Novo Nordisk. Equity Research. Teaching FDA a lesson. (Unchanged) Key financials. Flash note 29 November 2016

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1 Equity Research Investment Research Novo Nordisk Flash note 29 November 2016 Buy (Unchanged) Teaching FDA a lesson In 2013, the FDA delayed the approval of Novo s Tresiba due to a vague signal showing more CV events for Tresiba than Lantus. Now the large DEVOTE trial shows that Tresiba in fact led to 9% fewer CV events than Lantus, although not statistically significant. Furthermore, the trial showed that Tresiba led to a 40% statistically significant reduction in the number of severe hypos vs Lantus. DEVOTE. In 2013, Novo was asked by FDA to conduct a major CV trial for Tresiba. The DEVOTE trial included more than 7,500 type 2 diabetics treated for two years. Last year, Tresiba was approved based on interim data. Headline results from the full study now show that Tresiba patients had 9% fewer CV events than Lantus patients (not statistically significant). It naturally 100% rules out a CV risk on Tresiba. Strong hypo benefit. Importantly, the DEVOTE trial also adds further support to the hypo benefit for Tresiba. The trial showed that 27% fewer patients on Tresiba experienced a severe hypo, while the overall reduction of severe hypos was 40%. Furthermore, Tresiba led to a 54% reduction in nocturnal severe hypos. All this was statistically significant. A hypo is when a patient gets too low a blood glucose level and a severe hypo is when the patient needs third-party assistance. Label update. Novo already in September filed for a label update to include the positive hypo data on Tresiba from the SWITCH 1 and 2 trials. These data were primarily based on overall hypos, as the number of severe hypos was modest. The FDA action date on this label update is set for July. Novo will now in H1 17 also submit a filing to have the DEVOTE data added. It is very important to get the hypo data on the label, as Novo can then clearly state to patients, doctors and PBMs that Tresiba is superior to Lantus. Tresiba already has 83% commercial and 67% Medicare access. These data can support further access and maybe even the price. Key financials Year-end Dec (DKK) E 2017E 2018E Revenues (m) 88, , , , ,217 Revenues growth 6.3% 21.5% 3.6% 1.6% 4.9% EBITDA (m) 37,927 52,403 51,368 52,384 55,279 EBIT, adj. (m) 34,492 46,619 48,368 48,976 51,467 EBIT growth 9.5% 35.2% 3.8% 1.3% 5.1% Pre-tax profit (m) 34,096 43,483 47,779 49,067 51,554 EPS (adj.) Key data Price performance Source: FactSet Pharmaceuticals, Denmark Price (DKK)* 230 Target price, 12 mth (DKK) 280 Market cap (DKKm) 598,160 Market cap (EURm) 80,401 Reuters Bloomberg 1M 3M 12M 5Y Estimate changes 16E 17E 18E Source: Danske Bank Markets estimates * Price as at close on 29 November 2016 Includes dividends NOVOb.CO NOVOB DC No. of shares (m) 2,599.6 Net debt (current Y/E) (m) -18,188 Free float 73.0% Avg. daily vol, 12M (000) 3, Nov 15 Feb 16 May 16 Aug 16 Nov 16 NOVOb.CO STOXX 600/Health Care rebased Absolute -5% -26% -41% 83% Rel. local market -0% -18% -31% -12% Rel. EU sector -6% -22% -29% 9% Sales 0.0% 0.0% 0.0% EBITDA 0.0% 0.0% 0.0% EBIT (adj.) 0.0% 0.0% 0.0% EPS (adj.) 0.0% 0.1% 0.2% Next event Q4 2-Feb DPS Dividend yield 1.9% 1.6% 3.5% 3.7% 3.9% FCF yield 4.0% 3.3% 6.9% 6.3% 6.8% EBIT margin (adj.) 38.8% 43.2% 43.2% 43.1% 43.2% Net debt/ebitda (x) ROIC 78.7% 100.1% 91.3% 84.9% 82.3% EV/sales (x) EV/EBITDA (adj.) (x) EV/EBIT (adj.) (x) P/E (adj.) (x) P/BV (x) Source: Company data, Danske Bank Markets estimates Analyst(s) Martin Parkhøi mpar@danskebank.com Thomas Bowers thbo@danskebank.com 1 Important Novo disclosures Nordisk Buy and certifications are contained from page 6 of this report.

