Slide No. 1 Novo Nordisk Japan 27 November 2002

1
Novo Nordisk in JapanOverview, status and
opportunities

• by Senior Vice President Roger Moore
• President of Novo Nordisk Pharma Ltd, Japan
• at Carnegie Bank A/S
• 27 November 2002

2
Novo Nordisk in Japan
Sales force structure

• Facts about Novo Nordisk in Japan

• Approx 700 employees (more than 400 in sales and
  above 100 in development)
• Net sales of DKK 4,079 million in 2001 (17 of
  Novo Nordisk sales)

3
Development in Sales 1980-2001
CAGR (1980 2001) 22 CAGR (1992 2001) 13
4
Historical highlights

• 1955 Kodama began import of Novo insulins
• 1975 Yamanouchi began import of Nordisk
  insulins
• 1980 Novo Yakuhin established as a 50/50 JV
  with Kodama
• 1990 Kodama agreement terminated and Novo
  Yakuhin
• converted to 100-owned affiliate
• 1990 Start of Novo Nordisk Pharma Ltd
• 1992 hGH business transferred from Yamanouchi to
  NNPL
• 1993-97 50 MR recruitment plan
• 1998 Start of self-distribution
• 1999 Glucagon promotion / distribution assigned
  to Eisai
• 1999 Diabetes alliance with Takeda on Actos
• 2001 Launch of InnoLet and NovoRapid
• 2002 Launch of NovoRapid FlexPen

5
Top 20 foreign pharma companies, 2002
Sales DKK million
Source IMS 2002 (September MAT)
Exch. rate Average Sept. 2002 YTD
6
Doing business in Japan

• A nation of contradictions
• Strong culture, traditions
• Rapid adoption of new technology
• A nation in transition
• Economic recovery when?
• Deregulation / markets opening
• Institutional fatigue
• A nation of opportunities
• 2nd largest economy
• Most foreign companies have relatively small
  presence

7
Doing business in Japan
What it means for Novo Nordisk

• A nation of contradictions
• Strong culture, traditions
• Rapid adoption of new technology
• A nation in transition
• Economic recovery when?
• Deregulation/markets opening
• Institutional fatigue
• A nation of opportunities
• 2nd largest economy
• Most foreign companies have relatively small
  presence

• Customer Relations Mgmt the Japanese way
• Innovative products key, but 0 defects expected
• Pressure on prices
• Towards global competitiveness
• Changing corporate models
• 2nd largest pharma market
• Major growth opportunity

8
The media picture of Japan

• A shrinking economy
• Deflation
• Increasing unemployment
• Bankruptcies
• Non-performing loans
• Government not able to solve the problems
• Is this picture correct?
• Yes, but not complete!

9
Current challenges for Japan
10
Economic recession
11
Ageing population
Source Ministry of Health, Labour and Welfare
(2001)
12
pressure on healthcare spending
5 CAGR
7 CAGR
Source Morgan Stanley
13
leads to regular price cuts
Introduction of consumption tax
Source Morgan Stanley
14
The healthcare market in Japan
15
The healthcare market in Japan

• Compared to Europe / the US
• Hospitals and GPs sell drugs, however, this
  source of income is drying out
• Pharmacies are gaining market share from
  hospitals and GPs
• Decreasing margin to be shared between
  distributors and medical institutions
• In general, patients get 70-80 reimbursed
  (National Health Insurance)
• Twice as many hospital beds as in the US for half
  the population
• Patients stay in hospital 5-6 times longer than
  in the US
• Market size and dynamics
• Japanese pharmaceutical market 6,000 billion JPY
  (ethical drugs)
• Annual growth of approx 3
• MHLW New vision for the Japanese pharmaceutical
  industry
• Regulatory environment
• MHLW approves product registrations and prices
• Demonstrate medical merit and safety compared to
  existing products in Japan
• Bridging with foreign data problematic, however
  getting easier
• NHI price cuts and pricing of new products are
  problematic

16
Japan ethical sales by hospital, GP and pharmacy
Source IMSBase-JPM (Japan Pharmaceutical
Market) 2002 Market Share as of Sept MAT 2002
17
Diabetes care
18
The diabetes care market(insulin OAD market)

• Size Approx 160 billion JPY
• Growth 11 / year
• Treatment M S Growth rate
• Insulin 31 8
• OAD 69 13
• Competitors Takeda, Aventis, Bayer, Lilly,
• Dainippon, Sankyo, Yamanouchi
• Future trends Market growth of 10 expected
  Insulin
• analogues, prefilled devices and new OAD
• products expected to drive growth

Company estimate , MAT Sep 2002
19
The Japanese diabetes care market
A USD 1.1 billion market growing at 12 4Y CAGR

• A few large players

Growth in local currency
20
The diabetes care market( Insulin market only)

• Size Approx 50 billion JPY
• Growth 8 / Year
• NNPL market share Approx 76
• Treatment M S Growth rate
• Short-acting 26 23
• Premix 50 6
• Long-acting 24 -2
• Customers 8,500 HP GP
• Competitors Eli Lilly
• Future trends Increase in use of analogues
  (currently 8
• penetration) and increased use of prefilled
• devices

