.

C. ORGANIZATIONAL STRUCTURE

For information regarding the organizational structure and securities exchange listings of Novo Nordisk A/S, the main shareholder Novo Holdings A/S (formerly Novo A/S) and the Novo Nordisk Foundation and the ownership structure of Novo Nordisk A/S, reference is made to the sections ‘Shares and capital structure’ on pages 32-33 and ‘Corporate governance’ on pages 34-37 in our Annual Report 2019.

Companies in the Novo Nordisk Group are listed in the Company’s Annual Report 2019 on page 75, ‘Companies in the Novo Nordisk Group.’

D. PROPERTY, PLANT AND EQUIPMENT

The Company has its headquarters in Bagsværd, Denmark, where it occupies a number of buildings.

The Company believes that its current production facilities, including facilities under construction and planned for construction, are sufficient to meet its capacity requirements, including the capacity for meeting growing demand in the future for the products NovoLog^®/ NovoRapid^®, NovoLog Mix^®/ NovoMix^®, Levemir^®, Victoza^®, Tresiba^®, Ryzodeg^®, Xultophy^®, Fiasp^®, Ozempic^®, Saxenda^®, Rybelsus^® , NovoSeven^®, NovoEight^®, Rebinyn^®/ Refixia^®, Norditropin^®, Esperoct^®and devices. Reference is made to the sections ‘Capital expenditures in 2019, 2018 and 2017’ under Item 4 for more information about the current expansion programs. For the nature of the Company’s property, plant and equipment, as of December 31, 2019 and 2018, reference is made to Note 3.2 ‘Property, plant and equipment’ in our Annual Report 2019.

The major production facilities owned by the Company are located at a number of sites in Denmark, and internationally in the United States, France, China and Brazil. There are no material encumbrances on the properties; however, the facilities in Tianjin, China are constructed on land where the remaining term of the lease is 31 and 36 years.

Active pharmaceutical ingredient (API) production is located in Denmark, primarily in Kalundborg and with secondary locations in Hillerød and Gentofte, both in Denmark, as well as in New Hampshire, United States, although a new API production site in Clayton, North Carolina in the United States is being established.

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Novo Nordisk Form 20-F 2019

ITEM 4 INFORMATION ON THE COMPANY

The following table sets forth certain information regarding our major production sites.

MAJOR PRODUCTION FACILITIES	Size of production area (square meters)	Major Production Activities
Kalundborg, Denmark	166,500	•	Active pharmaceutical ingredients for diabetes and obesity as well as products for diabetes care
		•	Active pharmaceutical ingredients for haemophilia.
		•	Products for biopharm
Hillerød, Denmark	156,700	•	Durable devices and components for disposable devices
		•	Products for diabetes and obesity
		•	Active pharmaceutical ingredients for haemophilia
Bagsværd, Denmark	111,200	•	Products for diabetes and obesity
Gentofte, Denmark	70,800	•	Active pharmaceutical ingredients for glucagon and growth hormone therapy
		•	Products for growth hormone therapy, glucagon and haemophilia
Tianjin, China	68,500	•	Products for diabetes
		•	Production of durable devices
Montes Claros, Brazil	56,700	•	Products for diabetes
		•	Gel production for active pharmaceutical ingredients
Måløv, Denmark	54,800	•	Products for hormone replacement therapy
		•	Products for oral antidiabetes treatment
		•	Products for oral diabetes treatment
Clayton, North Carolina, United States	42,800	•	Products for diabetes and obesity
Chartres, France	28,600	•	Products for diabetes
New Hampshire, United States	14,800	•	Active pharmaceutical ingredients for haemophilia

In May 2015, Novo Nordisk initiated the construction of a new facility in Kalundborg, Denmark for producing API for NovoSeven^® and future products for the treatment of haemophilia. The facility is expected to be operational by the end of 2020. The production area of the facility is 7,500 square meters. The expected amount of expenditures for this facility is approximately DKK 1.8 billion. The facility is financed by cash flow from operating activities.

In November 2015, Novo Nordisk initiated the construction of a new facility in Hillerød, Denmark for producing medicines for the treatment of diabetes and obesity. The facility is expected to be ready for use in 2020. The production area of the facility is 10,300 square meters. The expected amount of expenditures for this facility is approximately DKK 2.4 billion. The facility is financed by cash flow from operating activities.

In March 2016, Novo Nordisk initiated the construction of a new diabetes API production facility in Clayton, North Carolina, United States. The majority of the facility is expected to be ready for use in 2020 while the remaining part is expected to be operational in 2022. The expected amount of expenditures for this facility is more than USD 2.6 billion. The facility will be financed by cash flow from operating activities.

In August 2019, Novo Nordisk acquired an existing tablet facility in Durham, North Carolina, United States to strengthen the establishment of the Company’s local U.S. supply chain for Rybelsus^® and other potential future oral products. The facility is expected to be operational early 2022. The expected amount of expenditures for this facility including acquisition value and rebuilt work is approximately USD 70 million. The facility will be financed by cash flow from operating activities.

In January 2019, Novo Nordisk initiated the expansion of its production facility in Chartres, France for assembly and packaging of diabetes finished products. The facility is expected to be ready for use by the end of 2021. The production area of the facility is expected to be 9,250 square meters. The expected expenditure for this facility is approximately EUR 81 million. The expansion is expected to be financed by cash flow from operating activities.

ITEM 4A    UNRESOLVED STAFF COMMENTS

None.

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Novo Nordisk Form 20-F 2019

ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS

ITEM 5        OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Critical accounting estimates

Reference is made to Note 1.1 ‘Principal accounting policies and key accounting estimates’ in our Annual Report 2019.

New accounting pronouncements

Reference is made to Note 1.2 ‘Changes in accounting policies and disclosures’ in our Annual Report 2019.

A. OPERATING RESULTS

Reference is made to the section ‘Forward-looking statements’ contained on page 2 and the discussion under the caption ‘Risk factors’ contained under Item 3. Reference is further made to our Annual Report 2019 ‘Managing risks to protect value’ on pages 29-31.