2 Investment case We remain positive on Novo Nordisk, with a 12M target price of DKK280 per share and a Buy recommendation. No doubt 2016 has been a significant disappointment with two revisions of the long-term EBIT target. We now believe expectations have been reset and made it less difficult for the CEO change on 1 January We still believe Novo is uniquely positioned in the diabetes market and has a very competitive product portfolio. We expect growth to be driven by the five potential launches of diabetes drugs in the US over the coming four years on top of the entry into obesity through the Saxenda launch last year. There is no doubt in our minds that the pricing environment for insulin products has become tougher but we believe the best way to mitigate this is through innovation. Valuation Our DCF model for Novo Nordisk suggests a 12M value of DKK307 per share, which is the main basis for our 12-month target price of DKK280 per share. Our DCF model uses a WACC of 6.05% and a risk-free interest rate of 2.0%. We have decided to apply a slight discount when setting our 12M target price due to the increased risk following the long-term EBIT target revision. Share price catalysts Novo has delivered very strong news flow in 2016 so far, with the strong SWITCH data, the positive outcome of the LEADER trial, strong data on Semaglutide (including SUSTAIN-6), a US approval of Xultophy and now the data from DEVOTE. The next key event is actually from a competitor, as we expect that Roche will soon release phase 3 data on ACE910 a potential future competitor to Novo s Novoseven. Important events in H1 include the Q4 report, the US launch of Xultophy, a potential effect from corrective measures in the US taken by the new head of US and finally the results from a headto-head trial between Novo s once-weekly GLP-1, Semaglutide, and Lilly s once-weekly GLP-1, Trulicity. Risks to our scenarios Risks that could impede achievement of our DCF-based 12-month target price include tougher competition to Victoza than we assume, a poor launch of Tresiba, a setback to key pipeline products, failure to get a label update on Tresiba (SWITCH trials) and Victoza (LEADER trial) and further worsening of the US pricing environment for diabetes drugs. 2 Novo Nordisk Buy

3 Company summary Sales breakdown, geographical areas Sales breakdown, divisions Eastern Western Middle North Latin East Europe, America, & 0% APAC, Africa, 0% 0% Biopharmac euticals, 21% Diabetes Care, 79% Company description Novo Nordisk is a world leader in the insulin market (58% of total sales in 2015) and also the leader in the GLP-1 market through Victoza (17%). It also holds strong positions in human growth hormone deficiency treatments (HGH, 7%) and haematology/novoseven (10%). The company claims a 47% global market share in insulin and 28% of the entire global diabetes market. Novo Nordisk employs more than 40,000 people worldwide. Main shareholders Name Votes (%) Capital (%) Novo A/S 75.0% 27.0% Institutional and private investors 25.0% 73.0% Company information Management Novo Nordisk Novo Allé, 2880 Bagsværd Denmark novonordisk.com CEO: CFO: IR: Lars Rebien Sørensen Jesper Brandgaard Peter Hugreffe Net sales and EBITDA margin (DKKm) EBIT and EBIT margin (DKKm) 150,000 60% 60,000 60% 100,000 40% 40,000 40% 50,000 20% 20,000 20% E 17E 18E 0% E 17E 18E 0% Net sales EBITDA margin EBIT EBIT margin P/E - 12 months forward (x) P/BV - 12 months forward (x) Source: Company data, FactSet, Danske Bank Markets estimates [all charts and tables] 3 Novo Nordisk Buy

