諾和諾德 (NVO) 2003 Q3 法說會逐字稿

Good morning and good afternoon, ladies and gentlemen and welcome to the Novo Nordisk Q3 results conference call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the conference, pleased press star, 0 on your telephone keypad and as a reminder, this conference call is being recorded. I would now like to turn the conference over to your host Mr. Lars Rebien Sorensen, please go ahead sir and I will be standing by for questions.

Thank you very much. Ladies and gentleman welcome to the Novo Nordisk conference call regarding our results for the first nine months of 2003 released, earlier today. My name is Lars Rebien Sorensen and I am the CEO of Novo Nordisk, and with me today I have our Chief Financial Officer Jesper Brandgaard, Mads Krogsgaard Thomsen Chief Science Officer. And also present are our investor relations officers Palle Olesen and Christian Kanstrup.

Today's earnings release is available in our home page www.novonordisk.com along with the slides that we will be using for this conference call. It was mentioned, the conference call was scheduled to last approximately 1 hour, and as usual we will start with the presentation as outlined on slide number 1. The Q & A session will begin in about 25 minutes.

Please turn to slide number 2. Also I would like to advise you that this call will contain forward-looking statements. Such forward-looking statements are apart from risks and uncertainties that could cause actual results to differ materially from expectations. A further information on the risk factors, please see the earnings release and the slides prepared for this presentation.

Also note we are making that conference call in Web cast at live, and the replay will be made available on the Novo Nordisk Web site after the conference call.

And slide number 3 provides you with the highlights of the first nine months of 2003.

Sales increase with 5% in the first nine months makes that (inaudible) 15% in local currencies. Operating profit increase with 5% whereas income for rehashing (ph) of our main currencies in the (inaudible) to record an increase in net profit of 20% for the first nine months of 2003.

We were satisfied with this solid performance, however please note that when comparing these period for the same period last year some factors have impacted both sales and costs, moreover currency is continued to impact our refolded performance.

The sales performance in the first nine months of 15% in local currencies, is only slightly impacted for the re first quarter of 2002. The cautious cost development relative to the first nine months of 2002 is influenced by the strengthening of the Euro versus other currencies, but also reflects an impact on the cost containment program initiated in April 2002.

Non-production costs were unchanged during the first nine months of 2002. The sales performance inline with our expectations and continued improvement development in cost sales combined with an increase level of non-recurring income enables us to increase our guidance for the full year operating profit.

We now expect operating profit to grow around 5%. Non- recurring income is now expected to be 650 millions in these corner, or approximately 150 millions base from the higher than previously anticipated. The overall stress fact net income financial encounts to be realized, at 900 million (inaudible) for the full year. Nordisk net profit for 2003, it is not expected to go around 15% as a consequence of the increase level of non-recurring income excluded in the license fees and our operating income.

In our pipeline we have received an approval letter from the FBA on instant debonair. We have received a confident opinion on the expansion of the label for those (inaudible) in Europe, and finally in the first quarter of 2004, we are going to report approximately three million cents (ph) for this, of mescal for reverse with this later in this presentation. Turn to slide number 4.

One thing at the biggest of the first of nine months, diabetes care was 4% that are going to state its management increases by 11%. These two areas constitute approximately 85% of total sales and I will get back to these areas and so with the following slides.

But let me, let us take growth hormone therapy, growth hormone therapy was up by 4% in local currencies, and local currency's growth were 14%. Sales were scored by strong growth in North America, and international operations, real lifelines solid underline market growth and market share gains.

Since the launch of our liquid growth hormone in United States we have seen a steady increase in market share now commanding approximately 5% of the US market. In Japan, our welcome on sales are growing inline with the overall market while in Europe the alcohol in the market sliding.

Also, in Europe we are continuing to launch Nootropic Simplex (ph) for the new indication SGA. On the first nine months of 2003, more than 90% of our growth hormone sales where the liquid Nootropic Simplex which is covered by patents expiring in the period of 2012 to 2015. Despite strong (inaudible) performance of our low dose HRT portfolio our HRT patents continues to decline, due to the overall confection of the market. And first nine month of 2003 sales declined by 7% of previous ended local currencies.

For the first quarter, sales increased with 12% and 20% in local currencies. The positive development in the third quarter is reflecting the change distribution set up in United States. As Novo Nordisk is now reporting full sale scenario of our HRT products in the US. At offset of this change distribution set up, failed in local currencies decreased with 11% in the quarter.

In Europe the sales growth, that more over been negatively impacted by parallel trading as well as continued pressure on prices. Looking to the total sales currencies had negative impact on sales of about 10%. Due to the appreciation of the Euro and the Danish Kroner versus all other major currencies. And hence, sales maintained at local currencies increases with 16%.

Turn to the slide number 5, which illustrates the significant currency impact of therapy area. The picture more or less tells the story with growth in most therapy has been reduced significantly in the first nine months due to unfavorable currency environment. Overall it is seen on the right hand side the negative impact from currencies, has been met in the third quarter and also the cause for the first two quarters.