The financial condition of the Group and its development are described in our Annual Report 2019 and our Annual Report 2018. The information in this section is based on these reports and should be read in conjunction with the annual reports. The analysis and discussions included in the annual reports are primarily based on the consolidated financial statements which are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

2019 compared with 2018

The following portions of our Annual Report 2019 constitute the Board of Directors’ and Executive Management’s discussion and analysis of results of operations (incorporated herein by reference):

‘Introducing Novo Nordisk’ (pages 1-7)

‘2019 performance and 2020 outlook’ (pages 20-28)

2018 compared with 2017

The following portions of our Annual Report 2018 constitute the Board of Directors’ and Executive Management’s discussion and analysis of results of operations (incorporated herein by reference):

‘Letters’ (pages 1-3)

‘Introducing Novo Nordisk’ (pages 4-9)

‘Performance and Outlook’ (pages 10-21)

Segment information

Reference is made to Note 2.2 ‘Segment information’ in our Annual Report 2019 for details on segmented results.

Inflation

Inflation for the three most recent fiscal years has not had a material impact on the Group’s Net sales or Net profit.

Foreign currencies

The majority of Novo Nordisk’s sales are in foreign currencies, mainly USD, EUR, CNY, JPY, GBP and CAD, while a significant proportion of production, research and development costs are carried in DKK. Consequently, Novo Nordisk has significant exposure to foreign exchange risks and engages in significant hedging activities where the most significant exposure and hedging are related to USD, CNY, JPY, GBP and CAD, while the EUR exchange rate risk is regarded as low due to the Danish fixed-rate policy towards EUR. Thus, Novo Nordisk does not hedge the EUR exchange rate risk. For further description of foreign currency exposure, reference is made to the disclosure in Note 4.3 ‘Financial risks’ in our Annual Report 2019 and for further description of foreign currency exposure and hedging activities, reference is made to the description of financial instruments in Note 4.4 ‘Derivative financial instruments’ in our Annual Report 2019.

Governmental policies

Please refer to pages 8-28 ‘Our business’ in our Annual Report 2019 and Item 4.

B. LIQUIDITY AND CAPITAL RESOURCES

Novo Nordisk maintains a centralized approach to the management of the Group’s financial risks. The overall objectives and policies for Novo Nordisk’s financial risk management are outlined in the Novo Nordisk Treasury Policy, which is approved by the Board of Directors. The Treasury Policy governs the Group’s use of financial instruments. For further information, reference is made to Item 11.

Financial resources

Reference is made to page 43 ‘Cash flow statement for the year ended 31 December’ and page 44 ‘Balance sheet’ in our Annual Report 2019. In addition, Novo Nordisk has obtained a credit rating from two independent external rating agencies.

Novo Nordisk believes its financial resources are sufficient to meet its requirements for at least the next 12 months.

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Novo Nordisk Form 20-F 2019

ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Cash flow in 2019, 2018 and 2017

Reference is made to page 43 ’Cash flow statement' for the year ended 31 December’ in our Annual Report 2019.

The most significant source of cash flow from operating activities is sales of Diabetes and Obesity care and Biopharm products. Generally, other factors that affect operating earnings, such as pricing, volume, product mix, costs and exchange rates, also have an impact on realized cash flow from operating activities.

Except as disclosed in note 4.5 'Cash and cash equivalents, financial resources and free cash flow' in our Annual Report 2019, there are no material restrictions on the ability of subsidiaries with material cash amounts to transfer funds to the parent company, Novo Nordisk A/S.

Trade receivable program

Trade receivable program, as of December 31, 2019, 2018 and 2017, respectively, are shown in Note 4.3 ‘Financial risks’ in our Annual Report 2019.

Debt financing

No long-term loans were outstanding as of December 31, 2019 or 2018. Following the implementation of IFRS 16, lease liabilities are recognized as Borrowings in the balance sheet. Reference is made to page 44 ‘Balance sheet’ and to Notes 1.2 ‘Changes in accounting policies and disclosures’ and 4.2 ‘Borrowings’ in our Annual Report 2019 for information on Current debt.

Derivative financial instruments

Novo Nordisk only hedges commercial exposures and consequently does not enter into derivative transactions for trading or speculative purposes. Currency hedging is done with foreign exchange forwards and foreign exchange options. Reference is made to Note 4.3 ‘Financial risks’ and Note 4.4 ‘Derivative financial instruments’ in our Annual Report 2019 for further information on financial instruments including currency exposure.

Commitments for capital expenditure etc.

Contractual obligations for capital expenditure and other contingent liabilities as of December 31, 2019 and 2018, respectively, are shown in Note 5.2 ‘Commitments’ in our Annual Report 2019.

The Executive Management of the Group believes that the obligations are covered by the Group’s financial resources as well as expected future cash flows from operating activities.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

Novo Nordisk’s research activities utilize biotechnological methods based on genetic engineering, advanced protein chemistry and protein engineering. These methods have played a key role in the development of the production technology which is used in the manufacturing of insulin, GLP-1, recombinant blood clotting factors, human growth hormone and glucagon.

The primary focus of Novo Nordisk’s research and development is on therapeutic proteins within diabetes, obesity, haemophilia, growth disorders and other serious chronic diseases such as NASH (non-alcoholic steatohepatitis) and atherosclerosis cardiovascular diseases.

Reference is made to Note 2.3 ‘Research and development costs’ in our Annual Report 2019 for research and development costs in 2019, 2018 and 2017, respectively. Novo Nordisk’s research and development organization comprised approximately 8,000 employees as of December 31, 2019.

In general, we expect that growth in research and development spending will follow a trend in line with sales growth indicating that the research and development cost to sales ratio is expected to be relatively constant in the foreseeable future. Thus, we currently expect to continue an expenditure level of around 13-15% of sales in research and development activities going forward. Development costs in 2019 were driven by significant investments late-stage trials with semaglutide and oral semaglutide as well as investments in semaglutide obesity with phase 3a/3b trials and CV outcome trials.

