Good day and welcome to the Q1 2015 Novo Nordisk A/S earnings conference call. Today's conference is being recorded. At this time I would like to turn the conference over to Lars Rebien Sorensen. Please go ahead.

Thank you very much and welcome to this Novo Nordisk conference call regarding our performance of the first three months of 2015 and the outlook for the full year. I'm Lars Rebien Sorensen, CEO of Novo Nordisk. With me I have Chief Financial Officer, Jesper Brandgaard, Mads Krogsgaard Thomsen, Chief Science Officer, and present are also our Investor Relations officers. Today's earnings release and the slides that are being used for this call are available on our website, novonordisk.com. The conference call is scheduled to last approximately one hour. As usual I will start with the presentation as outlined on slide number 2. The Q&A session will begin in about 25 minutes. Note that this conference call is being webcast live, that a replay will be made available on Novo Nordisk's website. Slide number 3. As always I need to advise you that this call will contain forward looking statements. Those forward looking statements are subject to risks and uncertainties that could cause the actual results to differ materially from expectation. For further information on the risk factors please see the earnings release and the slides prepared for this presentation. Turn to slide number 4. Sales growth in the first three months of 2015 was 24% in Danish krone, 9% measured in local currencies. The growth was primarily driven by North America and international operations and region China. Sales growth was realized within both diabetes care and biopharmaceuticals with the highest contribution coming from Levemir and Victoza. The rollout of our new generation insulins, especially Tresiba, is progressing well. In the first three months of 2015 the degludec product amounted to 10% of growth. With R&D the FDA accepted for review the Class 2 resubmission for Tresiba and Ryzodeg earlier this month. Furthermore we are encouraged by the positive data…

Thank you Lars. Please turn to slide 11. I'll start with an update on DEVOTE. In March we announced the decision to resubmit Tresiba and Ryzodeg to the FDA including the pre-specified interim analysis of DEVOTE. In the beginning of April the FDA accepted the Class 2 resubmissions for review. The decision to submit was made by a small [indiscernible] team within Novo Nordisk. This team will continue to interact with the FDA during the review on matters related to the DEVOTE interim analysis. The executive management team does not have access to the results of the interim analysis. We expect the review to be conducted in accordance with a six-month standard review team for a Class 2 resubmission and furthermore that the DEVOTE trial itself will be completed in the second half of 2016. Please turn to the next slide. In March we announced headline results from the two final Phase 3a trials for fast-acting insulin aspart, Onset 1 and Onset 2. The trials investigated fast-acting insulin aspart compared with NovoRapid in a basal-bolus regimen for people with Type 1 and Type 2 diabetes respectively. Both trials achieved their primary objectives by demonstrating that treatment with fast-acting insulin aspart is not inferior to NovoRapid with a regard to lowering of HbA1c. For people with Type 1 diabetes the HbA1c reduction achieved with fast-acting insulin aspart was statistically significantly larger than that achieved with NovoRapid when the insulins were given at mealtime. The improved glycemic control that was achieved with no change in overall hypoglycemia reflects that treatment with fast-acting insulin aspart led to a significantly lower increase of postprandial glucose than with NovoRapid during meals. The postprandial benefit was also seen in the Type 2 diabetes trial. Both fast-acting insulin aspart and NovoRapid were confirmed to be safe and…

Thank you Mads. Please turn to slide 15. During the first three months sales increased by 24% measured in Danish krone and by 9% in local currencies to DKK25.2 billion. Reported gross margin improved by 160 basis points to 84.6%, driven by a positive impact from currencies. The underlying gross margin was unchanged. Sales and distribution costs increased by 21% in Danish krone and by 7% in local currencies to DKK6.1 billion. The modest increase in costs reflects the preparation of launches of Saxenda and NovoEight in the US and there was investment in sales forces in selected countries in international operations. Research and development cost increased by 3% measured in Danish krone but decreased by 2% in local currencies to DKK3.3 billion. The decline in cost reflects the discontinuation of activities within inflammatory disorders in September 2014. Adjusting for the cost used within inflammatory disorders in Q1 2014, the R&D cost in Q1 2015 increased by 8% in local currencies. The underlying increase reflects the progression of the late stage diabetes care portfolio and is primarily driven by the DEVOTE trial and the Phase 3a program SUSTAIN. Other operating income was DKK2.8 billion compared to DKK215 million in 2014. The increase is driven by the non-recurring proceeds related to the initial public offering of NNIT and a non-recurring income related to the out-licensing of an asset intended for inflammatory disorders. Operating income increased by 47% in local currencies and by 73% in Danish krone to DKK13.9 billion. Adjusted for the income related to the partial NNIT divestment the growth in operating profit was 17% measured in local currencies. Net financials showed a net loss of around DKK1.4 billion compared to a net income of just below DKK300 million in 2014. The foreign exchange result was an expense of DKK1.4…

Thank you Jesper and ladies and gentlemen please turn to slide number 19. To summarize, we're very pleased with the performance of our first quarter of 2015. Our key products continue to perform well. The uptake of Tresiba as well as the early feedback on Xultophy and NovoEight are encouraging. Last but not least, we're happy to successfully have passed a number of critical milestones for our late stage diabetes care development project and look forward to the upcoming results for the other key R&D projects.