And the slide number 6, all of you view, sale by region. Growth in Europe of 7% is primarily driven by diabetes care and NovoSeven growing 8% and 18% respectively. The European instant (inaudible) continues to show volume growth in excess of 5%. On top of that we are gaining market shares, that's for markets. And NovoSeven sales in Europe, our positive impacted by the season increase in investigational use. Growth is negatively impacted by the decline of 17% of our HRT franchise.

Adjusted for the restocking in the first quarter 2002, the European golf which 5% over 7% in local currencies. North America continues to show solid growth rates triggered by inter (ph) franchise, and NovoSeven. With Insulin (ph) increased penetration of respectively NovoLog, but also NovoLog Mix, in driving growth. NovoSeven sales is driven by increased investigational were used within the client and the (inaudible), surgically used for congenital bleeding disorders and investigational use in general.

Several prices increases have also impact sale-imposed segments. The performance of international operation continuos to be impacted by the negative development in currencies. In local currencies growth 16%, more growth in the region is still influence negatively by the unstable situation in the Middle East.

Finally, note that the sales in international operation, can be volatile from quarter to quarter due to large tender orders.

The sales growth is driven by insulin, NovoSeven and growth hormone. Sales in Japan and also England declined by 1% however local currency growth is 10% (inaudible) driven by insulin and NovoSeven.

Turn to slide number 7, which illustrates the currency impact per region. Apart from the European region sales growth in reported numbers significantly reduces by the negative development in our main currencies where i just where the Euro and the Danish Kroner.

As expected, one of our key growth drivers where as North America, showing a growth rate of close to 30% in local currencies. These were however significantly reduced in reported terms due to the weakening of the US dollar.

In the third quarter Japan and Australia showed a growth of 3% despite a negative currency impact of 11%. This growth is driven by insulin supported by ongoing value upgrade of patients to disposables devices.

Turn to slide number 8, which provides you with the high light from our diabetes business in the first nine months or 2003. Diabetes can increase to 4% as reported there are 15% in local currencies. In the third quarter alone diabetes to 3% reported or 10% in local currencies. Major of the local currency sales of insurance and deliver system increased by 70% in the first 9 months of the year. Chief growth drivers were North America and Europe. In North America our two-insulin analog, NovoLog and NovoLog Mix have been the main drives growth and increase in market share.

Growth in North America was also influenced by general price increases during 2002 and recently earnings in September 2003. In local currencies insulin delivery system stood by 38% in the first 9 months of this year. The local currency growth 11% in Europe can lonely be attributed to the weak first quarter last year, however we are seeing continuous market grow in the European Insulin market a solid penetration of our insulin analogue is on the depending on overall market share in the second quarter Novo Rapid had a 70% market share of the short acting segment of from 12% a year earlier.

The corresponding figures for Novo Mix were 5% versus 1% the year before, insulin in delivery system with an international operations increased by 16% in local currencies compared to the first nine months of 2002 strong performance were seen especially in China face up a negatively impacted by the unstable situation as I mentioned In the middle east. So, moreover sales growth was impacted by negative currency environment especially for the Persian Rial the Turkish Lira and the Chinese Yen .

Japan and also Igno insurance delivery system show 12% growth in the first nine months in the local currencies as 16% in the third quarter.

Turn to slide number 9 which provides you with an overview of the insulin market this slide is placed on moving any of total market price for the fourth quarter ending with June 2003. We are pleased to see the solid volume growth continue and they grow in orders still goes above the market driven especially by the US Novo Nordisk is obtaining market shares in all regions are passing Japan. The southwest says an increase in overall market share to 48% after 46% the fourth quarter ending June 2002 compared to June 2003.

And in the most recent market statistic, the positive development is continuing, volume growth plays an important role for Novo Nordisk insulin business case that is also important to realize our fare share of the value upgrade. Sole concern is of upgrading patients to insulin analog and more advanced delivery system.

Turn to slide #10 which provide you with some insight into analog conversion and in the insulin market and also Novo Nordisk performance in the analog market. All in all the industry has now added some 27% of insulin to analogs and no slow down is seem to emerge.

However, stocking of human insulin in the US in the second quarter of 2003 did temporarily depress the compression rate. Novo Nordisk is continuing to gain market share within the analog market, maintaining a solid performance since the first quarter of 2002. We now hold more than 20% more than 20% of the analog market. Novo Nordisk analog franchise increase by 90% to 730 million Danish Kroner in the third quarter. Analog now constitutes some 14% of our instant sales. In the US it is almost the third.

Certified No 11, which survives on further insight in to the development of our analog's market share. As you can see on the left-hand side Novo Nordisk is gaining market share within both segments where we are present with our analogs. The market share gains of Novo Rapid, which is called NovoLog in US is continuing solidly through our ex-US launch of our premix analog NovoLog Mix is adding to our market share gains within the pre-mix segment.

These solid trends within the short acting and premix segments are expected to continue to add to the Novo Nordisk going forward. Likewise Novo Nordisk is gaining market share within all three main regions in japan no more rapid wealth support has been gaining significant market share is reducing the negative trend in our overall market development in Japan.