Historically Novo Nordisk has spent approximately 70-80% of total research and development expenditures on clinical development activities, and approximately 20-30% on research activities. The split between research and development will fluctuate in individual years depending on the composition of the clinical development portfolio.

In 2019, development within Diabetes and Obesity care comprises approximately 70% (73% in 2018 and 67% in 2017), and development within Biopharm comprises approximately 77% (77% in 2018 and 79% in 2017).

Research costs comprise the very early stages of the drug development cycle from the initial drug discovery until the drug is ready for administration to humans. The activities initially focus on identifying a single drug candidate with a profile that will support a decision to initiate development activities. Before selection of the final drug candidate, it is tested in animals to gather efficacy, toxicity and pharmacokinetic information.

Development costs are incurred from the start of phase 1, when the drug is administered to humans for the first time; these are the projects captured in the ’Pipeline overview’ (unaudited). The final product is developed, and subsequent clinical trials (phases 2 and 3) are conducted to further test the drug in humans, using the results from these trials to attempt to obtain marketing authorization, permitting Novo Nordisk to market and sell the developed products.

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Novo Nordisk Form 20-F 2019

ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Information related to selected research and development projects can be found under ‘Pipeline overview’ on pages 14-15 in our Annual Report 2019. Furthermore, a broader overview of our business activities can be found on pages 8-28 ‘Our business’.

The following Novo Nordisk compounds are currently in phase 3 development or have recently been filed for regulatory approval:

COMPOUND / BRAND NAME / INDICATION	Year entered into phase 3 or filed with the regulatory authorities	Patent expiration
Somapacitan (NN8640) Once-weekly human growth hormone / Growth disorder	Phase 3 in ADGH completed in 2018 and submitted for regulatory review in 2019. Phase 3 in GHD initiated in 2018.	20341
Semaglutide obesity (NN9536) / Obesity	Phase 3 initiated in 2018	20312
Concizumab (NN7415) / Haemophilia A and B with or without inhibitors	Phase 3 initiated in 2019	20333

¹ Current estimate United States. Key EU markets estimate 2035, Japan expiry 2035

² Current estimate

³ Current estimate United States. Key EU markets estimate 2034, Japan expiry 2034

During 2019 Novo Nordisk has not discontinued any development projects in phase 3.

In determining whether or not any project or group of related projects is significant, we consider the following qualitative and quantitative criteria:

• Assessment of the unmet medical need targeted with the specific project;

• The inherent project risk including the risk of safety issues, unsatisfactory tolerability profile, limitations on the efficacy of the compound;

• Timeline for completing the clinical testing and submitting an application for approval to regulatory authorities;

• Regulatory authorities’ position towards approval and drug label;

• Changes in competitive landscape during the development and approval cycle including competing drugs being developed by others;

• Changes in medical practice during the development period;

• Position of payers, the medical society and patients towards treatment with drug and price of drug;

• Expected uptake in market following launch; and

• Expected net present value of the project.

In assessing the criteria listed above, and as described in ‘Managing risks to protect value’ on pages 29-31 in our Annual Report 2019, it is important to note that at all stages of the development, due to the uncertainties inherent to clinical development and the regulatory approval process, there is a significant degree of uncertainty and risk that the project will not be successful. The nature of our development activities is such that a compound must first be proven to work by means of multiple clinical trials, which may require treatment of thousands of patients and could take years to complete. Even if initial results of preclinical studies or clinical trial results are promising, we may obtain different results that fail to show the desired levels of safety and efficacy, or we may not obtain applicable regulatory approval for a variety of other reasons. The compound must be accepted by either the FDA, the European Medicines Agency or similar agencies around the world, each of which may have differing requirements. During each stage, there is a substantial risk that we will encounter serious obstacles which will further delay us, or that we will not achieve our goals and, accordingly, may abandon a product in which we have invested substantial resources. Furthermore, the commercial potential of a project is dependent on the label granted by the regulatory authority upon approval. The label specifies for which indications a product can be used, major and minor safety concerns associated with drug treatment as well as if the drug can be combined with other types of medication. Thus a label can restrict usage substantially.

Due to the risks and uncertainties involved in progressing through pre-clinical development and clinical trials, and the time and cost involved in obtaining regulatory approvals, we cannot reasonably estimate the nature, timing, completion dates and costs of the efforts necessary to complete the development.

Given the uncertainties related to the process of product development, during the periods presented in our 2019 Form 20-F no single project in product development was significant based on the qualitative and quantitative criteria. However, during the periods presented two groups of projects were considered significant; the Diabetes and Obesity care group and the Biopharm group.

Reference is made to the caption ‘Risk factors’ contained under Item 3.

D. TREND INFORMATION

The key drivers behind Novo Nordisk’s performance continue to be the changes in demographics globally reflecting a continuous growth in the proportion of people who live in cities (urbanization), an increasing proportion of elderly people and a growing problem of obesity. These trends have contributed to the significant increase in the number of people with diabetes worldwide. According to the International Diabetes Federation, the number of people with diabetes is expected to increase to around 700 million by 2045 from 463 million in 2019. Diabetes and Obesity care is Novo Nordisk’s largest segment comprising more than 84% of sales. The epidemic growth in the number of people with diabetes, continuing transition from older to newer insulin generations, new delivery devices and market share gains are all driving Novo Nordisk’s growth within the Diabetes and Obesity care segment. Further, the roll-out of a number of new products within Diabetes and Obesity care (Ozempic^®, Rybelsus^®, Tresiba^®, Ryzodeg^®, Xultophy^®, Fiasp^® and Saxenda^®) are expected drivers of sales in the segment.

13

Novo Nordisk Form 20-F 2019

ITEM 6 DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES

In the United States, significant sales rebates are paid in connection with public healthcare insurance programs, such as Medicare and Medicaid, as well as rebates to pharmacy benefit managers (PBMs) and managed care organizations. Key customers in the United States include private payers, PBMs and government payers. Increasingly, PBMs and managed care organizations play a key role in negotiating price concessions with drug manufacturers on behalf of payers for both the commercial and government channels and determining the list of drugs covered in the health plan’s formulary. Specifically, there are three primary drivers:

• Competitive pressure from other manufacturers' diabetes products

• Payer pressure to reduce the overall drug costs has resulted in continued focus on negotiating higher rebates from drug manufacturers. Private payers remain keen to adopt narrow formularies that exclude certain drugs, while securing increased rebates from the preferred brands.

