Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

Novo Nordisk disclosed 17 risk factors in its most recent earnings report. Novo Nordisk reported the most risks in the “Finance & Corporate” category.

Risk Overview Q4, 2023

Risk Distribution

29% Finance & Corporate

24% Legal & Regulatory

18% Tech & Innovation

12% Production

12% Ability to Sell

6% Macro & Political

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

S&P500 Average

Sector Average

Risks removed

Risks added

Risks changed

Novo Nordisk Risk Factors

New Risk (0)

Risk Changed (0)

Risk Removed (0)

No changes from previous report

The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q4, 2023

Main Risk Category

Finance & Corporate

With 5 Risks

Finance & Corporate

With 5 Risks

Number of Disclosed Risks

No changes from last report

S&P 500 Average: 31

No changes from last report

S&P 500 Average: 31

Recent Changes

1Risks added

1Risks removed

2Risks changed

Since Dec 2023

1Risks added

1Risks removed

2Risks changed

Since Dec 2023

Number of Risk Changed

No changes from last report

S&P 500 Average: 3

No changes from last report

S&P 500 Average: 3

See the risk highlights of Novo Nordisk in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 17

Finance & Corporate

Total Risks: 5/17 (29%)Above Sector Average

Share Price & Shareholder Rights1 | 5.9%

Share Price & Shareholder Rights - Risk 1

Public takeover offers in respect of the Company's shares

No such offers occurred during 2023 or 2024 to date.

Debt & Financing1 | 5.9%

Debt & Financing - Risk 1

Changed

Capital expenditure in 2023, 2022 and 2021

For capital expenditure in 2023, 2022 and 2021, reference is made to the section entitled ‘Cash flow and capital allocation' on page 36 of our Annual Report 2023. No significant divestments took place in the period from 2021–2023. For capital expenditures expected in 2024, reference is made to page 37 in the subsection ‘2024 outlook' in our Annual Report 2023. Such expenditures are expected to be financed with cash flow from operating activities.

Corporate Activity and Growth3 | 17.6%

Corporate Activity and Growth - Risk 1

B. Business overview

Reference is made to the sections 'Novo Nordisk at a glance' on page 6 and ‘Strategic Aspirations' on pages 10-39 of our Annual Report 2023. Novo Nordisk is a global healthcare company and a world leader in Diabetes and Obesity care. The Company manufactures and markets pharmaceutical products and services that make a significant difference to patients, the medical profession and society. Headquartered in Denmark, Novo Nordisk employs more than 60,000 employees in 80 countries, and markets its products in approximately 170 countries. The Company has a broad product portfolio across Diabetes and Obesity care and Rare disease, including a full portfolio of glucagon-like-peptide-1 (GLP-1) receptor agonists for the treatment of diabetes and obesity, modern insulins and human insulins. During 2023, there has been continued strong growth across therapy areas and geographic areas in which Novo Nordisk operates. Combined with higher than expected demand, and temporary capacity limitations at some of our manufacturing sites, there have been periodic supply constraints for certain products, including the leading product by sales, Ozempic for the treatment of type 2 diabetes1. The Company also markets two drugs - Saxenda and Wegovy - for the treatment of people with obesity. In it's third year after launch the GLP-1 product, Wegovy, grew more than 400% to DKK 31 billion. Further, Novo Nordisk has a Rare disease portfolio consisting mainly of growth hormone and hemophilia products. From August to October 2023, Novo Nordisk acquired 100% of the share capital of a French company. Biocorp Production S.A., and its subsidiaries (Biocorp), whose primary assets are patents and know-how related to Mallya, a Bluetooth enabled add-on device that can be used in administering doses for injection pens and provide data for doctors and patients on correct dosing. The purchase price of the asset acquisition was approximately EUR 154 million. In September 2023, Novo Nordisk completed the acquisition of a Canadian company Inversago Pharma Inc. (Inversago), whose primary asset, INV-202, is currently in phase 2. The asset is focused on the development of peripherally acting Cannabinoid (CB1) receptor blocker therapies which have potential to treat people living with obesity, diabetes, metabolic and fibrotic diseases. The purchase price of the asset acquisition was approximately USD 600 million with additional contingent payments of USD 475 million. Novo Nordisk also agreed to acquire the asset Ocedurenone for uncontrolled hypertension with potential application in cardiovascular and kidney disease from KBP Biosciences PTE., Ltd. in 2023. The purchase price of the asset acquisition was USD 800 million with additional contingent payments of USD 500 million.

