Region China overview and strategy Camilla Sylvest SVP ... · Slide 3Capital Markets Day 2015...

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Region China overview and strategy

Camilla Sylvest SVP Region China

TEAM NOVO NORDISK Professional cycling team

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Forward-looking statements

Novo Nordisk’s reports filed with or furnished to the US Securities and Exchange Commission (SEC), as well as the company’s Annual Report 2014 and Form 20-F, both filed with the SEC in February 2015, and presentations made, written information released, or oral statements made, to the public in the future by or on behalf of Novo Nordisk, may contain forward-looking statements. 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.

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 this presentation, 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 recall, 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.

Please also refer to the overview of risk factors in ‘Be aware of the risk’ on p 42-43 of the Annual Report 2014 on the company’s website novonordisk.com.

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

Important drug information

• Victoza® (liraglutide 1.2 mg & 1.8 mg) is approved for the management of type 2 diabetes only

• Saxenda® (liraglutide 3 mg) is approved in the US and EU for the treatment of obesity only

Capital Markets Day 2015 Region China overview and strategy

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13th Five-Year Plan focusing on mature growth

-2%

0%

2%

4%

6%

8%

10%

12%

14%

GDP growth historically and estimated

China is adopting the new normal of mature growth

Source: China Five-Year Plan Source: OECD Statistics

Speed of growth Quality and sustainability

Double GDP cap by 2010 (vs 2000)

Maintain GDP growth at

7-8%

Double GDP cap by 2021 (vs 2010) G

ro

wth

ta

rg

et

Achieve rapid economic growth

Adapt to the New Normal of mature

growth Eco

no

mic

th

em

e Transform with

sustainable and balanced growth

2018 2010

US China Europe 11th Five-Year Plan (2006-2010)

12th Five-Year Plan (2011-2015)

13th Five-Year Plan (2016-2020)

6.4%

2.5%

1.8%

GDP growth (%)


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2008

Source: IMS Health Market Prognosis, November 2014. Market size ranking in constant exchange rates

The importance of China’s pharma market is still increasing

2018 2013

Rank Country Index 1 United States 100

2 Japan 27

3 China 14

4 France 13

5 Germany 13

6 Italy 8

7 Canada 7

8 United Kingdom 7

9 Spain 7

10 Brazil 5

11 Mexico 4

12 Australia 4

13 Russia 3

14 South Korea 3

15 Turkey 3

16 India 3

17 Greece 2

18 Netherlands 2

19 Poland 2

20 Belgium 2


2 China 29

3 Japan 26

4 Germany 14

5 France 11

6 Brazil 9

7 Italy 8

8 United Kingdom 8

9 Spain 7

10 Canada 6

11 Russia 6

12 Mexico 5

13 India 4

14 Australia 4

15 South Korea 4

16 Argentina 4

17 Poland 2

18 Turkey 2

19 Belgium 2

20 Netherlands 2


2 China 36

3 Japan 22

4 Brazil 12

5 Germany 11

6 France 8

7 United Kingdom 7

8 Italy 7

9 Canada 5

10 Russia 5

11 India 5

12 Spain 5

13 Mexico 4

14 South Korea 3

15 Australia 3

16 Turkey 2

17 Saudi Arabia 2

18 Poland 2

19 Argentina 2

20 Indonesia 2


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0

20

40

60

80

100

120

140

160

Category 1

Source: IDF Diabetes Atlas edition 1-7, year 2000-2015, respectively

Continued growth in number of people with diabetes Few Chinese patients reach treatment target

The diabetes prevalence in China is expected to continue growing and people with diabetes remain poorly controlled

Source: Prevalence and Control of Diabetes in Chinese Adults, JAMA, September 2013

151

110

People with diabetes (million)

0

20

40

60

80

100

Diabetes Diagnosed Drug treated

Adequate glycaemic

control

37%

23%

10%

2000 2003 2006 2009 2011 2013 2015 2040E

Share of people with diabetes (%)


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Increasing focus on quality enhancement and cost containment

Source: Framework adapted from BCG analysis

Phase I: Broad insurance coverage and equal access to health care

Phase II: Cost containment Phase III: Quality of healthcare, efficiency and innovation

