cLEAN® in
Novo Nordisk
Lars Rebien Sørensen
December 2007
Slide no 1 •
•
Our critical success factors
A compelling story is needed to
motivate our employees
Lean must be driven by management
Tools are important to know – but the
right mindset is required to succeed
Our compelling story:
Investing in the future
All the money saved through
our cLEAN® efforts, is transferred to R&D and Sales and
Marketing
Management must drive the program
Secure right ambition level
…and consistency
ONE WAY
• Long-term capability
building vs. ”firefighting” to
meet short term targets
• Overall perspective vs.
suboptimization
• Decision making
• Communication
• Behaviour/role-modelling
We have established an infrastructure
Dedicated resources to support
the programme
Incorporated the program into
existing structures
Product Supply
Diabetes
API
cLEAN®
network
Devices &
Sourcing
®
cLEAN
office
Diabetes
Finished Products
• Alignment of Budgets
• Inclusion of targets in the
Balance Score Card
Biopharmaceuticals
• Following progress through
Business Reviews
Having the right mindset is a prerequisite
for succeeding
Culture and Mindset
Culture and Mindset
cLEAN
cLEAN®®
Operational and
Technical
Heavy capability building changes the
mindset and secures sustainability
3 star
cLEAN®
3-STAR
cLEAN® 2-STAR
Ability to drive complex cLEAN® projects
2 star
Drive “shop floor” projects and workshops
1 star
cLEAN® 1-STAR
Apply basic cLEAN® tools in everyday work
Basic
cLEAN® BASIC
Awareness of cLEAN® Culture & Mindset
The importance of good communication
“M
ak
Shared story and target for
Product Supply
What does that mean in the
Senior Vice President areas?
What does that mean in the
Vice President areas?
Tailored scenarioes:
How will we communicate this?
e
m
an
a
ge
rs
ta
lk
”
After 1½ years, 70%
of the employees said...
98.3%
1.7%
We know what cLEAN® is…
Ved du hvad cLEAN™ er?
Yes
No
7.5%
We understand why it is
being implemented…
92.5%
Note: cLEAN® Survey 2005 Product Supply Average
After 3.5 years, we maintain the positive
attitude
Does not
correspond at all
1,0
I see cLEAN® as part of my area in five years
Note: cLEAN® Survey 2007 Product Supply Average
2,0
3,0
Corresponds to a
very great extend
4,0
5,0
4,1
Basically, I am very positive towards cLEAN®
I understand why we implement cLEAN® in Product Supply
Corresponds to a
moderate extend
1
4,3
4,0
cLEAN® transforms the way we run our
business
Behaviour
Tools
To harness our existing leadership
skills to better drive cLEAN® behaviour
1. Novo Nordisk Way of Management
2. Coaching in day to day business
To get a practical framework that helps us
structure and align the way we work
cLEAN®
Leadership
3. Continuously striving for
improvements
1. Daily board meetings
2. Information Centre
3. Process confirmation
Transparency
Alignment
Engagement
Performance
Sales outgrow number of employees
cLEAN® initiation
200
index
150
100
50
2002
2003
2004
2005
2006
E2007
Sales in local currencies
Reported sales
Number of FTEs
Notes:
* FTE: Full time employees
** E2007 according to guidance provided in connection with the release of results for the first nine months of 2007
based on exchange rates in effect 26 October: USD = 5.18; JPY = 4.53 and GBP = 10.63
COGS in percent of sales continues to
decrease
Currency impact*
COGS/sales (%)
30%
28.3%
27.7%
27.2%
24.7%
25%
23.4%**
20%
15%
2003
2004
2005
2006
E2007
Notes:
* Currency impact based on recalculation of sales in all years to 2003 average exchange rates for USD, JPY and GBP
** Guidance provided in connection with the release of results for the first nine months of 2007 based on exchange
rates in effect 26 October: USD = 5.18; JPY = 4.53 and GBP = 10.63
Discrete Production
Filling productivity improvement
Penfill® 3ml filling*
Volume/FTE
147
+10% p.a.
100
Continuous
improvements
are a key component
of cLEAN®
2003
2004
2005
2006
2007**
• Increase uptime
• Higher operating equipment
efficiency
• Increased cLEAN® capabilities
*
**
Danish production sites
Anchor budget 2007
Increase in productivity of document
handling
• Batch documentation
process optimized
• Release centres
established in several sites
• Batch documentation reduced
up to 40%
• Release times changed from
weeks to 1-2 days
We are able to defer investments
Production
facilities
Product
8E
HMge/animal
HMge/animal
Head count reduction/plant closed
DD
HMge
HMge
Available for 2nd generation modern insulins
PIA Ia
Detemir
Detemir
PIA Ib
Detemir
Detemir
PIA II
Detemir
Detemir
PIA-IV
Detemir
Detemir
PIA-V
Detemir
Detemir
PIA-III
Liraglutide
Liraglutide
Available for 2nd generation modern insulins
Plant initiation deferred
HMge Aspart
Aspart
IM1 dual line HMge
IM1 aspart
Aspart
Aspart
Lyophil.
Lyophil.
expans.
expans.
Process optimization
Savings in COGS are re-invested
in R&D and Sales and Marketing
200
R&D costs
Index
175
S&M Costs
GR
A
C
150
cLEAN
initiation
®
Sales
%
18
GR
CA
%
14
Cost of Goods Sold
125
100
2002
2004
Index based on reported sales and costs
2007E
Novo Nordisk outperforming peers
17/10 2007
700
Novo Nordisk
650
+72%
600
550
500
450
Pharma peers (indexed)
400
350
-6%
300
-20%
250
200
Jan 2006
Biopharm peers (indexed)
Jun 2006
Source: Carnegie, 18 October 2007
Nov 2006
Apr 2007
Sep 2007
Quality, Delivery and Costs have all improved
in parallel
Quality
Delivery
Cost
Our critical success factors
A compelling story is needed to
motivate our employees
Lean must be driven by management
Tools are important to know – but the
right mindset is required to succeed