Corporate Activity and Growth - Risk 2

A. History and development of the company

Novo Nordisk A/S was formed in 1989 by a merger of two Danish companies, Nordisk Gentofte A/S and Novo Industri A/S. Novo Industri A/S was the continuing company and its name was changed to Novo Nordisk A/S. The business activities of Nordisk Gentofte were established in 1923 by August Krogh, H. C. Hagedorn and A. Kongsted, and the business activities of Novo Industri A/S were established in 1925 by Harald and Thorvald Pedersen. From the beginning, the business of both companies was the production and sale of insulin for the treatment of diabetes. Novo Nordisk's B shares are listed on Nasdaq Copenhagen (NOVO-B). Its ADRs are listed on the New York Stock Exchange (NVO). Legal name:Novo Nordisk A/SCommercial name:Novo NordiskDate of incorporation:November 28, 1931Legal form of the Company:A Danish public limited liability companyLegislation under which the Company operates:Danish lawCountry of incorporation:Denmark Reference is made to ‘More information', on page 100 of our Annual Report 2023 for information on domicile.

Corporate Activity and Growth - Risk 3

C. Organizational structure

For information regarding the organizational structure and securities exchange listings of Novo Nordisk A/S, the main shareholder Novo Holdings A/S and the Novo Nordisk Foundation and the ownership structure of Novo Nordisk A/S, reference is made to the sections ‘Corporate Governance' on pages 19-22 and ‘Shares and capital structure' on pages 38-39 of our Annual Report 2023. Companies in the Novo Nordisk Group are listed in the section ‘Companies in the Novo Nordisk Group' on page 81 of our Annual Report 2023.

Legal & Regulatory

Total Risks: 4/17 (24%)Above Sector Average

Regulation3 | 17.6%

Regulation - Risk 1

Segment information

Novo Nordisk is engaged in the discovery, development, manufacturing and marketing of pharmaceutical products and has two business segments: (i) Diabetes and Obesity care and (ii) Rare disease. Reference is made to Note 2.2 ‘Segment information' in our Annual Report 2023.

Regulation - Risk 2

Impact of regulation

As a pharmaceutical company, Novo Nordisk depends on government approvals related to production, development, marketing and reimbursement of its products. Important regulatory bodies include the U.S. Food and Drug Administration, the European Medicines Agency, China's National Medical Products Administration and the Japanese Ministry of Health, Labour and Welfare. Treatment guidelines from non-governmental organizations such as the European Association for the Study of Diabetes and the American Diabetes Association may also impact the Company.