4 Summary tables INCOME STATEMENT Year end Dec, DKKm E 2017E 2018E Net sales 51,078 60,776 66,346 78,026 83,572 88, , , , ,217 Cost of sales & operating costs -33,594-39,418-41,235-45,859-49,280-50,879-55,524-60,487-61,239-63,938 EBITDA 17,484 21,358 25,111 32,167 34,292 37,927 52,403 51,368 52,384 55,279 EBITDA, adj 17,484 21,358 25,111 32,167 34,292 37,927 49,578 51,368 52,384 55,279 Depreciation -2,551-2,467-2,737-2,693-2,799-3,435-2,959-3,000-3,408-3,811 EBITA 14,933 18,891 22,374 29,474 31,493 34,492 49,444 48,368 48,976 51,467 EBIT incl eo, bef ass 14,933 18,891 22,374 29,474 31,493 34,492 49,444 48,368 48,976 51,467 EBIT, adj 14,933 18,891 22,374 29,474 31,493 34,492 46,619 48,368 48,976 51,467 Associated income ,140-8 Financial items, net , ,663 1, , Pre-tax profit 13,988 18,286 21,925 27,811 32,539 34,096 43,483 47,779 49,067 51,554 Taxes -3,220-3,883-4,828-6,379-7,355-7,615-8,623-9,848-10,114-10,626 Net profit, rep 10,768 14,403 17,097 21,432 25,184 26,481 34,860 37,931 38,953 40,927 Net profit, adj 10,768 13,303 17,097 21,432 25,184 26,481 32,035 37,931 38,953 40,927 CASH FLOW DKKm E 2017E 2018E EBITDA 17,484 21,358 25,111 32,167 34,292 37,927 52,403 51,368 52,384 55,279 Change in working capital ,148-2, Net interest paid , ,663 1, , Taxes paid -1,998-3,436-5,391-10,891-9,807-7,907-9,374-4,778-10,114-10,626 Other operating cash items 1,061 3,135 1,665 2, ,216 3,376 Cash flow from operations 15,378 19,679 21,374 22,214 25,942 31,692 38,287 46,097 42,404 44,877 Capex -3,047-3,889-3,332-3,622-3,644-4,335-4,112-6,711-7,386-7,749 Free cash flow 12,331 15,790 18,042 18,592 22,298 27,357 34,175 39,386 35,019 37,127 Disposals/(acquisitions) Free cash flow to equity 12,332 15,858 18,112 18,645 22,358 27,396 34,222 39,386 35,019 37,127 Dividend paid -3,650-4,400-5,700-7,742-9,715-11,866-12,905-24,121-20,291-21,093 Share buy-backs -6,512-9,498-10,595-11,896-13,924-14,667-17,196-14,000-16,000-16,000 New issue common stock Incr/(decr) in debt Minorities and other financing CF 508 1, ,184 Cash flow from financing -9,664-12,633-16,613-19,159-23,404-27,451-11,917-38,121-36,291-37,093 Disc ops and other 12,905 Incr/(decr) in cash 2,668 3,225 1, , ,265-1, BALANCE SHEET DKKm E 2017E 2018E Cash and cash equivalents 12,826 16,051 17,550 17,036 15,990 15,935 16,923 18,188 16,916 16,950 Inventory 10,016 9,689 9,433 9,543 9,552 11,357 12,758 13,222 13,431 14,093 Trade receivables 9,824 11,553 12,608 13,584 16,516 19,001 25,459 26,386 26,803 28,122 Other current assets Goodwill Other intangible assets 1,037 1,458 1,489 1,495 1,615 1,378 2,158 2,158 2,158 2,158 Fixed tangible assets 19,226 20,507 20,931 21,539 21,882 23,136 25,545 29,256 33,234 37,172 