• Recent industry consolidation among payers has over time led to increasing pricing pressure for pharmaceutical companies.

In 2019, payers continued to leverage their size and control to demand higher rebates, particularly in the basal insulin segment. As a result, average prices after rebates for the Novo Nordisk portfolio in 2019 in the United States declined. In addition, legislative changes to Medicare Part D resulted in further lower realized prices.

For 2020, average prices after rebates are expected to decline further compared with 2019 prices, predominantly driven by the insulin class and the funding of the Medicare Part D coverage gap, which has been changed based on a new legislation with effect from 2020. Importantly, market access for Novo Nordisk’s products is expected to remain at a level similar to that experienced in 2019. In addition, Novo Nordisk has from 2, January 2020 expanded its insulin affordability offerings in the USA to help people with diabetes who need alternative solutions.

The other segment of Novo Nordisk is Biopharm, which comprises haemophilia care, growth hormone therapy and hormone replacement therapy. In 2019, haemophilia sales increased due to continued uptake of NovoEight^® and Refixia^®/Rebinyn^® both in North America and across markets where launched in International Operations. Sales of NovoSeven^® and growth disorder products increased moderately.

For further information on trends, reference is made to the section ‘2019 performance and 2020 outlook’ on pages 20-28 in our Annual Report 2019. Information about expectations for the financial year 2020 can be found on page 23 in the subsection ‘Outlook 2020’.

E. OFF-BALANCE SHEET ARRANGEMENTS

Reference is made to Note 4.3 ‘Financial risks’ and Note 5.2 ‘Commitments’ in our Annual Report 2019.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

Reference is made to Note 5.2 ‘Commitments’ in our Annual Report 2019.

ITEM 6        DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND EXECUTIVE MANAGEMENT

Reference is made to pages 38-39 in our Annual Report 2019 for name, position and period of service as director for the members of the Board of Directors.

As of April 2019, Jesper Brandgaard retired from Novo Nordisk and Ludovic Helfgott was appointed executive vice president, head of Biopharm. As of August 2019, Monique Carter was appointed executive vice president, head of People & Organisation and Lars Green resigned from Novo Nordisk.

Reference is made to page 40 in our Annual Report 2019 for name, position, age and other management duties for the members of Executive Management. Business experience, year of appointment and year of joining Novo Nordisk for each member of Executive Management are included below:

Lars Fruergaard Jørgensen President and chief executive officer (CEO) Mr Jørgensen joined Novo Nordisk in 1991 as an economist in Health Care, Economy & Planning and has over the years completed overseas postings in the Netherlands, the US and Japan. In 2004 he was appointed senior vice president for IT & Corporate Development. In January 2013 he was appointed executive vice president and chief information officer assuming responsibility for IT, Quality & Corporate Development. In November 2014 he took over the responsibilities for Corporate People & Organisation and Business Assurance and became chief of staff. Mr Jørgensen was appointed president and chief executive officer in January 2017. Monique Carter Executive vice president and head of People & Organisation Ms Carter joined Novo Nordisk in November 2018 as SVP for Global People and Organization and was promoted to executive vice president in August 2019. Prior to joining Novo Nordisk Ms Carter was Group HR Director and member of the Executive committee at GKN plc, UK. Ms Carter was at GKN plc from 2014 to 2018. Ms Carter worked in the chemicals industry from 2005 to 2014 starting with ICI plc, UK (which later became part of Akzo Nobel, the Netherlands). Ms Carter later moved to Singapore to head up the APAC Regional HR while in the Decorative paints division of ICI plc. In 2010 Ms Carter became leading HR for the specialty chemicals businesses of AkzoNobel in the Netherlands after the acquisition of ICI plc by Akzo Nobel. Prior to ICI plc, Ms Carter held HR positions in a number of international companies.