Regulation - Risk 3

Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012

Pursuant to Section 13(r) of the Securities Exchange Act of 1934 "("Section 13("r)"), Novo Nordisk is obliged to disclose if, during 2023, it or any of its affiliates have engaged in certain Iran-related activities or transactions with persons designated under Executive Order 13224 or Executive Order 13382 dealt with the Government of Iran ("GOI"). Novo Nordisk conducts limited business relating to pharmaceutical products and devices within the Diabetes care and Rare disease business segments in Iran, which is permitted under the U.S. sanctions against Iran. Set forth below is a description of the activities and transactions by Novo Nordisk's subsidiaries that are required to be disclosed pursuant to Section 13(r). Novo Nordisk's U.S. subsidiaries and U.S. person employees are not involved in any of Novo Nordisk's activities in Iran. However, the United States maintains broad exceptions that permit the commercial sale and export of medicine and medical devices to Iran or the Government of Iran. Similar exceptions, like those encompassed in section 11 of Executive Order 13902, are also in place for the manufacturing of medicine and medical devices for use in Iran. Novo Nordisk Pars ("NN Pars"), a wholly-owned subsidiary of Novo Nordisk A/S located in Iran, contracts with a number of companies that may be owned or controlled by the GOI to distribute its products. NN Pars also sponsors educational programs and congresses organized by GOI-controlled medical universities, and hosts and/or engages as scientific delegates or lecturers/speakers health care professionals employed by these medical universities at similar programs in Iran and other locations. Additionally, NN Pars makes donations to GOI-controlled public health organizations focusing on diabetes awareness and policy. NN Pars receives payments from, and makes payments to, Iranian banks (some of which may be GOI-owned or controlled) relating to the sales of pharmaceutical products and devices. NN Pars makes payments incidental to its ordinary business activities to Iranian government entities and entities that are or may be GOI-owned or controlled, such as taxes, customs fees, insurance, product registration fees and telecommunications services expenses. In 2016, NN Pars purchased land from a GOI-owned or controlled holding company in order to construct a manufacturing facility in Iran. The facility opened and officially started production in August 2020 and is being used for assembly and packaging of insulin pens for use in Iran. NN Pars purchases utility services from a GOI-owned or controlled entity. The German subsidiary of NNE A/S, a wholly-owned subsidiary of Novo Nordisk A/S, previously sold raw materials and spare parts for production of dialysis filters and leucocyte filters and syringes to a GOI-controlled company. This business relationship, however, was wound down during 2018 and the German subsidiary was sold in 2019. NNE A/S received final payment in 2023 from such a GOI-controlled entity related to such sales and there are no longer any outstanding amounts between the parties. Novo Nordisk's gross revenue related to transactions with GOI-owned or controlled entities in 2023 was not in excess of 1% of Group sales. Novo Nordisk does not allocate its net profit on a country-by-country or activity-by-activity basis, other than as set forth in Novo Nordisk's consolidated financial statements prepared in accordance with IFRS as issued by the IASB; however, Novo Nordisk estimates that its net profit attributable to the transactions with the GOI discussed above would not exceed a de minimis percentage of the Group's total net profit in 2023. The purpose of Novo Nordisk's Iran-related activities is to provide access to important and essential pharmaceutical products such as insulin and haemophilia products to patients in Iran, and to improve the healthcare of the Iranian people in accordance with Novo Nordisk's access to care strategy. For that purpose, and because Novo Nordisk has determined that its activities comply with all applicable laws, Novo Nordisk intends to continue these activities (including local production of these products in Iran).

Environmental / Social1 | 5.9%

Environmental / Social - Risk 1

Added

The potential risk on our business as a result of failure to meet regulatory or ethical expectations on environmental impact, including climate change

Climate change has global implications and poses a significant threat to human health and development. Companies are increasingly expected to behave in a responsible manner on a variety of environmental matters, by governmental and regulatory authorities, counterparties, such as vendors and suppliers, customers and investors. In particular, we recognize the environmental issues related to the pharmaceutical industry. At Novo Nordisk, climate-related risks are identified and assessed through our risk management process. The risk assessment includes a natural hazards risk rating of supplier locations, provided by external insurance companies. The risk rating is related to ITEM 3 KEY INFORMATION various parameters, including natural events such as flooding, earthquakes, high-speed winds, tornados, hail storms, and lightning. The risk assessment serves to provide input for risk mitigation, and consequently prioritize actions to prevent or minimize the impact of supply disruptions on manufacturing. The Company's main production facilities are located in Denmark, where the risk of natural events is assessed lower; however, the Company also has other production facilities in countries that are at greater risk of natural disasters. For example, our production facility in Koriyama, Japan is exposed to a higher risk of earthquakes, our production facility in Tianjin, China is located in an area prone to storm surges due to rising sea levels and our production facility in North Carolina, United States is exposed to a higher risk of tornadoes and subsequent rainfall and lightening. In addition, availability of high-quality water is essential for the production of diabetes and biopharmaceutical products and hence the Company's operations. The Company has production facilities in countries with high water stress levels or high seasonal variations, such as France, Brazil, China, United States, Iran and Algeria. Despite our commitment to identify climate-related risks, we could be unable to meet our environmental objectives in an efficient and timely manner, or at all. Since 2020, all our production sites have sourced 100% renewable power; however, our CO2e emissions continue to rise as the company grows, in particular within Scope 3. We are committed to achieving net zero emission by 2045, and we have an interim target to reach zero CO2e emissions from operations and transport by 2030. To achieve this goal, we must also ensure our 60,000-plus suppliers play their part in this transformation, since their activities account for the majority of our total CO2e emissions. Our target is that all goods and services from suppliers will be based on 100% renewable power by 2030, which is an important milestone in achieving our greater net zero commitment. Factors that may inhibit our ability to reach these targets or failure to maximize our environmental sustainability credentials could expose us to increased regulatory risk and put us at a commercial disadvantage relative to our peers. This could result in a material adverse effect on our business, financial condition, results of operations and prospects and lead to reputational damage. ITEM 4 INFORMATION ON THE COMPANY