Although in the US and Europe where the competitive takes a slightly difference with satisfied with its overall development of our analog market share. Not showed in the chart however also adding to the growth is the continued grow up of analogs in international operations. So what is about our diabetes care franchise (inaudible) please turn to the next slide, which gives you off state on the performance of our admin, stages weakness. No 7 sales increase for 11% in the first nine months of 2003 in local currencies increase of 65%.

Sales growth in the first nine months of primarily realize in North America followed by Europe. However all regions contributed to growth for the third quarter the growth of first quarter was a 11% or 30% in local currencies. Several factors that constituted to the sales growth after 07 in the period the losses segment for NovoSeven is introduce the product for congenital bleeding disorder.

However the increase however the benefits are using the NovoSeven in connection with the client and the senior has lead to increased use of NovoSeven for this (inaudible). Then finally also has been positively affective by increase investigational use of low sales. So what so for the sales performance in the first nine months Mads Krogsgaard, our Chief Science Officer and now provide real update on R&D activities?

Thank you Lars, through the following two slides I will update you on the news from Novo Nordisk development pipeline. Please turn to slide 13 on update on our diabetes care pipeline.

As mentioned earlier noken orrish (ph) has received an approval bulletin from the FDA for inteleindecimia (ph) the predictable long acting instant analog for the treatment of diabetes. In the data the FDA request that Novo Nordisk addresses certain typical issues and provides additional information before US marketing approval can be granted. Novo Nordisk could meet with the FDA in the near future and will be able to further update you on the process at the time of the full year result.

Known in this context that the average FDA approval time is now between 19 and 23 months. In Europe the regulatory status is that Novo Nordisk is now finalizing answers to the outstanding questions on preclinical (inaudible) and process documentation. Aiming at a tiny a CPMP opinion around your end. In case of a positive opinion final approval by the IMEA and subsequent reimbursement and price negotiations in the individual countries will take place during the issuing months.

Also here notes that the average IMEA approval time is from 16 to 17 months. In Japan Novo Nordisk have achieved another important milestone as NovoMix third is being approved and it will be branded NovoRapid 30 Mix will be the first ever premixed analog on the Japanese market and it is to be launched in a superior portfolio of devices such as Flexpin (ph) in Japan with the premix segment in Japan comprising some 50% of total Japanese market the timely launch of NovoRapid 30 Mix will underpin Novo Nordisk (inaudible) to maintain the market share in Japan and drive our analog market share.

Studies with NN414 (inaudible) selection compound for the treatments of type 1 and 2 diabetics have been discontinued due to the findings of reversibly elevated liver enzymes in a few patients all after more than one weeks treatment, the mechanism underlying the adverse liver effect is at present not clarified, but is being investigated.

On the next slide, which I kindly ask you to turn to, you can see the news from our five pharmaceuticals pipeline including the NovoSeven expansion program. We have received a positive CPMP opinion concerning the extension of the labeling for NovoSeven in the EU to include both treatment of bleeding episodes and prevention of bleeding during invasive procedures in patient's with Factor VII deficiency and in patients suffering from Glanzmann's Thrombasthenia. The two new indications are strategically important to Novo Nordisk.

We have finished the enrollment in 3/4 ongoing areas of clinical NovoSeven studies, namely for patients bleeding due to traumatic injuries, patients undergoing liver transplantation and patients who are experiencing these bleeding episodes following stem cell transplantation. Currently data management and analysis is ongoing and consequently we expect to report from all these studies in the first quarter of next year.

The ICH study is ongoing as expected re boarding in the second half of 2004 Finally we recently launched NordiFlex and NordiLet the worlds first disposable growth hormone patents in selected markets. These pins represent further elements contributing to the positive development of our growth hormone franchise. I will now hand over a phone to our Chief Financial Officer Jesper Brandgaard.

Thank you Mads, please turn to slide 13 (inaudible) already looted to our local sales and local currency increased by 15% compared to the first nine months of 2002 measured in Danish Kroner sales increased by 5% to 19 billion 333 million, in the third quarter alone sales moved by 4% to Danish Kroner and by 12% in local currencies operating profit increased by 5% to 4 billion 575 million Danish Kroner in the first nine months of 2003. In the third quarter operating profit grew by 8%.

Net financials showed a net income of 739 million Danish Kroner in the first nine months of 2003 compared to 223 million in the first nine months of 2002. Novo Nordisk recorded a net foreign exchange gain of 745 million Danish Kroner primarily related to the hedging of the US dollar the Japanese Yen and the British Pound, this compares to a gain of 130 million in 2002

Tax rate for the first nine months of 2003 is 34% down from 35% in 2002 thus giving us a 20% growth in net profit, and a 21% growth in earnings per share (inaudible) an impact from our share buy back program. Please turn to the next slide for an update on our currency exposure. Once again our reported numbers have been significantly impacted by currencies we do however hedge our main currencies so that we short term are able to compensate some what for the negative impact on our operating profit.

