Introduction by Kurt Anker Nielsen
Ladies and gentlemen, on behalf of Novo Nordisk's Corporate Management I would like to welcome you to our 1997 investor presentation.
My name is Kurt Anker Nielsen and I am Chief Financial Officer of Novo Nordisk.
With me here today are three of my colleagues from Corporate Management. Bruce Carter - our Health Care Chief Science Officer - will give you an update on the significant progress made over the last two-three years within the Discovery, Development and Technology areas, and Lars Rebien Sørensen and Steen Riisgaard who will brief you on the progress made in our two business areas: Health Care and Enzyme Business. At the end of this presentation I will be back with some comments about our expectations for 1997 and why we believe Novo Nordisk is more well positioned than ever to create long-term value for our shareholders.
Now, let me take you back to the end of 1994. As most of you will remember, Novo Nordisk decided to implement a new strategy.
Slide 1 - Promises Made - Promises Kept
We decided to focus on our core businesses and to divest businesses, products and projects in areas where we did not believe we could achieve a global leadership position. Further, we believed that we would add the most value for our shareholders by collaborating with companies that complement our own capabilities within our core businesses. We realised that in an industry where exclusivity in the market place is critically important, development times had to be reduced.
And finally, due to the nature of drug discovery today, discoveries will be made not only within, but also outside of our core businesses. With our breakthrough discovery strategy we want to ensure that the value of discoveries made outside our core businesses is maximised.
I hope you will all agree with me that the commitments we made, now more than two years ago, are commitments we have met. Today, in 1997, Novo Nordisk is a much more focused company. Resources in all areas of the organisation have been realigned to support the business strategy. All of our non-core businesses have been divested. We entered into alliances with LifeScan and the Mayo Clinic within Diabetes Care and with Rhône-Poulenc Rorer within Women's Health Care. And we are already beginning to see significant progress in terms of reducing development times which Bruce Carter will allude to in his presentation. Also, our financial performance has been in line with what we have promised.
Slide 2 - Financial Results 1996
In 1996 operating income and net income grew by 15%.
This growth was generated by a healthy underlying volume growth in Novo Nordisk’s core businesses, a significant increase in licence fees and by control of costs.
Overall sales grew by 8%. The sales growth in Health Care and the Enzyme Business amounted to 12% and 11%, respectively. In local currencies sales in the continuing businesses increased by 13%.
Licence fees and other operating income increased by 35%.
This increase was primarily driven by a significant increase in the royalty income from SmithKline Beecham's sales of Seroxat®/Paxil® outside of the Nordic countries.
Restructuring costs dropped from DKK 177 million in 1995 to DKK 104 million in 1996. Most of these charges are provisions for severance payments related to the restructuring programme, we have decided on in our staff and service functions.
Income before tax increased by 17%. However, as expected the tax rate increased from 27.5% in 1995 to 28.8% in 1996 resulting in an increase of net income of 15%. Earnings per share of DKK 10 was DKK 23.98, or USD 2.02 per ADS at the year end exchange rate.
Now, despite these results we are aware that there are still many important issues that we as a company need to address and give our full attention, and it is these issues which will be addressed in our presentation today:
- Novo Nordisk's D&D strategy and new product pipeline
- The increased competition within the Diabetes Care market, especially the market for Type 2 diabetes
- The situation in the US insulin market including our NovoPen® direct-to-consumer strategy
- The market growth and competition within Women's Heath Care
- The prospects of our Enzyme Business
So, today we will not only talk about the promises we made and the promises we kept. We will also talk about promises we will meet and our commitment to build long-term value for our shareholders.
With this, I am pleased to introduce Bruce Carter, member of Corporate Management and Chief Science Officer.