Company estimate , MAT Sep 2002
21
Novo Nordisk and the diabetes care market

• Novo Nordisks products Vial 5 Prefilled
  20 Cartridge 75
• Novo Nordisk products in pipeline Full
  range (FlexPen, InnoLet), NovoMix30,
• NN304 , NN1998, NN2211
• Historic and current market position
  1955 Kodama Pharma starts selling insulin of
  Novo brand.1988 Launch of NovoPen1992 Recombi
  nant insulin was launched.1994 Launch of
  NovoLet2001 Launch of rapid-acting insulin
  NovoRapid, InnoLet
• Novo Nordisks strengths and challenges Strengths
  The leading insulin company Product
  line-up Device superiority
• Challenges Aventis entry in insulin New
  analogue products introduced later than
  competition

22
Insulin market volume development
8.5 4Y CAGR
1997
2000
2002
1998
1999
2001
Index as Q1 1997 100
23
Upgrading the Japanese insulin market
Prefilled Device
Penfill
Insulin analogue
Human insulin
24
Move from durable to prefilled devices
Total insulin market volume, Japan
100
80
60
40
20
0
2000 Q2
2000 Q3
2000 Q4
2001 Q1
2001 Q2
2001 Q3
1999 Q2
1999 Q3
1999 Q4
2000 Q1
2001 Q4
2002 Q1
2002 Q2
25
Insulin market share development
26
New insulin products to underpin strategy
Lauched April 2002
Young people Patients preferring a pen Doctors
preferring a pen
Older people Patients preferring a doser Doctors
preferring a doser
Lauched July 2001
27
Patients segment and preference
Middle-age pts
Geriatric pts.
Geriatric pts
Young pts
(number)
10s, 20s
60s
30s-50s
Over 70
NovoPen 3
22
21
9
2
NovoPen 300
13
21
9
-
Ergo Pen
15
25
22
11
NovoLet
11
25
7
4
HumaKart Kit
16
21
13
7
InnoLet
5
6
20
32
NovoPen300 Demi
28
10
2
2
FlexPen
27
25
27
24
SourcesSSRI survey on injectors of kit products
28
An early peek at the implementation
Novo Nordisk market shares in the prefilled
segment
66.9
8.7
0.5
29
Human growth hormone
30
The market for growth hormones

• Size Approx 60 billion JPY
• Growth -1 / year
• NNPL market share 28
• Treatment M S Growth rate
• Vial 5 -39
• Cartridge 93 -1
• Prefilled 2 -31
• Customers 2,400 HP GP
• Competitors Pharmacia, Lilly, Sumitomo
• Future trends Presently the market growth is
  very low,
• but will likely increase coming from new
• indications (eg GHDA and IUGR/SGA).

Company estimate , MAT Sep 2002
31
Novo Nordisk and the market for growth hormones

• Novo Nordisks products
• Vial 1 Cartridge 99
• Novo Nordisk new indications and devices in
  pipeline
• eg IUGR/SGA
• Historic and current market position
• 1977 Yamanouchi Pharma started selling human
  growth
• hormone Nordisk
• 2000 Launch of liquid growth hormone
  Norditropin S
• Novo Nordisks strengths and challenges
• Strengths Product superiority Long experience
  of Nordisk, YMN and NNPL
• Challenges Increase market share in a decreasing
  market.

32
The growth hormone market in Japan

• A few large players

Modest volume growth
Serono 2
Gram
Sumitomo 12
Pharmacia 35
Lilly 21
Novo Nordisk 28
1998
1999
2001
2000
2002
1997
33
Market share development in Japan
34
Fast conversion to SimpleXx in Japan
35
Norditropin SimpleXx and development key to
market share gain

• hGH specialist sales force
• Development of new indications and devices
• eg IUGR/SGA
• Expansion of marketing tools, scientific
  information and activities

36
Haemostasis management
37
NovoSeven in Japan

• Market size Less than 10 of world market
• Launched in Japan In 2001
• Sales Less than 5 of total NovoSeven sales
• Customers 150 HP GP
• Competitors Baxter (Feiba Immuno , Proplex ,
  AutoPlex)
• Future market for NovoSeven
• Increase awareness of NovoSeven via education of
  doctors
• Independent NovoSeven Business Unit has been
  established with own sales force
• Development of new indications
• Japan included in the global intra-cerebral
  hemorrhage bleeding study
• Japan planned to be included in future global
  NovoSeven studies

38
The future of Novo Nordisk in Japan
39
The future for Novo Nordisk in Japan

• Challenges
• Maintain high insulin market share facing
  increasing competition from Lilly and Aventis
  analogues
• Strengthen hGH market position
• Strengths
• The best customer satisfaction ratings in
  diabetes care
• The best and most innovative device portfolio
  with fast adoption
• Highest attention to product quality
• Strategy
• Value upgrade of insulin to offset pressure on
  market shares and bi-annual price reductions
• Increase hGH market share in a flat or decreasing
  market by re-focusing sales, marketing and
  development efforts
• Increase NovoSeven use and develop new
  indications