Tech & Innovation

Total Risks: 3/17 (18%)Below Sector Average

Trade Secrets2 | 11.8%

Trade Secrets - Risk 1

Patent situation of key Diabetes and Obesity care products

Today, biosimilar and/or interchangeable versions of insulin can be approved in the United States via the 351(k) pathway. In the EU, a biosimilar pathway and guidelines are available for insulins, and the guideline for biosimilar products issued in Japan is also relevant for insulin. A biosimilar to NovoRapid/NovoLog produced by a competitor was launched in 2020. An interchangeable biosimilar for NovoRapid/NovoLog produced by a competitor was approved in July 2021. Furthermore, biosimilar insulins are being developed in China by local competitors. The total sales of Victoza were DKK 8,664 million in 2023 (DKK 12,322 million in 2022). The compound patents for Victoza have expired. In Japan, the drug compound patent expired in 2022; in the U.S. and Germany, the drug compound patent expired in 2023. The drug compound patent expired in China in 2017 and in 2023 a biosimilar version of Victoza was approved in China. Novo Nordisk has received notifications from several manufacturers that they have filed Abbreviated New Drug Applications (ANDAs) for liraglutide, the active pharmaceutical molecule in Victoza and in Saxenda, respectively, and semaglutide, the active pharmaceutical molecule in Ozempic and in Wegovy, respectively, with the FDA. The ANDAs contain Paragraph IV certifications to obtain approval to engage in the commercial manufacture, use or sale of such products before the expiration of some or all of the patents currently listed for those products in the Orange Book. Novo Nordisk has filed complaints for patent infringement against these manufacturers. Novo Nordisk has entered into settlement agreements with several manufacturers that have filed ANDAs for Victoza. Consequently, these manufacturers are licensed to launch a generic version of Victoza as of June 22, 2024, or earlier under certain circumstances. Moreover, Novo Nordisk has entered into settlement agreements regarding the U.S. patent litigation matters for Saxenda. Novo Nordisk has now also entered into a settlement agreement with Alvogen Inc. regarding the U.S. patent litigation case for Ozempic. All terms of the agreements are confidential. All agreements are subject to review by the U.S. Federal Trade Commission and the U.S. Department of Justice. In March 2023, Mylan filed IPRs challenging the validity of the two patents which claim the semaglutide compound. Mylan also filed an IPR challenging the validity of a patent which claims a method of treating Type 2 diabetes using 1 mg of semaglutide. The Patent Trial and Appeal Board did not institute proceedings on the two compound patents, but did institute proceedings on the method of treatment patent. A hearing will take place in July 2024 with a decision by October 2024. In China, the semaglutide compound patent was subject to invalidation actions and was upheld by the Beijing IP Court in November 2023. This decision has been appealed to the Supreme People's Court where the case is currently pending. Novo Nordisk will continue to defend its intellectual property associated with liraglutide and semaglutide, including through litigation. The total sales of obesity care products (Saxenda and Wegovy) were DKK 41,632 million in 2023 (DKK 16,864 million in 2022), of which the majority of the sales comes from Wegovy. The drug compound patent for Saxenda (liraglutide) has expired in all countries. Patent expiry in the U.S. for the semaglutide branded products - Ozempic, Rybelsus, and Wegovy - is 2032. For additional information, reference is made to the section 'Patent status for products with marketing authorisation on page 29 of our Annual Report 2023.

