Economic footprint

Novo Nordisk’s business strategy aims to contribute to society in those areas where the company has outstanding knowledge and expertise. Access to health, ethical business practice, supply chain management and environmental management at production sites are important for the institutional framework within which the markets work.

The so-called ‘economic footprint model’ helps bring about a better understanding of how Novo Nordisk contributes to society, locally and globally. It illustrates Novo Nordisk and its economic stakeholders and the interactions that drive economic growth in well-developed societies.

In reports from the major production sites the company’s contribution to socio-economic growth is assessed and quantified. This includes job creation, local and national taxes and local purchases.

Making an impact in developing countries1

Novo Nordisk seeks to contribute to society in those areas where the company has outstanding knowledge and expertise. One of the key questions discussed below is how private companies and responsible business practice can make a difference in the market economies of the developing world.

Health and education are acknowledged to be key elements in development. The pharmaceutical industry is increasingly active in the developing world, offering products and cure for events that were previously regarded as inevitable mortal events. However, offering health products is not enough; products must be affordable and income must be generated in the local economies to generate funds for a sustainable healthcare system.

Economic growth and trade combined with foreign investments that create employment are well known factors in building economic growth and generating funding for societal infrastructure. By creating jobs or buying materials from suppliers in the developing world and offering healthcare products Novo Nordisk can contribute to economic growth and social development.

Novo Nordisk’s economic footprint model illustrates the relationship between Novo Nordisk and its economic stakeholders and their role as drivers of economic activity in society. As a business Novo Nordisk impacts society through sustainable business practices, investments and employment. As a pharmaceutical company Novo Nordisk offers knowledge, R&D and healthcare products. This illustrates that successful development requires interplay of various economic processes.

But wealth is unevenly distributed and unregulated capitalism has not proved a solution to that issue. Market failure, inadequate information and lack of societal institutions impede the workings of economic stakeholder mechanisms in particular in the developing world. This can be illustrated by a modified footprint model. The model illustrates the ‘Catch 22’ for poor societies.

Poverty sets off a vicious circle in which poor health and poorer quality of life reinforced by poor education, poor infrastructure and low company presence impedes job creation and productivity and may result in unstable environments. To support the generation of economic wealth, this circle needs to be broken. But as the model illustrates no company can do this alone. Novo Nordisk cooperates with governments and NGOs, but also cooperation across industries and business sectors should be encouraged.

By being present in the developing world Novo Nordisk can contribute to building well functioning societies through application of company policies and standards.

• Company presence:
  Product availability, jobs in production sites and sales, suppliers and supply chain management, local tax contributions.

• Employment opportunities:
  Universal Declaration of Human Rights/ILO standards, health and safety, non-discrimination, minimum wages, employee income, tax contributions.

• Societal institutions and capacity:
  National Diabetes strategies, diabetes clinics, best possible pricing scheme in Least Developed Countries, funding through the World Diabetes Foundation, corporate tax contributions, business ethics, company policies for clinical trials, environmental and social management etc.

• Education:
  Awareness and education of healthcare professionals and people with diabetes, education and training of employees.

Our position

Novo Nordisk believes that responsible business practices in conjunction with government regulation may be a way to ensure that the market economy is working for everyone. By setting rules, norms and standards we can contribute to achieving the Millennium Development Goals. Responsible business practices have the potential to alleviate the consequences of the absence of a legal and regulatory framework and infrastructure. We do this by contributing to building health infrastructure such as offering assistance to building national diabetes strategies, educating healthcare professionals and people with diabetes.

Customer, employee and environmental protection may also be absent. Being responsible implies not taking advantage of that. The policies, described in Novo Nordisk Way of Management, guide employees’ behaviour. Novo Nordisk actively supports the UN Universal Declaration on Human Rights and the principles of the Global Compact such as protection of human rights, freedom of association and the right to collective bargaining and elimination of discrimination and forced labor. All social and people policies in Novo Nordisk apply throughout Novo Nordisk’s global operations. Social responsibility and environmental management is implemented at all production sites and all affiliates inform their key suppliers of the scope of the company’s social and environmental policies.

All of these policies directly impact  the workings of the market economy and individuals’ ability to influence and improve their economic situation.

Performance in 2004

Novo Nordisk markets its product in 179 countries across the world. In 2004 focus has been on increasing internationalisation. The company’s tangible assets, production and the majority of employees are still primarily located in Denmark, but an increasing part of the investments in production is made outside Denmark and outside the developed world. Since 2001 there has been a 432% increase in the company’s assets in the IO region2  - encompassing 152 countries outside of North America, the European Union, Japan, Australia and New Zealand. This reflects a relative increase in the importance of this region while the share of other international sites remains stable.

The growth in employees at international sites reflects this trend. Of the 20,285 full-time positions in Novo Nordisk 8,446 are outside Denmark and 2,911 of these are in the IO region. This represents almost a quadrupling in six years in the less developed part of the world (from 743 in 1999).

Socio-economic impact in the developing world: performance data for Novo Nordisk’s business in the IO region

The IO region includes 152 countries in three continents where the majority can be characterised as developing or countries in transition. Novo Nordisk has offices in 47 of these countries, while the company is represented in the rest of these countries through third party. The company has production sites or license manufacturing in four of these countries: Brazil, China, Hungary and India.

Infrastructure

Novo Nordisk supports the governments of Zambia, Tanzania, Malaysia, El Salvador and China in developing and implementing a national diabetes strategy. The company has had talks with governments in Kenya, Mexico and Brazil.

Business conduct

Company policy exists but not universal standards for marketing and advertising conduct globally. The guiding principle is to follow local legislation. A policy based on universal standards will, however, be implemented by December 2005. Novo Nordisk has a procedure for handling and approval of promotional material. One requirement is that legal affairs shall review materials to ensure local laws, competition and liability issues.

Corporate accountability

Novo Nordisk applies independent, third party audit and assurance of all published data and descriptions audited by PricewaterhouseCoopers.

Compliance with standards

Novo Nordisk follows Good Practice Standards (GxP) in laboratory (GLP), in manufacturing (GMP), and in clinical trials (GCP) according to the International conference on Harmonisation (ICH, 1996).

Clinical trials standards adopted

Novo Nordisk observes external guidelines and regulations having their origin in the Nuremburg Code (1947); World Medical Association, The Declaration of Helsinki, ethical principles for medical research involving human subjects and other ethical guidelines, local laws and the principle of current GLP, GCP, GMP (International conference on Harmonisation (ICH, 1996)), EU directives and Danish legislation. These standards also apply to phase 4 trials, including local trials in countries where local legistation does not call for such high standards.

Notes

1. Developing world is defined in accordance with UN/DAC and consists of Least Developed Countries (LDCs), Middle income countries and countries in transition.
2. The International Operations region of Novo Nordisk encompasses 152 countries (mainly developing and in transition) outside of North America, the European Union, Japan, Australia and New Zealand. Key markets include China, India, Korea, Turkey, Taiwan, Brazil, Mexico, Egypt, Thailand, Argentina and countries in transition.