At the end of third quarter 2003 Novo Nordisk has hedged the future expected cash flow is related to the US dollar 18 month ahead the Japanese Yen 14 month ahead whereas the British pound was hedged nine month ahead.

This is a slight decrease in Japanese Yen hedging period compared to our half-year announcement whereas the US dollar and the British Pound hedging periods are unchanged. Please turn to slide 17 for an outlook for 2003, higher one of income label of trace of full year guidance. For the full year we now expect license fees and all the operating income to be realized at around 1.1 billion Danish Kroner as we expect non-recurring income to be around 150 million Danish Kroner higher in two or three than previously anticipated. Of these 150 million Kroner the major part is related to Zymo Genetics offering new shares in October where as the remaining part is the reversal of an accrual related to an upfront payment received from pharmacy in 2000, in connection with the now terminated US HRT deal.

Hence we now expect operating profit to grow by around 5%. This corresponds to an expected local currency close of close to 25%. As Novo Nordisk can hit the net cash flow for 2003 in relation to the US Dollar, the Japanese Yen, and the British Pound the negative influence from the depreciation of those currency verses the Danish Kroner on operating profit will be all set by currency hedging gains included in net financial and net financial income is still expected at the level of 900 million for the year as the gains related to the weakening of the US Dollar since August is counter balanced by losses related to a stronger Japanese Yen.

Accordingly their profit is now expected to grow around 15% for the full year of 2003. Novo Nordisk now plans to lift the 2.5 million Danish Kroner in production facilities and other assets in 2003, whereas depreciation and amortization for 2003 still are expected to realized at the level of 1.5 billion Danish Kroner. As usual the expectations are given based on the assumption that currency exchange rates remain at the current level for the rest of 2003.

Assuming the currency remain unchanged hedging gains in 2004 will be realized at the level of 300 million Danish Kroner considerably less than the 900 million Danish Kroner expected this year. Finally, and as already commented upon in connection with our half-year results the financial year 2004 will apart form a currency impact also be negatively influenced by a lower level of non-recurring income. Non-recurring income for 2004 is still expected at 150 million Danish Kroner related to the advantage pattern settlement verses the estimates of now 650 million non-recurring income for 2003.

Thus despite the solid underline performance trend witnessed, the reported growth in 2004 will be lowered by what currently looks like a top comparison. This concludes all presentation of the financial results. Lars Rebien Sorensen will now moderate the Q&A session.

Thank you, yes, please note again this conference is being taped and the replayable will be made available on our Web site and like to invite the operator to take the first question please.

Ladies and gentlemen if you have a question at this time please press the "1" key on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue please press the "#" or "pound" key. Once again that's "1" to ask a question.

The first question today comes from Martin Parkhoi, please go ahead and announce your company name.

Hello this is Martin Parkhøi from Danske Bank. I have a couple of questions. Firstly regarding to Japan, I think that Mads said that he expected the launch of the NovoLog Mix in Japan would be able to keep the market share in Japan. Don't you think that your market share will be a bit total market share will be a bit under pressure following the potential norms of the Lan tos in the early stage of 2004?

Then secondly, with respect to Europe we saw specifically for the third quarter a insulin growth of 5%, which was a bit lower than in the first half. So it is specifically for the third quarter, a insulin growth of a 5% in Europe which was a bit lower than in the first half, could you say anything about that if you are feeling any impact for further role of a launches in new European markets such as France and then finally with respect to your guidance you are indicating sales and EBIT growth of around 5% for both?

If you look at your fall, then this would imply at your fall even of around 1.7 billion Kroner and then hence it would also imply a margin in Q4 at the level of Q3. It seems to bit difficult for me to understand since your life is income; your non-recurring income together in the fourth quarter should be around $500 million versus a little bit above $200 million in the third quarter. Do you really think that your cost will increase so much in the fourth quarter?

Thank you Martin, this is Lars Rebien, three questions one dealing with Japan, and one dealing with Europe, and then a comment on the guidance. Let me start with Japan. I think it is correct. It is an interesting situation, which is emerging in Japan where Novo Nordisk has been regaining position in March or April with a launch of our rapid acting analog and also with our, expected launch of NovoLog mix.

At the same time we are expecting the imminent launch of the Lantus, so that will be an interesting battle flayed out. You have to a, knowledge cheer that the basis segment in Japan is unusually small compared to other market where as in the US it is more than 40% in Japan and it is only around 30%.

So the potential impact from ranges and Lantus is expected to be relatively modest and another aspect which we think might be as big advantage for Lantus is that Japanese markets traditionally has been facing a lot of emphasis on high quality devices, but we have had our own care obviously Allianz is our part of deal with this model and learnt the earlier about recalls and several quality issues in Japanese market and we think it is going to be another hurdle for Lantus supply mainly in Japan given the situation of their devices which are really Japanese model.