14

Novo Nordisk Form 20-F 2019

ITEM 6 DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES

Maziar Mike Doustdar Executive vice president and head of International Operations Mr Doustdar joined Novo Nordisk in 1992 as an office clerk in Vienna, Austria. From 1993 through 2007 he took up various positions in finance, IT, logistics, operations and marketing, within various parts of Novo Nordisk’s emerging markets, first in Vienna and subsequently in Athens and Zurich before he was appointed general manager of Novo Nordisk Near East, based in Turkey, in 2007. In 2010 Mr Doustdar was promoted to vice president of Business Area Near East and in 2012 he re-located to Malaysia to head the Business Area Oceania South East Asia. In 2013 he was promoted to senior vice president of Novo Nordisk’s International Operations, and in April 2015 Mr Doustdar was promoted to executive vice president, continuing his responsibility for Novo Nordisk’s International Operations.  In September 2016 Mike Doustdar assumed additional geographical responsibility and was promoted to executive vice president for an expanded International Operations, leading all commercial units globally, except for USA and Canada.	Ludovic Helfgott Executive vice president and head of Biopharm Mr Helfgott joined Novo Nordisk in April 2019 as executive vice president and head of Biopharm. Mr Helfgott joined Novo Nordisk from AstraZeneca, UK, where he was global vice president in charge of the company's Cardiovascular, Metabolism and Renal global franchise, supervising both assets in development and on the market. He joined AstraZeneca in 2005 in an international sales effectiveness role and has since held operational leadership roles with increasing responsibilities in Italy, Spain and at corporate headquarters. Prior to this, Mr Helfgott was with McKinsey & Company in Paris, Moscow and Brussels from 1998 to 2005.
Karsten Munk Knudsen Executive vice president and chief financial officer (CFO) Mr Knudsen joined Novo Nordisk in 1999 as a business analyst in NNIT A/S, previously a subsidiary of Novo Nordisk, and has since held finance positions of growing size and complexity throughout the Novo Nordisk value chain. From 2010 to 2014 Mr Knudsen was corporate vice president for Finance & IT at Novo Nordisk Inc. in the US and in 2014 he was appointed senior vice president of Corporate Finance in Novo Nordisk. In February 2018 Mr Knudsen was promoted to executive vice president and chief financial officer. In April 2019 Mr Knudsen assumed further responsibilities as his area was expanded to cover Finance, Legal & Procurement.	Doug Langa Executive vice president and head of North America Operations Mr Langa joined Novo Nordisk in 2011 as senior director of Managed Markets. In 2015 Mr Langa was promoted to corporate vice president of Market Access in the US and in 2016 he was appointed Senior Vice President of Market Access in the US. In this role he was responsible for securing formulary access with key payer customers for Novo Nordisk brands. In March 2017 Mr Langa was appointed senior vice president, head of North America Operations and president of Novo Nordisk Inc., and in August 2017 Mr Langa was promoted to executive vice president, continuing his responsibilities as head of North America Operations and president of Novo Nordisk Inc. Mr. Langa represents Novo Nordisk Inc. on the Board of Directors of the trade association PhRMA. Mr Langa joined Novo Nordisk from GlaxoSmithKline, where he was the Senior Director of Payer Marketing. Prior to GlaxoSmithKline Mr Langa spent the majority of his career at Johnson and Johnson, where he held various roles of increasing responsibility within Managed Markets, Sales Leadership and Marketing.
Camilla Sylvest Executive vice president and head of Commercial Strategy & Corporate Affairs Ms Sylvest joined Novo Nordisk in 1996 as trainee. From 1997 to 2008 Ms Sylvest had roles in headquarters and regions within pricing, health economics, marketing and sales effectiveness. In 2003, she was appointed vice president of sales and marketing effectiveness in Region Europe. From 2008 to 2015 Ms Sylvest headed up affiliates and business areas of growing size and complexity in Europe and Asia and in 2013 she was also appointed corporate vice president. In August 2015 Ms Sylvest was appointed senior vice president and general manager of Novo Nordisk’s Region China. In this role she was responsible for the company’s activities in China, Taiwan and Hong Kong. In October 2017 Ms Sylvest was promoted to executive vice president.	Mads Krogsgaard Thomsen Executive vice president and chief science officer (CSO) Mr Thomsen joined Novo Nordisk in 1991 as head of Growth Hormone Research. He was appointed senior vice president of Diabetes R&D in 1994 and in November 2000 he was appointed executive vice president and chief science officer. In this role, he is responsible for global drug and device research, CMC and global development, medical affairs, regulatory and safety within Novo Nordisk.
Henrik Wulff Executive vice president and head of Product Supply, Quality & IT Mr Wulff joined Novo Nordisk in 1998 in the logistic and planning function. From 2001 to 2008 he held different managerial roles within Novo Nordisk’s manufacturing organisation, Product Supply, before being appointed senior vice president of Diabetes API in Product Supply, Denmark. In 2012 Mr Wulff was appointed senior vice president of the worldwide division Diabetes Finished Products. In 2013 he was promoted senior vice president of Product Supply globally. In April 2015 Mr Wulff was promoted executive vice president and in 2019 with an expanded responsibility covering Global IT and Quality Assurance.

The Board of Directors has the overall responsibility for the affairs of the Company. Reference is made to pages 34-37 in our Annual Report 2019.

The activities of the members of Board of Directors and members of Executive Management outside the Company are included in our Annual Report 2019 on pages 38-40.

There are no family relationships between the Board of Directors, Executive Management or between any of the members of the Board of Directors and any member of Executive Management. No director or member of Executive Management has been elected according to an arrangement or understanding with shareholders, customers, suppliers or others. As required by the Danish Companies Act, directors are elected at General Meetings by simple majority vote. In addition, four employee representatives are elected for a four-year term by the employees of Novo Nordisk A/S.

15

Novo Nordisk Form 20-F 2019

ITEM 6 DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES

B. COMPENSATION

Remuneration of the Board

Remuneration Principles

The Company’s Remuneration Principles provide the framework for the remuneration of the Board. Novo Nordisk Remuneration Principles may be found on our website at novonordisk.com (the contents of the website are not incorporated by reference into this Form 20-F).

In March 2019, the Annual General Meeting approved amendments to the Remuneration Principles in order to reflect that the Research & Development Committee had become a permanent Board committee. Moreover, the Annual General Meeting approved that travel allowance should be denominated in DKK instead of EUR in 2019.

There has been no deviation from the Remuneration Principles in the 2019 remuneration of the Board.

Remuneration composition

The remuneration of Novo Nordisk’s Board comprises a fixed base fee, a multiplier of the fixed base fee for the Chairmanship and members of the Board committees, fees for ad hoc tasks and a travel allowance.

Remuneration compensation

Remuneration	Board of Directors
Base fee
Board committee fee
Travel allowance
Fee for ad hoc tasks
Short-term cash-based incentive programme (STI)
Long-term share-based incentive programme (LTI)
Pension
Social securities taxes
Expenses
Other benefits
Severance payment

Base fee, Board committee fee, travel allowance and fee for ad hoc tasks

In 2019, the remuneration level was identical to that of 2018. No fees for ad hoc tasks were paid in 2019.

Social security taxes

In 2019, Novo Nordisk paid social security taxes imposed by authorities in the EU in relation to the Board members in line with the Principles.

Expenses

In 2019, Novo Nordisk reimbursed reasonable expenses relating to travel and accommodation for the Board members in line with the Principles.

Share-based incentive

In 2019, no stock options, warrants or participation in other incentive schemes were offered to the Board members, except for employee-elected Board members, who may be eligible to participate in ordinary share programmes as employees in Novo Nordisk.

Other benefits

The professional fees in connection with assistance on tax-related matters incurred by Board members based outside of Denmark are reimbursed. The Chair is provided with an office and secretarial support in Novo Nordisk’s headquarters in Bagsværd, Denmark.

