Novo Nordisk contributes to socio-economic welfare by securing and creating employment, by developing the competences of its employees and by making products and offering services that provide better health for people with diabetes and others whose healthcare needs we serve.

Local and global impact - Novo Nordisk's economic stakeholder model

We examine the interactions between the company and our key economic stakeholders to better understand Novo Nordisk’s impacts on the local and global society. Our approach builds on the principles developed by the Global Reporting Initiative. The model illustrates the relationships between Novo Nordisk and our economic stakeholders: customers, suppliers, employees, investors, and the public sector, and their roles as economic drivers in society. Novo Nordisk activities locally and globally serve as an engine of growth in the economy by boosting local supply chains, investing and developing a new skills base. Salaries and supplier income spent locally or paid as tax multiply through the local community. Direct impacts refer to a company’s direct contribution to wealth creation, such as employment. Indirect impacts describe the impact of a company’s operations and investment in new facilities on the economic activities and performance of others.

To show the indirect impact of Novo Nordisk in Denmark (2002), we have estimated the indirect employment created by Novo Nordisk production and consumption by Novo Nordisk employees in Denmark. The indirect effects are estimated by using the production multiplier for the pharmaceutical industry and the consumption multiplier from Statistics Denmark. 18,471 indirect jobs were created by Novo Nordisk. The value of these jobs in terms of salary is DKK 3.9 billion and DKK 1.5 billion in income taxes (see table below).

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To demonstrate the impact that we have locally and globally, we report on key indicators of economic and geographical impact.

Measured by turnover, Novo Nordisk is the twelfth largest Danish company. Most production facilities, 61% of full-time employees and 91% of tangible assets are in Denmark. From 2002 to 2003 our turnover grew by 5%. 99% of sales are outside Denmark: 43% in Europe, 24% in North America, 16% in Japan & Oceania, and 16% in International Operations. 44% of the cash from customers goes to suppliers, who are primarily located in Denmark. The full-time employee base grew by 4% from 2002 to 2003, primarily in International Operations (9%), followed by North America (7%), and Japan & Oceania (7%).

61% of cash added value was remuneration, mainly in the developed world, particularly Denmark. In 2003, total corporate taxes constituted 9.5% of our turnover. In Denmark 13% are paid as local taxes and 87% as state taxes. Most investors are Danish (62%), North American (24%) or British (11%). An estimated 70% of our employees own a total of 1% of the shares.

Level of investment

A measure of the company’s future economic capacity and development. In 2003, Novo Nordisk invested DKK 2.3 billion in new production facilities in Denmark, Brazil and France, down from DKK 4 billion in 2002.

Value of knowledge

All the skills, expertise and competences of the employees of Novo Nordisk benefit individuals as well as society.

Expenditure on research and development

An important capacity builder for society and source of the innovation that will create future wealth for Novo Nordisk. The wage share of R&D (36%) is an indication of the company’s impact as a capacity builder in a community. The expenditure on R&D constitutes 16% of the net turnover. This share has remained fairly constant at 16–17% in the period between 1999 and 2003.

Contribution to society

Our turnover in 2001 accounted for 1.8% measured as a share of GDP in Denmark, rising to 1.9% in 2002. In 2002 our economic contribution to overall economic wealth for society through value added was 0.8% of GDP, 4.4% of Danish exports and 0.5% of Danish employment. In 2003 Novo Nordisk accounts for 5% of Danish corporate taxes and an estimated 0.5% of Danish employment. Our employees accounted for 0.6% of total Danish personal income taxes (60% state and 40% local taxes).

Socio-economic impact at global level

Our contribution to society through the value of our products and services in terms of improved health. Health economics is one method we use to measure this impact (see article on 'Investment in health'). Novo Nordisk has been making substantial investments in Latin America, where there is a large and growing market in diabetes care products. In 2002, the company acquired Brazilian insulin producer Biobrás for USD 31.4 million. In 2003, Novo Nordisk announced its intention to invest more than USD 200 million in extending the Biobrás insulin production facility in Montes Claros, Brazil. The facility will supply export markets around the world and create some 500 direct jobs in the region. The project will begin in the first half of 2004, with production starting in 2007. This investment will not only lead to a tenfold increase in Novo Nordisk’s current production capacity in Latin America and the Caribbean, but will bring to Brazil know-how on biotechnology and pharmaceutical production.

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This model illustrates Novo Nordisk and its economic stakeholders and the interactions that drive economic growth in society. When, for instance, investors provide risk capital so that Novo Nordisk can develop new products, it will benefit customers, employees and suppliers. For customers, in turn, the products from Novo Nordisk improve their ability to contribute to society. When employees, suppliers and investors spend their income to buy things, make savings or investments, they too contribute to wealth generation in society. And in their capacity as citizens in the local and global community, all economic actors pay taxes to the public sector in return for services.

Novo Nordisk's economic stakeholder model
(click to view pdf file)