We will now take our first question from Sachin Jain Merrill Lynch. Please go ahead.

Hi, thanks for taking my questions. Just two questions on the US basal market. So firstly, any comments on how we should think about potential Tresiba launch from late this year, particularly timeline to achieve reimbursement given an October or thereabouts approval has passed much of the contracting done for 2016 through the coming months. How quickly essentially do you think you can get onto commercial plans? And then secondly, I wonder if you could give any early commentary from your perspective as a competitor on the Toujeo early launch and in particular their co-pay assistance program and whether you feel you need to respond in any way at the moment or potentially in the future? Thank you.

Thank you very much. This is Lars Rebien here. I'll give you a few comments and then I'll pass onto Jakob. In regards to Tresiba, our current planning, and with all the uncertainties of course in that we don't know how the FDA is going to respond to our resubmission, would be that we would be ready to launch in the beginning of January in the US. Toujeo is still early days and we will be facing a similar situation as Toujeo in that we will be needing to get into a market where contracts have to some extent already been negotiated and this of course in this day and age is creating some obstacles to a rapid take-off. But we will address that when we get to the marketplace and when we know what the competitive situation looks like. And Jakob, do you have anything further to add?

No I think just to confirm that and say that with Tresiba the focus is on the innovation and we're going to sell it on the merits of the product and what that brings to patients on basal insulin above and beyond what's available. And contract is of course an integrated part of that but that's not the main emphasis. So we'll have to discuss with clients as approvals allow us to do so. And on copay the same. We of course will ensure that we're competitive but it's too early to comment on competitor moves in this space. So we'll have to deal with that as we need to make those decisions.

Clearly an expectation on our side that we will come out with a label which is differentiable to that we see of Lantus and Toujeo and based on that we will make our assessment based on the competitive environment at the point of time of launch. Thank you very much.

Can I just take one follow-up? What's your base case expectation for [hypoglycemia] labelling given those comments?

Well just overall no insulins have any benefit than the label on hypoglycemia. Our hypoglycemia studies are not finalized to be added to this resubmission and review by the agency but Mads, perhaps you can comment on when that can be expected and what our expectations are from those trials?

Yes so first of all the things that we as a standard procedure would expect to be in the label are the benefits that we see on kinetics and dynamics and potential variability. You will see the fasting glucose levels and so on. That's kind of pretty routine in the clinical pharmacology and in the clinical sections respectively. As regards hypoglycemia, it is, as Lars says, and the switch class, switch 1 and 2, which are blinded trials done to a very large extent the way that you expect the agency to have such things done nowadays. They do report early next year and they will be followed immediately by submission of the data for inclusion into the label. And at that point my expectation would be -- and hope would be to have a differentiated -- for the first time ever to have a differentiated label also as regards hypoglycemia.

Our next question comes from Richard Vosser from JPMorgan. Please go ahead.

Thanks very much. Just a follow-up. As you say on Tresiba, you're thinking of launching early next year. Just how should we think about the investment potentially ahead of that in terms of sales force and how that would affect the guidance, whether that's in the guidance for full year 2015 or whether those investments would really be a 2016 issue? And then secondly, we're seeing with the DPP-4s potential for heart failure signals and obviously some of the players backing off in terms of marketing. Are you seeing the GLP-1 class already benefiting from that? And linked to that, in terms of the oral GLP-1, does that impact your decision making at all around the oral GLP-1? And perhaps you could talk about the timelines for the steps or hoops you have to go through on the oral GLP-1 as well? Thanks very much.

Yes thank you very, very much. As we are expecting to launch in the beginning of the year and as we do need an approved label by the agency to start really any pre-launch activities, it is going to be very, very modest in terms of cost. And Jesper, just to have you in the loop here, I [Technical Difficulty] question on oral GLP-1 question [indiscernible]. Then as it relates to 2016, whether -- what the cost picture would be in 2016. It will depend on first of all the competitive landscape, second of all on the progress of our Victoza product and Saxenda. And if we are in a situation where we still have strong momentum behind these two brands, we will be having to review whether we need additional resources and we will include all that in the eventual guiding that we will be giving you where we start to give you a heads-up in Q3 normally and then we'll firm it up when we come with our annual results in January 2016. Mads, do you see any impact from the discussion of heart failure on DPP-4s on the growth of GLP-1? And does that impact our timelines for the oral GLP-1?