Board and committee fee levels 2019

	Board		Audit Committee		Nomination Committee		Remuneration Committee		R&D Committee
	Multiplier	DKK	Multiplier	DKK	Multiplier	DKK	Multiplier	DKK	Multiplier	DKK
Chair	3.00	2,100,000	1.00	700,000	0.50	350,000	0.50	350,000	0.50	350,000
Vice chair	2.00	1,400,000	-	-	-	-	-	-	-	-
Member	1.00	700,000	0.50	350,000	0.25	175,000	0.25	175,000	0.25	175,000

16

Novo Nordisk Form 20-F 2019

ITEM 6 DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES

Travel allowances for Board members and committee members 2019

In home country with 5 hours or more air travel	Outside home country but on home continent	On another continent than the home country
DKK 37,500 per meeting	DKK 37,500 per meeting	DKK 75,000 per meeting

Board remuneration 2019

The table below includes the total remuneration of each Board member in 2019. The total remuneration for each Board member supports the main focus of the Board on corporate strategy, supervision, organisation and governance, thus contributing to the long-term interest of the company.

Actual remuneration of the Board 2019¹ 

DKK million	Fixed base fee	Fee for ad hoc tasks and committee work	Travel allowance	Total4
Helge Lund2 (BC and NC)	2.1	0.4	0.6	3.1
Jeppe Christiansen (BV and RC)	1.4	0.4	0.1	1.9
Brian Daniels (RDM and RM)	0.7	0.4	0.4	1.5
Laurence Debroux3 (AM)	0.5	0.3	0.3	1.1
Andreas Fibig (AM)	0.7	0.4	0.3	1.4
Sylvie Grégoire (AM, NM and RDM)	0.7	0.7	0.3	1.7
Liz Hewitt (AC and RM)	0.7	0.9	0.5	2.1
Mette Bøjer Jensen (NM)	0.7	0.2	0.1	1.0
Kasim Kutay (NM)	0.7	0.2	0.1	1.0
Anne Marie Kverneland (RM)	0.7	0.2	0.1	1.0
Martin Mackay (RDC)	0.7	0.4	0.3	1.4
Thomas Rantzau (RDM)	0.7	0.2	0.1	1.0
Stig Strøbæk (AM)	0.7	0.4	0.1	1.2
Total	11.0	5.1	3.3	19.4

BC = Board chair, BV = Board vice chair, AC = Audit Committee chair, AM = Audit Committee member, NC = Nomination Committee chair, NM = Nomination Committee member, RC = Remuneration Committee chair, RM = Remuneration Committee member, RDC = R&D Committee chair, RDM = R&D Committee member.

1. None of the Board members has received remuneration from companies in the Novo Nordisk Group other than Novo Nordisk A/S for this period. 2. Novo Nordisk provides secretarial assistance to the Chair in Denmark. 3. Ms Debroux was first elected in March 2019. 4. Excluding social security taxes and other benefits paid by Novo Nordisk amounting in aggregate to less than DKK 1 million.

Remuneration of Executive Management

Remuneration Principles

The Company’s Remuneration Principles provide the framework for the remuneration of Executive Management. Novo Nordisk Remuneration Principles may be found on our website at novonordisk.com (the contents of the website are not incorporated by reference into this Form 20-F).

In 2019, the Annual General Meeting approved amendments to the Remuneration Principles in order to ensure that Novo Nordisk is able to reclaim incorrect payouts of incentives in case of a misstatement of data regardless of whether this originates due to wilful misconduct or gross negligence.

The 2019 remuneration of executives did not deviate from the Remuneration Principles.

Remuneration composition

Remuneration packages for executives comprise a base salary, a short-term cash-based incentive, a long-term share-based incentive, a pension contribution and other benefits.

The fixed remuneration enables the executives to take decisions with a long-term perspective in mind without undue considerations for short- or long-term incentives. The variable remuneration is designed to promote performance in line with the company’s strategy and to further align the interests of executives and shareholders.

17

Novo Nordisk Form 20-F 2019

ITEM 6 DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES

Remuneration package components

Remuneration	Executive Management	Comments
Base salary		Accounts for approximately 15–35% of the total value of the remuneration package.*
Pension		Up to 25% of the base salary and short-term cash-based incentive.
Fee for committee work
Travel allowance
Fee for ad hoc tasks
Short-term cash-based incentive programme (STIP)		Up to 12 months‘ base salary plus pension contribution per year, typically based on base salary at the end of the year.
Long-term share-based incentive programme (LTIP)		Up to 18 months’ base salary plus pension per year for the chief executive officer and up to 13,5 months’ base salary plus pension contribution per year for the executive vice presidents. At the end of the vesting period the shares allocated may be reduced or increased by up to 30%.
Expenses		Reasonable expenses are reimbursed.
Other benefits		Executive Management receives non-monetary benefits such as company cars, phones etc. Executives on international assignments may receive relocation benefits.
Recruitment arrangements		When recruiting new executives who are not employed by Novo Nordisk at the time of employment the Board of Directors may grant a sign-on arrangement in the form of cash payment or share incentive programme.
Severance payment		Up to 24 months‘ base salary plus pension contribution. Executive Management contracts entered into before 2008 exceed the 24-month limit, but will not exceed 36 months‘ base salary plus pension contribution.

* The interval 15-35% denotes the span between 'maximum performance' and 'on-target performance'.

Base salary

In 2019, the base salary of the executives increased by 2% in general in line with other employees of the company. Further, the base salary of the Chief Executive Officer has been phased-in over a three-year period (year-over-year) as from 1 January 2017 with the last increase related to phase-in as of 1 January 2019. The base salary of Karsten Munk Knudsen has been phased-in from his EVP appointment as of 15 February 2018. Due to an expansion of responsibilities during 2019, the base salary of Henrik Wulff has been adjusted accordingly.

Pension

In 2019, executives were eligible for a defined contribution pension scheme of 25% of base salary and short-term cash-based incentive. No executive has a prospective entitlement to a defined benefit pension scheme.

Short-term cash-based incentive

For 2019, the Board determined that the maximum possible short-term cash-based incentive would be maximum 12 months’ base salary plus pension contribution for the chief executive officer, and 9 months’ base salary plus pension contribution for executive vice presidents. The performance was linked to the achievement of a combination of a number of predefined corporate and individual targets.