Trade Secrets - Risk 2

Patents

To maintain and expand competitiveness, Novo Nordisk strives for the strongest possible protection for those inventions that are created during the development of new products. Novo Nordisk anticipates that the expiration of certain patents could impact sales within the coming years. However, through continued investments in research and development, Novo Nordisk strives to bring novel and innovative products to the market and thereby sustain strong patent protection in the future, as new generations of products replace currently marketed products. For patent information on all Novo Nordisk's marketed products, reference is made to the section ‘Patent status for products with marketing authorisation' on page 29 in our Annual Report 2023. For key products with recent patent expiration or with patent expiration occurring within the coming years, geographic sales splits are provided and factors that may influence the potential impact of competitive product launches are discussed. Sales of key products with recent or upcoming patent expiration:Total sales in 2023 (in DKKmillion)North America OperationsHereofInternationalOperationsHereofProductUSAEMEARegion ChinaRest of WorldVictoza8,664 3,814 3,613 4,850 2,166 1,256 1,428 Saxenda 10,289 3,887 3,306 6,402 3,780 146 2,476

Cyber Security1 | 5.9%

Cyber Security - Risk 1

The potential risk on our business as a result of cybersecurity breaches

We rely on our IT systems to protect our intellectual property, business confidential information, and personal data. Therefore, disruption as a result of cybersecurity breaches could negatively impact the Company's business and operations or financial results. IT systems act as a backbone for the Company. They support processes in research & development, manufacturing, sales and supply, and business administration. As we are a global company, the size and complexity of our IT systems are significant, and our IT infrastructure and networks are spread across the geographic regions in which we operate. The dedicated cybersecurity teams who operate our global IT security infrastructure may be unable to respond sufficiently to the threats facing us or may fail to prevent service interruptions or security breaches resulting from attacks by malicious third parties. Many of these cyber threats have the potential to cause significant downtime of critical IT systems or the unintended disclosure of confidential information and personal data. Although we have not previously experienced material losses as a result of such incidents, we cannot guarantee that we will be able to prevent similar incidents from occurring or adversely affecting our business in the future. We are subject to data privacy regulation in the EU (including the General Data Protection Regulation) and to privacy laws in many other jurisdictions where we do business that impose obligations and restrictions on the collection and use of personal data. In the ordinary course of the Company's business, it collects and stores personal data (including sensitive personal data) of patients, health care professionals, employees and other third parties. Many third-party vendors provide support services in relation to our business processes and require access to sensitive information (including personal data) in the course of their work. Such vendors could themselves be susceptible to cybersecurity or personal data breaches. Any unauthorized access, disclosure, or other loss of personal data could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and significant regulatory penalties, disrupt the Company's operations and damage the Company's reputation.