Yes Richard, quite frankly it is true that the GLP-1 volumes are coming up but you know it can only be speculation because it can't be on behalf of the DPP-4s because of the signal that some feel there are on congestive heart failure. It can be market expansion due to Eli Lilly marketing their analog or it can be the waning fear of pancreatic safety concerns that we've seen go by over time. So I can't really speculate but what I can say is that the GLP-1 agonists do not have a disadvantage. If anything they improve fuel utilization in the failing myocardium and there are actually human data to suggest that this might be beneficial in congestive heart failure. For oral semaglutide it's the same story and the only thing I would comment there is that the timelines are such that pending our [indiscernible] decision later this year we will be able to in the first half of next year kick off these three.

Mads, just let me say -- just to [indiscernible] your comment, we're talking about heart problems with the DPP-4 and relating that over to GLP-1s. Remind the audience of the timeline for the LEADER study where, if anything we hope to see some positive signals from Victoza.

Yes and the LEADER, as you hopefully will be aware, is reporting in the first half of next year. And even though the strictness, i.e. the triple endpoint of cardiovascular death and stroke and myocardial infarction is the primary endpoint, we do of course have as a secondary endpoint congestive heart failure. And we will be looking at that with great interest. But you know there's no reason to believe anything but either we have neutral or potentially if anything beneficial effect.

Thank you very much for that. We'll take the next question, please.

Will you just --

Sorry, Lars.

Just a second, just a second.

We leave the oral GLP-1 till the next step, you didn't call that.

Sorry, I only said when we could start, yes. [I made] [indiscernible] things. So what we're doing is currently liaising with the regulatory [indiscernible] and that will be in the Phase 2 meeting with the US FDA. And once all of those things are wrapped up and we have conclusion about the clinical program per se, which will be a program seeking to define actually what we believe to be superior nature of this in the oral space, then we'll get back to you with the aim of starting as early as possible. Next year, of course, there will also be derived investment decisions in all these kinds of things. So actually, this is also why you won't hear from us until some months from now.

Our next question coming from Michael Novod from Nordea. Please go ahead.

Yes, hello. Thank you very much. Two questions to GLP-1. First of all, GLP-1 competition. You have been talking about earlier that you might see pricing change in the GLP-1 market in the US when, for example, Lilly needs to get down to more formal areas. How do you see the competitive environment in the next six to 12 months? Should we expect any major changes? And then secondly, to GLP-1 in NASH. We have seen data at EASL recently. And even though I know it's only a few patients and it's still a bit early, it does look a bit intriguing comparing to other compounds as well. Maybe Mads has some comments to how you could potentially develop liraglutide in NASH?

Yes, certainly Mads would be the right to ask about a fatty liver. But let me say about the pricing before we hand it over to Mads. We are not anticipating any pricing impact in 2015. The only caveat I've had to put in here is that once one starts to negotiate contracts for 2016 and onwards, sometimes the situation develops such that you'd need to accept certain price decreases already in the current year. But given that we have a very strong position with a gold standard product, one should expect that we will hold our position firm on the pricing of Victoza. And then on to your fatty liver -- sorry.

Well, thank you, Lars, for appointing me fatty liver expert. I think I've a sense of pride for that. No, NASH or non-alcoholic steatohepatitis, as it is also known, is the segment of non-alcoholic fatty liver disease where you are starting to see increasing fibrosis. So you have these four stages. And obviously, as you progress through NASH and end up with potentially liver cirrhosis, it becomes totally irreversible, requiring liver transplantation or resulting in mortality. Hence, since there's no approved product for this indication, it is an area of great interest currently, medically and pharmaceutically, and also for Novo Nordisk, obviously, with the latest investigator initiated study completion from Phil Newsome and his co-workers. So obviously Novo Nordisk is right now looking into is this something we should study clinically? And the data's interesting. So we may well get back to you on that. And initially, it would obviously make sense to look at Victoza, because this is the product we have on the market. But as you are aware, we do have, of course, a whole portfolio of GLP-1 activities.

Mads, if I may add a question here, is this something that we would be starting to look at in our obesity trials as well, since it is not alcohol related?