And with that to the European insulin markets of third quarter we are not seeing any unusual trends, we are trying to solve the problems in the second quarter of 2000 and third quarter of 2002, which is impacting the growth rate of our third quarter business, but I think when we get down to quarterly compares on regional model then we have to be a little bit careful because the usual qualities trains. We have to that was a quite complicated calculation on the guidance for the EBITDA, how can you get to a guidance of around 5% on EBITDA or within ambassador that we have already reported, Martin is asking.

I do not think that is difficult, in the reality what you need to do Martin is speak to the guidance that I have already given you for the various cost elements for the full year. What I have set for the full year is for the production cost that you would see in drop in our gross margin, between 1% to 1.5% you will see is in the tea cost just below 30% overall for the year you see a 90% initial of around 16% sales and you would see a hair pin cost in the board park between 7% to 7.5%.

We need to calculate that through and then with the estimate that you have made which sounded reasonable on the life in season all other operating income then you can actually make off Q4 to make sense from that. We do not give specific guidance on an individual global quarter, but I do note that if you look at the individual quarter the Q4 have a tendency to be the ones with a relative highest cost percentages.

And I do note that if you look at the divisional quarter, the Q4s have a tendency to be the ones with relative highest cost percentages.

OK but it is just a common, I think that it seemed like the distribution is a bit more heavy I think where against the fourth core position than we have seen in the quarters.

That marginally maybe the case.

OK

OK thank you very much Martin. Next question please

The next question comes from Poul Lykkesfeldt, please go ahead and announce your company name.

Hello, this is Poul Lykkesfeldt from ABN Amro Alfred Berg. Few questions please could you tell us about what is being the price development after November 7 in the market in a way that has been launched both historically and then recently and secondly can you remind me of the personal reimbursement situation if Novo Seven is used for investigational use.

Then also there was know an update on in to free fall for the entrance synthesis of which you mention at a time you tell me at the in 622 project what is the status with the 2344 project and when are you about to announce looking up and whether you want to continue developing or not and then lastly in relations to Japan which was touch up on earlier you do have $500 million of sales around that how do you intend to defend yourself against Lantis which have taken previously market share by ups and downs and can you give an indication as to what is the status in terms of inadequate pricing that food are even (inaudible) often living in Japan and what here which we expect a little bit as to lost in Japan

Thank you very much Poul, a couple of questions here and two regarding your Novo Seven the price available and reimbursement status of investigational use which I agree within question you know I kept to metal crop what is the expectations for I mean section 244 and what are the current status of the government of Lantus in Japan again.

So, we for which mental basis we saw, regarding NovoSeven the price developments is that subject newer our picture has been that has been more price changes outside the United States, where inside the United States receiving a price increase of well approximately 5% in Jan 2003 so that particular assignment and you have to reimbursement to also shown that investigation use usually as we reimbursed.

This is a usual news, which is approved by the physician and usually so that hospital pharmacy will be making to occur and they're by the usage.

With regard to Lantus (inaudible) enters before as mentored in to the loop I mentioned before that the auction factors about 8 years in Japanese market which leads us to believe that perhaps the effect of Novo Nordisk is being in modest, regarding to the fact that the later market is relatively small, the fact that the previous market is growing in Japan. It is a different type of diabetes.

The Basal market will also lose 20% and the fact that we have introduced new devices which are extremely (inaudible) in a regimen with Novo Rapid and eventually also very shortly is the Novo Mix all these factors leads us to believe that had to interact when the Lantus might be lesser when you compare with other markets And then on the centre point and on the (inaudible) registration in Japan.

Yes Poul, these are that we panic even don't know in a 21st 44 situation, that we previously announced that we will be pinching basically these three kind of soft coded session on the outcomes of the twelve month subsocoligists studies and seem work that we are not been front loading because of the conversation of the recogginiza (ph) or the 6 to 2 program. This analysis will be done by next year, we will update you in 2004 on the future destiny of development of 2004.

This will be better in Japan, situation is that we have this spring initiated these predevelopment and on amateur you would argue that these three program has the duration to the tune of couple of years and again here in Japan the tradition is for pretty intensified therapy as eluded too by last in trying that the proof are positioning of instant detemia (ph) which seems to be very appropriate for the Japanese setting.

OK. Finally approximately two years to stay the three and right hand average do they cut sorry cruel sign on an average for the southern Japan according to your feeling?.

You should never make predictions about approvals in Japan, that is not a good idea but you did make your own.

But the average statistics industry standard what is happening in your mind?

I think I do not remember. I remember the US and European statistics but we can investigate and get back to you.

Many thanks.

Thank you Paul. And next question please.

The next question comes from Brian Thinka (ph),. please go ahead announce your company name. That question seems to be withdrawn.

The next question comes from Henrik Simonsen. Please go-ahead announce your company name.

Hello, good afternoon gentlemen. Few questions on the Novo Seven side, I was wondering if you could update on the patient to, was had to have deficiency and classmanser (ph) disease.

And, secondly, question to Lars, I noticed that last Wednesday we had some virtue of black Wednesday with the number of bad drop reports out. Number of companies Merks Shancow (ph) and even fight to talked about increased competition that is what I want you give the issue of increase competition. I would seem to be following our deep productivity also with Novo Nordisk, now having discontinued NN622 and 14.