Focus of 2009-11 Current focus Ongoing focus

Cost

Quality Access Quality Access

Cost

Access

Cost

Quality


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54% 37% 34%

29%

35% 36%

17% 27% 30%

0%

25%

50%

75%

100%

2004 2009 2013

Phase I: Focus on access to healthcare by broad coverage Estimated source of funding

Access to health care driven by increased government spending

EDL: Essential Drug List

Sources: China Health Statistics Yearbook (2014), National Health and Family Planning Commission of China

Phase I: Broad insurance coverage and equal access to health care; ~130bnUSD government investment

Focus of 2009-11

Cost

Quality Access

Government funding Public funding Out of pocket

210 372 93

Health care spend per capita (USD)

Key objectivesrowing GDP • Investment of more than USD 130 billion • Basic coverage to reach >95% • Establish basic healthcare system • Establish EDL system


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Phase II: Cost containment

Drug prices will be subject to multiple reviews but pricing remains attractive

Phase II: Cost containment

Quality Access

Cost

Drug prices reviewed on Central, Provincial, City and Hospital level

1 Policies are still being developed and not fully in place 2 Without regional policy support NRDL: National Reimbursement Drug List; PRDL: Provincial Reimbursement Drug List

Entering Hospital

Patent/ exclusive

drugs

Drugs with high sales

value

Other drugs

Central/

Provincial

price

negotiation

Provincial

bidding

Hospital

negotiation

City 2nd

bidding1

Hospital negotiation2

Reimburse-ment

pricing

NRDL/PRDL drugs

Key objectivesrowing GDP • Push for more rationalised drug supply • Reduce hospital reliance on drug sales • Stricter compliance requirements

Current focus


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Phase III: Quality of healthcare, efficiency and innovation

Historically, China has been slow in adopting new treatment options

Focus on quality of healthcare, innovative products and faster access to market

1 New Molecular Entities (NMEs) from 2008-12 availability as of 2013 Source: IMS Health

Phase III: Healthcare quality, efficiency and innovation

Access

Cost

Quality

0

20

40

60

80

100

120

140

160

180

USA Germany UK South Korea

Canada China Global India

Key objectives:ently ~5.8% of outgrowing GDP • Enhance drug quality and encourage innovation • Encourage private investments • Encourage private health insurance

Ongoing focus

NMEs available in 20131


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Macro social environment

RDPAC: R&D Based Pharmaceutical Association Committee; AIC: Administration for Industry and Commerce

• Anti-corruption campaign driven by president Xi

The regulatory environment is rapidly changing with implications for all pharma companies in China

Implication

• Corruption cases • AIC investigations • Access to hospitals • Medical promotion

Rules and enforcement

• 9-bans • Blacklist rule • RDPAC


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• Novo Nordisk China established in 1994

• Largest diabetes sales force in China

• Approximately 2,800 FTEs

• Tianjin factory established in 1997

• Manufacturing of NovoPen® and filling of devices

• Expanded in 2003 and 2008

• Approximately 1,000 FTEs

• Research centre established in 2002

• Focus on discovery technology, discovery biology, E.coli research and mini-pilot

• Expanded in 2012

• Approximately 200 FTEs

1 CAGR for 9-year period Note: Revenue in constant exchange rates

Region China historic revenue development

Region China historic development

0

2

4

6

8

10

FTE: full-time employee equivalents

DKK billion

7.9

Novo Nordisk has invested in changing diabetes in Region China for more than 20 years

2005 2014


CAGR1 +22.9%

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Sales organisation divided into nine regions covering 31 provinces

Largest cities cover 20% of the population, but ~50% of the diabetes market

Novo Nordisk China sales force is divided into nine regions covering all key provinces

NEC

BCH

NCH

CCH

WCH

SCH

ECH

SEC

CSC

#of cities

Share of population

Share of diabetes market

Diabetes market growth

rate

Big cities ~30 ~20% 51% 7%

Rest of China

- ~80% 49% 12%


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Initiatives leveraged to cater for different city segments