Well, that's interesting, Lars, because yes, obese people do tend to have increased fat in the liver. But so do people with Type II diabetes. So a Type 2 diabetic average American population, almost three out of four will have some degree of fatty liver. So you can do it either way. And that is something we of course in management will have to discuss.

Next question comes from Peter Verdult from Citi. Please go ahead.

Good afternoon. It's Peter here from Citi. Two questions, big picture ones, starting for you, Lars. Just on China, you're relying on the older part of your portfolio, currently there seem to be pricing and reimbursement changes afoot, increased level competition. And the whole industry's struggling getting drugs approved and reimbursed through the Chinese FDA. So I just wanted an update on your thoughts on China going forward. And then for Jesper or Mads. Do you think, if we take an R&D spend in the region of DKK15 billion to DKK16 billion this year and next, you've got four large outcome studies reading out next year. I just wanted to understand what are the drivers of R&D spend going to be over the medium term? Because it seems that unless you start to move forward with oral GLP-1 in diabetes or explore indications like NASH and Alzheimer's, there's scope for the absolute R&D budget to step down post-, or from 2017. So interested in your thoughts there, thanks.

Thank you very much, Peter. In regards to China, our current assessment is -- and you actually allude to it as there is a reluctance in the marketplace for being able to interact directly with pharmaceutical representatives. And this is favoring the old portfolio and its favoring the introduction of new products. So we are internally and also now externally advising that whereas we would have told you a year to two years ago that our expectation for growth in China would be 15%, we are talking more likely 10% in the near future, as long as the current economic situation in China applies, and until we get a more normalized situation on the [indiscernible] and all the compliance issues that they're currently dealing with here. Then it's interesting, notes are flying between Mads Krogsgaard and Jesper Brandgaard. Whenever we talk about R&D budgets, negotiations are ongoing, and I am sure that Mads Krogsgaard will find a way not to have R&D budget decline. But first of all, before we ask Jesper, Mads, can you expand the R&D budget productively?

Yes, we are waiting on some of these big trials.

Yes, and it's actually interesting, nice question, thank you. Because we've actually had very in-depth discussions in the R&D management team about the launch of outlook for R&D and the spend, and what to spend it on. And you're absolutely right, there's some things that are short-term drivers of that spend. And they include of course a lot of Phase 3. But do bear in mind we have a handful of major diabetes assets either just being launched, on the way to being launched, and we have set aside quite substantial funds to life-cycle manage those by broadening out indications, getting new and better claims, etc., etc. Other than that, the oral GLP-1 program if and when we do proceed into Phase 3, will be a very significant one that will of course take us into a whole new arena that potentially opens up for use of the oral protein engineering and deliberate technology in many other peptide areas than just GLP-1, by the way. And this is not appropriate, you can say. Then obviously, you also mentioned asset exploration. It is true that once you have beautiful baby like -- or, well, grown up, like Victoza, whenever there are data that warrant further study, whether it's Alzheimer, whether it's NASH, whether huge unmet needs, it is in a way upon the company to of course at least consider doing so. We should also remind ourselves that we actually have a relatively, you can say, interesting early stage, clinical diabetes -- sorry, obesity pipeline with not less than three assets in there of a non-GLP-1 nature, so to speak. So I will find plenty to use the R&D spend in the coming years. But you have much more at a later point.

Peter, as you can hear, there is no end to the creativity. But let's turn to Jesper. Because, Jesper, I have to make ends meet here and what's your expectations on this exuberant pipeline?

Well, [I'll be] a bit more concrete and actually look at the actual spend in 2015. I would anticipate that the cost ratio that we're going to report this year is going to be about 13%. Of course, that's a significant decline compared to the 15.5% we had last year. But do bear in mind that we had DKK600 million in closedown costs for inflammation last year. And we are significantly benefiting from the very substantial currency impact we have. If we look at the R&D cost line, it is so that two-thirds of the R&D costs are actually denominated either in krone or euro. And as a consequence, we do get a very positive impact on the cost ratio. But around 13% is probably most likely, given the current rates we see for currencies. Also, do bear in mind that the average growth rates that we're actually having has been in absolute costs growing to the tune of 10% year on year for our R&D investments. So substantial increases year on year. But of course, we are having a significant growth in our top line. And that's why we are adding significant resources year on year to the R&D area. And we expect to continue to do so with continued, focused approach zooming in on the therapy areas, where we have significant insights.

Our next question comes from Michael Leuchten. Please go ahead.