Production

Total Risks: 2/17 (12%)Below Sector Average

Costs2 | 11.8%

Costs - Risk 1

D. Property, plants and equipment

The Company has its headquarters in Bagsværd, Denmark, where it occupies a number of buildings. Sales growth in 2023 has resulted in periodic supply constraints and related drug shortage notifications across a number of products and geographies. Following higher than expected volume growth in recent years, including GLP-1-based products such as Ozempic and Wegovy, combined with the expectation of continued volume growth and capacity limitations at some manufacturing sites, the 2024 outlook also reflects expected continued periodic supply constraints and related drug shortage notifications across a number of products and geographies . Novo Nordisk is investing in internal and external capacity to increase supply both short and long term. The supply capacity is gradually increased, including the capacity for meeting growing demand in the future for the products Activelle, Actrapid, Alhemo, Esperoct, Estrofem, Fiasp, Glucagen, Insulatard, Kliogest, Levemir, MacrilenTM, Mixtard, Norditropin, NovoEight, Novofem, NovoLog/ NovoRapid, NovoLog Mix/ NovoMix, NovoNorm, NovoSeven, NovoThirteen/ Tretten, Ozempic, Rebinyn/ Refixia, Rybelsus, Ryzodeg, Saxenda, Sogroya, Tresiba, Trisequens, Vagifem, Victoza, Wegovy, Xultophy and devices. Reference is made to the sections ‘Capital expenditures in 2023, 2022 and 2021' under Item 4 for more information about the current expansion programs. For the nature of the Company's property, plant and equipment, as of December 31, 2023 and 2022, reference is made to Note 3.2 ‘Property, plant and equipment' in our Annual Report 2023. The major production facilities owned by the Company are located at a number of sites in Denmark, and internationally in the United States, France, China and Brazil. There are no material encumbrances on the properties; however, the facilities in Tianjin, China are constructed on land where the remaining term of the leases is 30 and 34 years. Active pharmaceutical ingredient (API) production is located in Denmark, primarily in Kalundborg and with secondary locations in Hillerød and Gentofte, both in Denmark, as well as in New Hampshire and North Carolina, United States. The following table sets forth certain information regarding our major production sites. MAJOR PRODUCTION FACILITIESSize of production area(square meters)Major Production ActivitiesKalundborg, Denmark168,300Active pharmaceutical ingredients for diabetes and obesity as well as products for Diabetes careActive pharmaceutical ingredients for haemophilia.Products for Rare diseaseHillerød, Denmark156,900Durable devices and components for disposable devicesProducts for diabetes and obesityActive pharmaceutical ingredients for haemophiliaBagsværd, Denmark111,200Products for diabetes and obesityClayton, North Carolina, United States89,000Active pharmaceutical ingredients for diabetes and obesity (purification)Products for diabetes and obesityGentofte, Denmark70,800Active pharmaceutical ingredients for glucagon and growth hormone therapyProducts for growth hormone therapy, glucagon and haemophiliaTianjin, China67,200Products for diabetesProduction of durable devicesMåløv, Denmark60,900Products for hormone replacement therapyProducts for oral antidiabetic treatmentProducts for oral diabetes treatmentChartres, France58,700Products for diabetesMontes Claros, Brazil56,200Products for diabetesGel production for active pharmaceutical ingredients In December 2021, the Company announced the investment in construction of a new purification facility and a new recovery facility as well as rebuilding of one existing fermentation facility at the production site in Kalundborg, Denmark. The investment will establish additional capacity for manufacturing active pharmaceutical ingredients. The facilities are expected to increase the production area with approximately 59,900 square meters. The facilities are expected to be operational during 2027 and the expected amount of expenditures is DKK 16,500 million with realized spend of DKK 10,801 million as of December 31, 2023. The facilities will be financed by cash flow from operating activities. In June 2022, the Company announced its investment in an expansion of an existing facility at the production site in Hjørring, Denmark. The investment will increase the capacity for production of NovoFine Plus needles and is expected to increase the production area by 5,900 square meters. The expansion is expected to be finalized during 2025. The expected amount of expenditures is approximately DKK 560 million with realized spend of DKK 409 million as of December 31, 2023. The expansion will be financed by cash flow from operating activities. In November 2022, the Company announced its investment in the expansion of its clinical manufacturing facilities in Bagsværd, Denmark. The investment will establish additional capacity in R&D for the manufacturing of active pharmaceutical ingredients to supply the Company's global clinical trials. The expansion is expected to increase the production area with 7,000 square meters and it is expected to be finalized in 2025. The expected amount of expenditures is DKK 7,400 million with realized spend of DKK 4,111 million as of December 31, 2023. The expansion will be financed by cash flow from operating activities. In June 2023, the Company announced its investment in expanding an existing API production facility in Hillerød, Denmark. The facility is expected to be operational during 2028 and its production area expected to be 65,000 square meters. The expected amount of expenditures for this facility is approximately DKK 15,900 million with realized spend of DKK 2,342 million as of December 31, 2023. The facility will be financed by cash flow from operating activities. In November 2023, the Company announced its investment in the expansion of its API production facility in Kalundborg, Denmark. The facility is expected to be fully operational during 2029 and its production area expected to be 170,000 square meters. The expected amount of expenditures for this facility is approximately DKK 42,400 million with realized spend of DKK 2,140 million as of December 31, 2023. The facility will be financed by cash flow from operating activities. In November 2023, the Company announced the investment in an expansion of an existing facility at the production site in Chartres, France. The investment will significantly increase the capacity of the manufacturing site, adding aseptic production and finished

Costs - Risk 2

Raw materials

The impact on the overall profitability of Novo Nordisk from variations in raw material prices is unlikely to be significant. Currently, there is no raw material supply shortage that is expected to significantly impact the Company's ability to supply any significant market. Regarding the 2023 capacity constraints, reference is made to page 33 of the Annual Report 2023. Periodic supply constraints and related drug shortage notifications across a number of products and geographies are expected to continue in 2024. The supply capacity is gradually being expanded.