Associated companies Other non-current assets 1,813 2,144 2,687 2,472 4,782 6,255 8,956 8,956 8,956 8,956 Total assets 54,742 61,402 64,698 65,669 70,337 77,062 91,799 98, , ,451 Shareholders' equity 35,734 36,965 37,448 40,632 42,569 40,294 46,969 46,779 49,441 53,275 o/w Minority interests Current liabilities 2,242 2,906 3,291 3,859 4,092 4,950 4,927 5,106 5,187 5,442 Interest bearing debt Pension liabilities Oth non-curr liabilities 4,623 5,457 5,969 3,399 3,543 3,079 3,957 9,027 9,027 9,027 Total liabilities 19,008 24,437 27,250 25,037 27,768 36,768 44,830 51,388 52,057 54,176 Total liabilities and equity 54,742 61,402 64,698 65,669 70,337 77,062 91,799 98, , ,451 Net debt -11,856-15,547-17,048-17,036-15,990-15,935-16,923-18,188-16,916-16,950 Working capital 6,425 2,766 1,262 1,489 1,843-3,331-2,656-2,753-2,796-2,934 Source: Company data, Danske Bank Markets estimates 4 Novo Nordisk Buy

5 Summary tables PER SHARE DATA E 2017E 2018E No. of shares, fully diluted YE (m) 2, , , , , , , , , ,360.2 No. of shares, fully diluted avg. (m) 2, , , , , , , , , ,393.0 EPS rep. (DKK) EPS adj. (DKK) DPS (DKK) CFFO/share (DKK) Book value/share (DKK) MARGINS AND GROWTH E 2017E 2018E EBITDA margin 34.2% 35.1% 37.8% 41.2% 41.0% 42.7% 48.6% 45.9% 46.1% 46.4% EBITA margin 29.2% 31.1% 33.7% 37.8% 37.7% 38.8% 45.8% 43.2% 43.1% 43.2% EBIT margin 29.2% 31.1% 33.7% 37.8% 37.7% 38.8% 45.8% 43.2% 43.1% 43.2% EBIT adj margin 29.2% 31.1% 33.7% 37.8% 37.7% 38.8% 43.2% 43.2% 43.1% 43.2% Sales growth 12.1% 19.0% 9.2% 17.6% 7.1% 6.3% 21.5% 3.6% 1.6% 4.9% EBITDA growth 18.0% 22.2% 17.6% 28.1% 6.6% 10.6% 38.2% -2.0% 2.0% 5.5% EBITA growth 20.7% 26.5% 18.4% 31.7% 6.9% 9.5% 43.3% -2.2% 1.3% 5.1% EPS adj growth 11.7% 27.4% 32.2% 28.7% 20.5% 7.4% 23.3% 20.9% 5.4% 8.0% PROFITABILITY E 2017E 2018E ROIC (after tax, incl. GW, adj.) 38.3% 52.1% 57.7% 73.9% 73.6% 78.7% 100.1% 91.3% 84.9% 82.3% ROIC (after tax, excl. GW, adj.) 38.3% 52.1% 57.7% 73.9% 73.6% 78.7% 100.1% 91.3% 84.9% 82.3% ROE (adj.) 31.3% 36.6% 46.0% 54.9% 60.5% 63.9% 73.4% 80.9% 81.0% 79.7% ROIC (adj.) - WACC 32.2% 46.0% 51.6% 67.8% 67.6% 72.6% 94.1% 85.3% 78.8% 76.2% MARKET VALUE E 2017E 2018E Share price (DKK) No. shares reduced by buybacks (m) 2, , , , , , , , , ,360.2 Mkt cap used in EV (m) 195, , , , , ,702 1,021, , , ,092 Net debt, year-end (m) -11,856-15,547-17,048-17,036-15,990-15,935-16,923-18,188-16,916-16,950 MV of min. and ass. comp. (m) Enterprise value (m) 187, , , , , ,056 1,010, , , ,430 VALUATION E 2017E 2018E EV/sales (x) EV/EBITDA (x) EV/EBITA (x) EV/EBIT (x) P/E (reported) (x) P/E (adj.) (x) P/BV (x) EV/invested capital (x) Dividend yield 2.26% 1.59% 2.12% 1.96% 2.26% 1.92% 1.60% 3.48% 3.69% 3.91% Total yield (incl. buybacks) 5.53% 4.19% 4.96% 4.32% 4.87% 4.07% 3.27% 5.89% 6.52% 6.82% Free cash flow yield 6.30% 4.38% 4.90% 3.74% 4.23% 4.04% 3.35% 6.87% 6.27% 6.84% FINANCIAL RATIOS E 2017E 2018E Net debt/ebitda (x) Net debt/equity (x), year-end Dividend payout ratio 41.8% 40.4% 46.3% 46.2% 48.0% 49.6% 47.3% 53.2% 53.7% 52.6% Interest coverage (x) Cash conversion (FCF/net profit) 114.5% 109.6% 105.5% 86.7% 88.5% 103.3% 98.0% 103.8% 