Lars Rebien Sørensen: Thank you very much, Henrik. This is Lars. Even Merks Oso would do a start little bit about what can be expected from these two new indications which has been approved by the European authorities on 07'?.

Yes I will do that and first of all, can you say with the approval in fact Sevan deficia, and glasmansa fombatania (ph), (inaudible) now approved in three principle different settings, one being from chronological theory overcoming the lack of factor 8 which is a well known (inaudible) situation, one being substitution therapy with the kind of giving back body what is (inaudible) deficiency and the final one is (inaudible) were kind of (inaudible) by giving logical dose of NovoSeven?

Lars Rebien Sørensen: It is shown that NovoSeven has been used investigational already in many parts of the world (inaudible) and hence to some extent already in use for those indication or been quite often at two low dose level in particular for the composite diseases, so that is why we are very happy that we have the (inaudible) I would say that the average, the estimated patient cool for each of those two is in the whole park of 1PPM IE around 1 per million.

I should say those that they are (inaudible) messages in this regard because I read a Japanese (inaudible) 91 where they actually identified under 92 (inaudible) patients in the Japanese market or in the Japanese segment. So imagine around 1000 to 2000 patients worldwide and lot of these will not may be need NovoSeven on the basis but during opposite surgery are in crisis situations.

Thank you, Mads.

Thousand patients world wide and a lot of these will not need NovoSeven in a regularly basis, but during (inaudible) surgery or in crisis situation

Thank you Mads. Then regarding speculation about the general pharmacy sector (inaudible) whether or not we also see a decline in (inaudible) activity then what the implications are of increasing competition I think the over all general view would probably be that we see an over all decline in productivity in all the by the general industry.

Now that is translatable (inaudible) contribute the concerned about that when we had seen we had to admit some left an startling results over the last couple of years (inaudible) I think you need to be little bit more qualified before you draw a parallel to (inaudible) in that regard if you look at the announcement that has been made on (inaudible) I think the focus is on (inaudible) is the reflection of the complication of preliminary interim results subjected in the progress (inaudible) our competitors and (inaudible) company that I am working in this field.

We still have a strong belief that the preliminary (inaudible) will become commercial product some technical hurdles but we think that can be solved just third half slogging (ph) and a medical thing to resolve if we did not that NovoSeven and other of the 5 pharmaceutical applications is correct the liver indications which remain early on where probably not hard and (inaudible) which were optimal to show (inaudible) in that standing we are moving ahead we have the data which has been collected but not (inaudible) in three other indication NovoSeven and we are quite optimistic of course as that we would be able to substantiate the investigational using NovoSeven later we have the usual time it takes.

(inaudible) the regulatory hurdles (inaudible) we have experienced this in the past (inaudible) our companies have experienced the same so that is not unexpected we are meeting with the condition of the general pharma industries when we talk about 602 and 414 here we are talking about small molecules where they (inaudible) fortunately extremely high for 602 we see (inaudible) all the companies compounds within the same area.

414 is a very early project and as you all know that success rate of the project of that phase is perhaps also 20 or 30% so if you qualify, take a qualified look at this I have know indication that we are facing a productivity crisis and our innovation ability, I think we need to continue to hold the dice and eventually the success will come.

Thank you

Alright. The next question please.

The next question comes from Erik Leberigot (ph). Please go ahead and announce your company name

Yes good afternoon this is Erik Leberigot from the Texas Branch (inaudible) few questions please, first you mentioned some price increases in September 2003. I guess usually prior any price increases there are some moves in inventories, could you tell us how much do you think that may have represented for Novolin the third quarter.

Secondly on (inaudible) in the US even though you are not probably ready to make any more comments regarding the status in the US. Could you tell what may be the best and the worst-case scenarios for (inaudible) I do not know you cannot did the worst any time FDA's involved but at the earliest what can be the time schedule for launch in the US. Certainly could you update the status of NM 22 11 ans see if that the start of phase three clinical tower is still forecast for mid next year and finally with this new nonrecurrent items in Q4 it makes.

And finally with these new non-recurrent items in Q4 it makes the comparison basis even tougher for 2004. Would you already make in more comments than you did in the -- at the end of the first half regarding '04 biz.

OK thank you very much, for questions. The first, beginning with price increase in September and all that impacting (inaudible) and thereby (inaudible).

Yes, on clearly we are seeing the USA greater trends from the wholesale attraction the speculation price movements and that has also been the case for our portfolio products. (Inaudible) specific is the price increases in the insulin area.

In early September we saw price increases between 5-10% and a little bit depending on what type of product we are looking at.

The stocking impact we can see for Novo Nordisk in the third quarter is very limited and probably below $50 million Kroner.

Thank you (inaudible) United States, best case, worse case -- maybe I should caution you a little bit.