The corporate measures were aligned with the strategic priorities of the company and performance was assessed along the four dimensions: Sales, Operating profit, Market share and the execution of the strategic plan. Sales and operating profit performance have been solid. Market shares performance has likewise progressed positively. Targets linked to the execution of the strategic plan included sales execution, R&D, business development, digital health, organisational efficiency, environmental and organisational development.

Individual measures were linked to the personal leadership skills, the evolution of the culture of the company and business performance relating to the individual’s area of responsibility.

The Board has assessed the performance of the executives in relation to the business and individual targets. Based on this assessment the Board determined that the average short-term incentive for the executives was 100% of the maximum short-term incentive (84% in 2018). Consequently, the short-term incentive for the chief executive officer for 2019 was 12 months’ base salary plus pension contribution, while the average short-term incentive for the executive vice presidents (who have been registered executives in 2019 for the full year) was 9 months’ base salary plus pension contribution.

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Novo Nordisk Form 20-F 2019

ITEM 6 DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES

Long-term share-based incentive

The executives have in 2019 participated in a long-term incentive programme consisting of a one-year performance period (2019) and a three-year vesting period (2020-2022). If the targets for economic value creation and sales growth were met, and at least 85% performance was reached for non-financial targets during the one-year performance period, the allocation of shares would correspond to 9 months’ base salary plus pension contribution for the chief executive officer and 6.75 months’ base salary plus pension contribution for the executive vice presidents. The maximum share allocation after the one-year performance period is up to 18 months’ base salary plus pension contribution for the chief executive officer and up to 13.5 months’ base salary plus pension contribution for the executive vice presidents.

In 2019, Novo Nordisk exceeded the target for economic value creation by 6%, primarily driven by higher underlying operating profit coupled with a net favourable currency impact. Sales were 2% above the target level in constant exchange rates. All of the non-financial targets were reached in 2019. On this basis, 82% of the maximum share allocation will be allocated to the executives. Thus, shares equalling 14.7 months’ base salary plus pension contribution have been allocated to the chief executive officer, whereas shares equalling 11 months’ base salary plus pension contribution have been allocated to the executive vice presidents. The shares allocated have a three-year vesting period (2020-2022). At the end of the vesting period the shares allocated to each executive may be reduced or increased by up to 30%. The reduction or increase will depend on whether the actual average annual sales growth during the three-year vesting period is lower or higher compared to a target determined by the Board.

Expenses

In 2019, executives received reimbursement for reasonable expenses in relation to travel etc.

Other benefits

In 2019, executives received non-monetary benefits in relation to company cars, phones etc. in line with the Remuneration Principles.

Recruitment arrangements

In 2019, no sign-on arrangements were agreed on or paid out to the registered executives.

Notice period and severance payment

As of 15 April 2019, former registered executive Jesper Brandgaard has retired from Novo Nordisk. Until April 2020 Jesper Brandgaard will, however, continue to provide certain services for Novo Nordisk. A severance payment of DKK 27.7 million is to be paid in April 2020.

Claw-back

In 2019, there was no legal or factual basis on which to exercise claw-back or request repayment of incentives for current or former executives.

Executive remuneration in 2019

The table below includes the total remuneration of each executive in 2019. None of the executives has received remuneration from companies in the Novo Nordisk Group other than Novo Nordisk A/S for this period. The fixed remuneration enables the executives to take decisions with a long-term perspective in mind without undue considerations for short- or long-term incentives. The variable remuneration is designed to promote performance in line with the company’s strategy. The variable remuneration is based on a number of targets that must be achieved before the incentive is released to the executive. Targets are aligned to short-term and long-term strategic priorities in the corporate strategy and thereby ensure that the long-term interests and the sustainability of the company are considered. The variable remuneration is provided as STI and LTI.

Actual remuneration of the Executive Management for 2019

DKK million	Base salary	Short- term incentive	Pension	Benefits	Total6	Long-term incentive7	Total	Fixed	Variable	Total
Executive Management
Lars Fruergaard Jørgensen - President and CEO	13.9	13.9	7.0	0.3	35.1	19.7	54.8	17.7	37.1	54.8
Monique Carter1 - People & Organisation	1.3	1.3	0.6	0.7	3.9	2.1	6.0	2.3	3.7	6.0
Karsten Munk Knudsen - Finance, Legal & Procurement	5.1	3.9	2.3	0.3	11.6	5.6	17.2	6.7	10.5	17.2
Camilla Sylvest - Commercial Strategy & Corporate Affairs	5.2	3.9	2.3	0.3	11.7	5.6	17.3	6.8	10.5	17.3
Mads Krogsgaard Thomsen - Research & Developement	7.2	5.4	3.2	0.3	16.1	7.7	23.8	9.3	14.5	23.8
Henrik Wulff - Product Supply, Quality & IT	5.9	4.6	2.6	0.3	13.4	6.2	19.6	7.7	11.9	19.6
Non-registered executives4, 5	17.2	19.0	5.7	1.2	43.1	17.9	61.0	21.7	39.3	61.0
Former executives:
Jesper Brandgaard2	2.1	1.3	0.8	0.1	4.3	2.2	6.5	2.7	3.8	6.5
Lars Green3	3.5	2.2	1.4	0.2	7.3	—	7.3	4.6	2.7	7.3
Executive Management in total	61.4	55.5	25.9	3.7	146.5	67.0	213.5	79.5	134.0	213.5