89.9% 90.7% Capex/sales 6.0% 6.4% 5.0% 4.6% 4.4% 4.9% 3.8% 6.0% 6.5% 6.5% NWC/sales 12.6% 4.6% 1.9% 1.9% 2.2% -3.8% -2.5% -2.5% -2.5% -2.5% QUARTERLY P&L Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16E Sales (m) 25,200 27,059 26,792 28,876 27,212 27,459 27,537 29,647 EBITDA (m) 14,520 13,130 12,613 12,140 12,933 13,214 13,156 12,065 EBIT before non-recurring items (m) 11,032 12,482 11,980 11,125 12,309 12,497 12,420 11,142 Net profit (adj.) (m) 9,876 8,212 8,252 5,694 9,455 9,968 9,803 8,705 EPS (adj.) (DKK) EBITDA margin 57.6% 48.5% 47.1% 42.0% 47.5% 48.1% 47.8% 40.7% EBIT margin (adj.) 43.8% 46.1% 44.7% 38.5% 45.2% 45.5% 45.1% 37.6% Source: Company data, Danske Bank Markets estimates 5 Novo Nordisk Buy

6 Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S ( Danske Bank ). The author of the research report is Martin Parkhøi. Analyst certification Each research analyst responsible for the content of this research report certifies that the views expressed in the research report accurately reflect the research analyst s personal view about the financial instruments and issuers covered by the research report. Each responsible research analyst further certifies that no part of the compensation of the research analyst was, is or will be, directly or indirectly, related to the specific recommendations expressed in the research report. Regulation Danske Bank is authorised and subject to regulation by the Danish Financial Supervisory Authority and is subject to the rules and regulation of the relevant regulators in all other jurisdictions where it conducts business. 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7 Not Rated: Danske Bank Markets produces investment research on Danske Bank but does not have an investment recommendation to buy, hold or sell or any target price on the stock. As at 29 November 2016, Danske Bank Markets had investment recommendations on 264 securities. The distribution of recommendations is represented in the Securities ratings breakdown diagram below. Hold 33% Sell 14% Buy 53% The proportion of issuers corresponding to each of the recommendation categories above to which Danske Bank provided investment banking services in the past 12 months is shown below. 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In addition, the research analysts of Danske Bank who have prepared this research report are not registered or qualified as research analysts with the NYSE or FINRA but satisfy the applicable requirements of a non-u.s. jurisdiction. Any U.S. investor recipient of this research report who wishes to purchase or sell any Relevant Financial Instrument may do so only by contacting Danske Markets Inc. directly and should be aware that investing in non-u.s. financial instruments may entail certain risks. Financial instruments of non-u.s. issuers may not be registered with the U.S. Securities and Exchange Commission and may not be subject to the reporting and auditing standards of the U.S. Securities and Exchange Commission. Report completed: 29 November 2016 at 21:18 GMT Report disseminated: 29 November 2016 at 10:50 GMT 7 Novo Nordisk Buy