Yes obviously, we had a situation where we have not yet even had (inaudible) conference or for that matter a face to face meeting with agency and hence I can say very little, obviously the best case situation would be one in which the data that it has been generated since the finding of the original regulatory (inaudible) satisfies the needs of the agency, and the worst case situation is one in which Novo Nordisk ends up having to do new studies that will take time before we have approval of the drug.

So that is the best and the worst case and we can't give you any indications whatsoever in this regard.

Thank you Mads and unfortunately not much to clarification than what you have already communicated. Then what about your expectations in (inaudible) which you will -- are you still expecting earning mid of starting 2003 mid 2004.

Yes we are working with the electrotype very diligently and eagerly to move in around mid next year into phase (inaudible).

Thank you Mads, then the final question whether or not these are non-recurring issues, items (inaudible) did not give any comments at this point of time on the 2004 guidance. In general we keep guidance when we have something which we believe that the market should be aware of. We are currently working on our operational profits for the next year.

We made comment in financial with the half year results that there were significant issues, non-recurring nature (inaudible) is non-recurring nature from HRT and from zymogenetics(ph) which will of course make the hurdle much higher for next year, (inaudible) to the currency related impact on operating profit (inaudible) and then restate what our guidance played(ph) so far in 2004.

The impact that we have stated that we have had in 2004 will be an impact of $500 million lower non-recurring income that is approximately at the 5% guidance in operating profit we have given for 2003. that is equivalent to an 8% impact on frozen(ph) operating profit and whereas at the currency level we have currency we are seeing an approximate 3% negative impact if the rates stay where they are for the rest of the year and through the entire 2004 so that is an approximately 10% negative impact, include everything else being equal for 2004.

As for what level are we targeting in the business for 2004, I think what we mentioned at half year, what is generally our plans, that is to look for plans which can generate an operating profit growth on the line which is line with our long term trends which is to grow on a yearly basis our operating profit at around 15%.

The expect lithemia launch in the US to make a GMA diverge form a normal trend?

We are, we have already stated that it is too early to speculate on launch of lithemia in US because of the un clarity about the regular sort of situations so we will be, but with the assumptions for our guidance for 2004 when we give you this guide what the substance has been get into that but we do not except in general that the launch of lithemia should have any major impact on our SG&A. This is part of out ongoing business, this is part of the supporting the ancient business that is also you should not except the major impact one SG &A on that

OK. Thank you.

Thank you and next question please?

the next question come from Lausch Heborain (ph), please go a head and say company name.

Yes, Thank you. That technic question, loss savings as Hela #2 (Ph 1:13) just the NovoSeven just provide us with some teak sales estimates based on your current knowledge show of the use of NovoSeven. Could you please provide us with that kind of update again?

Thank you very much. Lausch pieces operating we are to check the price man to get the peak sales or experience on NovoSeven we have tried that few times and (inaudible) you are great men can you make them comments on these new indications that we just have approved what could we expect in terms of the impact on that and then also since we are expecting to announce with all some trauma on central transplanting on ICH could you perhaps give us a little bit of comments as to the sides of the number incidents in these three areas and of course not knowing what the dose rate is going to be, there is some qualification on these three areas.

Yes, I do that, not in basically it is just restatement of what I stated sometime ago limit that about the high volume areas and they would typically suit trauma and ICH and in principle also of GI there is a O beats but I qualify that statement in just a minute.

With a V trauma, you can say that first of all trauma is many different things but trauma relevant to NovoSeven therapy that is not to say that these patients that will ever be treated or been binded to NovoSeven but that could be a relevant target population would in the low end be around 100,000 and in the high end be a, which is going to be a 400,000 patients.

Having said that then ICH that is an area where we are taking about bleeding stroke and they are in the bull park of somewhere in excess of 100,000 patients annually perhaps a tune of 130,000 also. It could have been to the, then of GI bleeds I mentioned a 120,000 or so and I done that previously. Now I have to qualify that statement by saying that the golden stand of therapy of endoscopic therapy and basal active substances, which together will actually adequately, manage the patient's in and around four out five cases.

Hence it is about 20 % of that target population that are real fruit targets for the NovoSeven therapy. Of course you could see some patient's being treated with NovoSeven out of fear for lack of failure for what the other products, but in principle that would be the scientific immerse of the target population. If then look at give a (inaudible) this is quite easily assessed as you can count them by the numbers and they are it is in the tune of 10,000 surgical transplants of whole livers on an annual basis and then finally in terms of stem cell transplantation where we are in the ball park, as I had (inaudible) too previously in the low numbers around if we look only at bone marrow transplants around 13,000 cases yearly.

If you look broadly at chemotherapy induced thrombocytopenia associated with cancer chemotherapy when we are talking to closer to 100,000 patients. So that the little bit of question of how and how did you to find that sequence?

Then of course we have ascertained as a matter of which dosage to use. We will be expecting that the prices following these indications (inaudible) these indicators will be similar to the market prices that we are seeing a right now is that correct (ph) and the two (inaudible) indicating in Europe I would suspect that some other side has already been included for that because these are almost identifiable individuals that we are talking about.