Novo Nordisk’s commercial activities are tailored to city segmentation

Segment 1

Big cities

Segment 2

Smaller cities

Segment 3

Counties

Strengthen leading position

Strengthen leading position

Educate, expand presence and stay ahead

~1,000

~300

~500

Positioning Sales Reps

• New product launches

• Product upgrade initiatives

• High level academic meetings

• New patient capture

• Training healthcare professionals

• Patient education

• Meeting-the-expert program

• improving patient treatment

• Diagnosis and treatment

• e-Education

• Mentor program

• Improving diabetes awareness

Initiatives


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Total pharma

Source: IMS CHPA Data, September 2015 Note: Data is sensitive to changes in IMS data collection and reporting methodology

The Chinese pharma market has displayed a significant slowdown in growth across all therapy areas

Total insulin Total diabetes care

5.5%

0%

10%

20%

30%

40%

50%

60%

0%

10%

20%

30%

40%

50%

60%

9.4%

0%

10%

20%

30%

40%

50%

60%

9.8%

2008 2015 YTD

2008 2015 YTD

2008 2015 YTD

Market growth

Market growth

Market growth


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0%

10%

20%

30%

40%

Value MS (%)

0%

20%

40%

60%

80%

100%

Total diabetes market share Total diabetes market value

by product categories

Source: IMS MAT monthly September 2015 value figures OAD: oral anti-diabetic Source: IMS MAT monthly September 2015 value figures

Novo Nordisk Sanofi Bayer

Tonghua Dongbao Other BJ Ganli

Eli Lilly BMS

33%

Dec 2012

Sep 2015

Dec 2012

Sep 2015

Animal insulin Human insulin Modern insulin

GLP-1 DPP-IV

46%

17%

34%

Novo Nordisk maintains overall market leadership despite changing market dynamics

Value MS (%)


OAD

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0%

20%

40%

60%

80%

100%

Novo Nordisk is the clear market leader within human insulin despite intensified competition

The human insulin market is dominated by premix insulin

Source: IMS MAT monthly September 2015 volume figures Source: IMS MAT monthly September 2015 volume figures

Volume MS (%)

Premix (83%)

Long-acting (7%) Fast-acting (10%)

Human insulin market breakdown by insulin segment

Dec 2012

Sep 2015

0%

10%

20%

30%

40%

50%

60%

70%

Volume MS (%)

15%

61%

19%

Dec 2012

Sep 2015

3%

Tonghua Dongbao Novo Nordisk

HK Union

Eli Lilly


Bayer

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20%

40%

60%

80%

100%

0%

10%

20%

30%

40%

50%

Long-acting insulin growth outpaces the overall modern insulin market growth

The modern insulin market is gradually shifting towards increasing long-acting insulin usage

Source: IMS MAT monthly September 2015 volume figures Source: IMS MAT monthly September 2015 volume figures

Volume growth (%) Premix

Long-acting Fast-acting

Modern insulin

11%

15% 20%

24%

Premix (58%)

Long-acting (24%)

Fast-acting (18%)

Modern insulin market breakdown by insulin segment

Sep 2013

Sep 2015

Volume MS (%)


Dec 2012

Sep 2015

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1 State Council Document 2015 No.44 - 18 August 2015

Policy changes expected to lead to faster access for key Novo Nordisk products Expected timelines for key products

Innovation and market access are key to future growth

2015

Reimbursement Regulatory review Phase 3

China is currently reforming the Evaluation and Approval System for Drugs and Medical Devices1

• Accelerate drug registration process

• Eliminate the drug-application backlog

• Improve drug quality

Key objectives for Novo Nordisk in the coming years:

• Improve Victoza® reimbursement status

• Obtain Tresiba® approval after filing in August 2015

• Complete phase 3 trial with Ryzodeg® and prepare file


2016 2017 2018 2019 2020 2020+

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Key challenges Key opportunities

Concluding remarks

• Growth in GDP and growth in health care spend coming down

• Prices under pressure with possible price erosion in the coming years

• Increased competition in diabetes from both international and local competitors

• Basal modern insulin market growing faster than modern insulin premix market

• GDP growth of 6-7% attractive on a global scale

• Insulin volume growth of 5-7%, 110 million people with diabetes hereof 70 million not diagnosed

• High unexploited insulinisation potential and significant value upgrade potential

• Attractive insulin prices despite ongoing reforms

• Increase presence in basal segment with Levemir® and Tresiba® approval


Region China overview and strategy Camilla Sylvest SVP ... · Slide 3Capital Markets Day 2015...

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