Ability to Sell

Total Risks: 2/17 (12%)Above Sector Average

Competition1 | 5.9%

Competition - Risk 1

Market and competition

Novo Nordisk's insulin and other pharmaceutical products are marketed and distributed through subsidiaries, distributors and independent agents each responsible for specific geographic areas. The Company's financial reporting is divided into: EMEA (covering Europe, the Middle East and Africa), Region China (covering Mainland China, Hong Kong and Taiwan), Rest of World (covering all other 1 Product indications described in this Form 20-F are composite summaries of the major indications approved in the product's principal markets. Not all indications are necessarily available in each of the markets in which the products are approved. The summaries presented herein for the purpose of financial reporting do not substitute for careful consideration of the full labelling approved in each market. countries except for North America) and North America (covering the United States and Canada). For 2023, the Company's most important markets in terms of sales were the United States, China, Japan, Canada, and the major European countries. Due to the increasing number of people with diabetes, the global pharmaceutical market for treatment of diabetes continues to grow. Several of the major international pharmaceutical companies have entered the diabetes market, specifically in the area of oral products for the treatment of type 2 diabetes. In the global insulin market, Novo Nordisk, Eli Lilly and Sanofi are the most significant companies measured by market share. The use of GLP-1 as a treatment option for people with type 2 diabetes has continued to increase resulting in significant growth of the GLP-1 market. Novo Nordisk and Eli Lilly are the most significant companies in the global GLP-1 market measured by market share. In February 2018, Novo Nordisk launched the once-weekly GLP-1 product, Ozempic, for the treatment of adults with type 2 diabetes in the United States and Canada. Since then, Ozempic has become a market leading product and the Company's best performing product by sales, with global sales of DKK 95.7 billion in 2023. The global branded obesity market grew 116% by volume in 2023. Wegovy has been launched in the United States, Denmark, Norway, Germany, the UK, Iceland, Switzerland and the United Arab Emirates. Market conditions within the pharmaceutical industry continue to change, including efforts by both private and governmental entities to reduce or control costs generally and in specific therapeutic areas. Most of the countries in which Novo Nordisk sells insulin subsidize or control pricing. In most markets insulin and GLP-1 products are prescription drugs. In recent years, there has been a general trend in the United States of payers managing the cost of diabetes care to exert pressure on the price of Novo Nordisk's and competitors' products. In spite of this external pressure, Novo Nordisk has maintained a leading position in the overall diabetes care market through the quality and innovation-driven value of the Company's Diabetes care products. In the United States, pharmacy benefit managers and managed care organizations have continued to leverage their increasing size and control to demand higher rebates which has impacted the net realized prices. Furthermore, competition has intensified, including the authorization of the first interchangeable insulin in 2021, contributing to a downward pressure on manufacturers' net prices.

Demand1 | 5.9%

Demand - Risk 1

Seasonality

Sales of individual products in individual markets may be subject to fluctuations from quarter to quarter. However, the Company's consolidated operating results have not been subject to significant seasonality.

Macro & Political

Total Risks: 1/17 (6%)Above Sector Average

Natural and Human Disruptions1 | 5.9%

Natural and Human Disruptions - Risk 1

Changed

Important events in 2023

Reference is made to ‘Introducing Novo Nordisk', pages 3-9 and ‘2023 performance and 2024 outlook', pages 34-37 of our Annual Report 2023 for a description of important events in 2023.

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?

Risk factors are any situations or occurrences that could make investing in a company risky.

The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.

They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.

It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.

How do companies disclose their risk factors?

Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.

Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.

Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.

According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.

How can I use TipRanks risk factors in my stock research?

Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.

You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.

Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.

A simplified analysis of risk factors is unique to TipRanks.

What are all the risk factor categories?

TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.

1. Financial & Corporate

Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.

2. Legal & Regulatory

Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
Regulation – risks related to compliance, GDPR, and new legislation.
Environmental / Social – risks related to environmental regulation and to data privacy.
Taxation & Government Incentives – risks related to taxation and changes in government incentives.

3. Production

Costs – risks related to costs of production including commodity prices, future contracts, inventory.
Supply Chain – risks related to the company’s suppliers.
Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.

4. Technology & Innovation

Innovation / R&D – risks related to innovation and new product development.
Technology – risks related to the company’s reliance on technology.
Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.

5. Ability to Sell

Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
Competition – risks related to the company’s competition including substitutes.
Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
Brand & Reputation – risks related to the company’s brand and reputation.

6. Macro & Political

Economy & Political Environment – risks related to changes in economic and political conditions.
Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
International Operations – risks related to the global nature of the company.
Capital Markets – risks related to exchange rates and trade, cryptocurrency.

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