That is absolutely correct Lars is both a registry within Factor VII deficiency and Glanzmann's thrombasthenia and that is where the based on the where the people are being treated with NovoSeven.

It we correct for new patients that (inaudible) treated according to this labeling and maybe the more correct dosing you should not expect anymore than around 100 million Kroner worth or so of add on sales due to this but strategically it makes a lot of sense to us.

Thank you so much. Next question please.

The next question comes from Alex Evans. Please go head and announce your company name.

Hi, this is Alexander Evans (ph) from Deutsch Bank. A couple of questions. Firstly we saw a strong rebound in a third quarter and in RIT (ph) sales and I just want make the sort of tell us what inventory levels along with wholesalers now whether there is kind of any excess stock or whether that was just a sort of a rebound after no more levels.

Also on the buy back from just if you can correct me or tell me whether I am right or wrong, but does not look like you have done any buy backs during the last -- or you bought any shares back during a last quarter, that's right, Can you just comments on that and also in terms of US insulin growth on the line it seems to slowed over the past three quarters from the 47 down 39 down 28%. I was just wondering if you expect that continue to slow going forward.

Thank you so much. These are the first two answer (inaudible) the third quarter re found on OAD for has been the inventory level and what all the inventory level which and what are the implications for this. And in terms of your share buyback what has been (inaudible) going forward.

At first its our share buyback but let me comment on the OAT (ph) first and on the OAT front we actually seen some impact from I mentioned before on the human insulin side that we have seen some speculation in the US. Where wholesaler actually speculate in price movements.

And it is actually stock levels are not always not reported into the market statistics it is such movements which have impacted the first two quarters of this year where as more interesting in the third quarter. I am also see as in normal impact or normal trend in our OAT sales in the US. So --

I think a more third quarter more a patriot of the under line development in the US OAT front for (inaudible).

So you would expect sales any abnormal inventory movements can in the four-quarter sales of that product..

(inaudible) As I said it is with low invest level we seen currently, we are seeing speculations in the product movements four products being either part of the wholesale of behavior it definitely notes some thing that we in any way try to (inaudible) but it something that do have and I would not like to make a speculation as per wholesaler movement but it something that we try always to avoid.

The second question you offer regarding the buy back scheme we are under going $2 billion share repurchase program and the movement that you seen in the third quarter so related to timing we have stayed to our guidance (inaudible) we will expects to repurchase at the 2 billion shares -- before the 2 billion Kroner worth of shares before the end of the 2003.

OK. Thank you. The last question is whether now we see some sort of planning growth rates of our U.S business. You should actually note to here that has been a pipeline fielding are nothing we are mentioned that is in the Q3 of 2002 which is impacting with comparison so we are not taking any deteriorating growth of our penetration of the business in the U.S.

And the on the line we see an overall increase in the demand of insulin in the U.S then you can see that from the normal (inaudible) that we are now in the last four quarters projecting a volume growth in U.S of 5.8% which is getting closer to European (inaudible). If the comparison to last year where we had a pipeline period of Novo Log Mix ?

Thank you. Should we take the final question?

The next question comes from Michael Leacock. Please go ahead and announce your company name.

It is Michael Leacock here from E Trade. Just one question if I may probably (inaudible) relating to the oral antidiabetic drugs. We have seen (inaudible) drugs being discontinued across them different companies and it is clearly -- you guys are also coming across a very tough hurdle to get new drug through. Why is this the case and is it perhaps customer(ph) is going to another area where we go next in terms of your (inaudible) to final oral antidiabetic drugs do not make it?

Thank you so much. Yes Mads, I think you have get the honor of getting the last question

Yes. I think that is a very pertinent question and obviously you can first of all look at what is out there in the market and we have currently (inaudible) that grows in the body. We have compound the stimulate (inaudible) in action in particular in the liver namely metformin or Glucophage and we also have compounds that in the periphery stimulate the insulin sensitivity such as the (inaudible) this means that the hurdles that have to get over in order to get the new innovative medicine that fulfill (inaudible) medical need into the market place they are (inaudible) of course getting higher as we have to ease the important drug crisis in the market.

I have said that most companies including ourselves had been looking into the possibilities of nuclear receptors the so called PPAR, PPAR gamma and PPAR alpha and sometimes both of them together and obviously when you go into gene regulation via these nuclear conscription factors you are actually playing around between 50 and 150 of the body's genes all at that same time increasing the risk that the that some untoward and unexpected side effects is actually observed either pre-clinically or clinically.

As for your question of should we looking outside of the this area will first of all I should say that Novo Nordisk has over the last year or so emphasized our commitments to innovation with the bio-pharmaceutical drugs because we believe that our proving technology is among the leading in the world and we do on the other hand have certain assets that we are exploring maximally within the (inaudible) field.

Thank you very much, Mads.

So, thanks very much ladies and gentlemen for listening in. We will look forward to talking to you next quarter with the conclusion of the results for the 2003. Thank you very much. Bye.

This concludes today's conference call. Thank you for participating.