1. Effective August 2019, Monique Carter became executive vice president in Novo Nordisk’s Executive Management. Amounts in the table include remuneration from the effective date in 2019 with the exception of short-term incentive, which covers the full year. 2. Jesper Brandgaard retired from Novo Nordisk in April 2019. Until April 2020 Jesper Brandgaard will continue to provide certain services for Novo Nordisk. Remuneration of Jesper Brandgaard from January to April 2019 is included in the above table. 3. Effective from 31 August 2019, Lars Green decided to leave Novo Nordisk. The remuneration of Lars Green from January to August 2019 is included in the table above. 4. On 1 April 2019, Novo Nordisk’s Executive Management was expanded to include Ludovic Helfgott. Amounts in the table include remuneration from 1 April 2019. 5. Includes remuneration for Maziar Mike Doustdar, Ludovic Helfgott and Doug Langa. Maziar Mike Doustdar, Ludovic Helfgott and Doug Langa received benefits and recruitment arrangements in accordance with their contracts and local guidelines. The benefits and recruitment arrangements received in 2019 not included in the above table amounted to DKK 10.7 million (DKK 0.9 million in 2018). 6. Excluding social security taxes paid amounting to DKK 2.7 million (DKK 1.2 million in 2018) for Executive Management 7. The shares are locked up for three years before they are transferred to the participants employed at the end of the three-year period. The value is the cash amount of the long-term incentive granted in the year using the grant-date market value of Novo Nordisk B shares. For shares allocated for the 2019 performance, the amount of shares may potentially be reduced or increased depending on whether the actual average annual sales growth during in the three-year vesting period is lower or higher compared to a target determined by the Board.

19

Novo Nordisk Form 20-F 2019

ITEM 6 DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES

The difference in the total remuneration to executive management in the above table compared to note 2.4 - Employee Cost in Novo Nordisk Annual Report 2019 is mainly related to long-term incentives. The disclosure in note 2.4 is based on IFRS recognition principles where the long-term incentive programmes are expensed over the grant year and the subsequent 3 years of vesting. The long-term incentive included in the above table is the total cost of the 2019 programme.

Long-term incentive programme 2019

Long-term incentive programme 2019 - targets

										Months of base salary equivalent
	KPI	KPI weight		Measure	Achievement	Outcome		Performance		CEO		EVP
	Economic value creation
	Long-term incentive target basis (100%)									4.5		3.4
Financial targets	2019 economic value creation	50	%	Degree of target achievement index 90-110		106	%	158	%	7.1		5.3
	Sales growth
	Long-term incentive target basis (100%)									4.5		3.4
	2019 sales growth	50	%	Degree of target achievement index 97-103		102	%	169	%	7.6		5.7
	Total financial targets	100	%			104	%	163	%	14.7		11.0
Non- financial targets	R&D: Achievement of marketing authorisation for specific product	20	%	Target achievement below 85% results in a reduction		100	%
	R&D: Successful achievement of milestones in clinical trial	10	%			100	%
	R&D: Successful achievement of milestones in clinical trial	10	%			100	%
	R&D: Progress in the pipeline within other chronic diseases	10	%			100	%
	R&D: Submission of product files to the regulatory authorities in the US and Europe of a certain product	10	%			100	%
	R&D: Achievement of marketing authorisation in the EU and the US for specific product	10	%			100	%
	Environmental: Contracts in place to increase use of renewable energy	10	%			100	%
	Societal: Progress in societal activities	10	%			100	%
	Efficiency: Progress in organisational development	10	%			100	%
	Total non-financial targets	100	%			100	%			No reduction		No reduction
	Total months allocated									14.7		11.0
	Maximum allocation, months									18.0		13.5
	Performance as percentage of maximum									82	%	82	%
	Performance as percentage of target									163	%	163	%

Based on the company’s performance in relation to the KPIs in the long-term incentive programme, the executives are entitled to 82% of the maximum. The shares allocated to the executives are described in tablebelow.The shares allocated to the executives under the long-term incentive programme for 2019 are subject to a three-year vesting period where the shares allocated might be reduced or increased by up to 30%. The reduction or increase will depend on whether the actual average annual sales growth during the three-year vesting period is lower or higher compared to a target determined by the Board.

Long-term incentive programmes 2017-2019 – unvested shares

Executives have been eligible to participate in long-term share-based incentive programmes in 2017-2019. The table below includes an overview of allocated but not yet vested shares to each executive. All information included in the table, including the number of shares and the calculation of value of the shares, is based on the allocation at the time of the establishment of the respective programmes. However, the number of shares allocated may be reduced or increased, depending on whether the performance of the company in the respective three-year periods deviates from targets determined by the Board. The performance of the company and consequently the number of shares to finally be granted to each executive will only be determined after the end of each of the three-year periods and, thus, below is not an expression of the actual value of each programme.

20

Novo Nordisk Form 20-F 2019

ITEM 6 DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES

Long-term incentive programmes 2017–2019 - unvested shares

	Grant date	Vesting date	Number of shares allocated1	Value per share at grant date	Total market value at launch (DKK million)2	Months of base salary at year-end equivalent
Lars Fruergaard Jørgensen
2017 Shares allocated	February 2017	February 2021	43,850	237	9.4	8.2
2018 Shares allocated	February 2018	February 2022	58,938	304	16.5	12.6
2019 Shares allocated	February 2019	February 2023	66,218	322	19.7	14.7
Monique Carter
2019 Shares allocated	February 2019	February 2023	6,895	322	2.1	8.2
Karsten Munk Knudsen
2018 Shares allocated	February 2018	February 2022	16,578	304	4.6	9.4
2019 Shares allocated	February 2019	February 2023	18,682	322	5.6	11.0
Camilla Sylvest
2017 Shares allocated	February 2017	February 2021	6,037	237	1.3	5.5
2018 Shares allocated	February 2018	February 2022	16,578	304	4.6	9.4
2019 Shares allocated	February 2019	February 2023	18,682	322	5.6	11.0
Mads Krogsgaard Thomsen
2017 Shares allocated	February 2017	February 2021	16,962	237	3.6	6.2
2018 Shares allocated	February 2018	February 2022	22,885	304	6.4	9.4
2019 Shares allocated	February 2019	February 2023	25,788	322	7.7	11.0
Henrik Wulff
2017 Shares allocated	February 2017	February 2021	13,751	237	2.9	6.2
2018 Shares allocated	February 2018	February 2022	18,421	304	5.2	9.4
2019 Shares allocated	February 2019	February 2023	20,757	322	6.2	11.0
Non-registered executives