Thank you, it's Michael Leuchten from Barclays. One financial question and one commercial, please. Jesper, on the gross margin, your comment was that in constant exchange rate gross margin was flat. That's an unusual scenario given the way the top line developed. Just wondered what's behind that? And then just going back to the GLP-1 market, I appreciate there are many potential reasons why the market is expanding as rapidly as it is at the moment. But from a feet on the ground perspective, what are you hearing from your sales reps on the back of the introduction of yet another once-weekly product that seems to have kick started the market growth but not taken share from Victoza? How do you read that dynamic, and what do you hear from your reps? Thank you.

Thank you very much. Gross margin, that is Jesper's hobby. So can we have a comment on your usual fact that gross margins for us this time with sales growth seem to be flat?

Yes. It's a dull hobby if it's a flat gross margin. But I think if you look at the key facts, this first quarter we had a slight negative price and productivity impact and a slight positive mix impact from selling higher volumes, especially of modern insulins and Victoza. But overall, that ended in an unchanged gross margin. And then we have a 160 basis point positive impact from currencies. And my anticipation for full year 2015 in terms of underlying development in gross margin remains unchanged and still with a very substantial positive currency impact of around 1.5 percentage points or so for the full year.

Thank you. And then Jakob, further color on the development of the GLP-1 market, especially in the United States, new launches and how is that impacting the business going forward, do you think?

Yes, what we've picked up so far is a fairly classic standard launch from Lilly that came across a little slow in the beginning, where focus was initially on specialist that has picked up a little bit lately. Promotion, to some extent, up against Victoza. That's the nature of very often they want to perceive it as all the qualities of a GLP-1, but with the ease of the once-weekly injection. So in that sense, we are being sold up against a little bit, but that's not surprising, being the gold standard. I must say, lastly, no sort of major news other that in behavior. But a pretty standard promotion.

Our next question comes from Terence McManus, Credit Suisse. Please go ahead.

Thank you, yes. It's Terence McManus from Credit Suisse. Two questions, please. Firstly, I was wondering whether you have had any payers in the US or other key markets come back to you to renegotiate Levemir contracts following the launch of [TJO]? Sometimes we've seen in the past that new launches give payers an excuse. And secondly, has the FDA made any suggestion that an outcome will be required for Tresiba? And if they did, would you expect this to be behind closed doors? And if so, how would you be able to communicate that? Thank you.

Yes, thank you. And the first question, Levemir [TJO] introduction, no, we have not seen any contract being reopened. And in general, our expectation for the pricing of our portfolio in the US remains the same as we announced in connection with the annual result. Classed as slightly positive, the queue one numbers are a slight negative for technical reasons, The way we book rebates through ops. So the full year is still flat to slight positive on our portfolio. And this is predicated on no contracts being reopened as of now. Then with regard to whether or not outcome and how one would deal with that, Mads, can you give a little speculation then on what might happen?

Well, not so very much, unfortunately, because the situation is, as you know, we have these very effective firewalls implying that I'm not privileged to know anything about any dialogue as related to cardiovascular outcomes and Tresiba devote interim results at all. I only hear with the other stuff, so to speak. So I don't know anything, but of course the underlying team is in a position to be equipped to have [an outcome] if that were the case. Obviously it would be a rather different situation, I think, the agency by definition would not be able to hold that in a public forum, and maybe we wouldn't even hear about it. I simply don't know. But of course the team is filled with the best experts we have, so we'd be able to entertain that if it happened.

Next question comes from Martin Parkhoi. Please go ahead.

Yes, Martin Parkhoi. Actually, I have a question to the last slide in your presentation with the closing remarks why you still assess more than 10% annual diabetes market growth. If we look at the insulin market and the three big players which now have reported Q1, I can see that underlying growth for these three players combined is something between 1% and 2%, which of course is driven by the -- of course, this big decline in Lantus, but also the pressure on prices US. Do you actually believe you could come back to double digit growth in the insulin market alone with the environment we see right now? That was the first question. And in that context, you could of course comment on the development you've seen in US for your products, where we have seen a negative price impact in the first quarter but you still expect a positive or flat effect for the full year. Then, second question is to Mads, just on semaglutide, because that was a question regarding NASH on Victoza. But of course the patent on Victoza expires in 2023, and before we know it, we are there. So would you put all your efforts into semaglutide now? And I think about -- have you also -- would it also be possible actually to make a once-daily version of semaglutide, given the fact that that could also protect your franchise on Victoza when that should expire?

Thank you very much, Martin. I will give you my point of view on the Tresiba growth story and the us pricing. Basically, it's our anticipation that if and when we get approval for Tresiba in the US and when we are able to launch the [indiscernible] family in the US, that will allow us to achieve 10% or more top line growth in the diabetes market. The current players are impacted by their contracting. Are they rebating enough? Of course, I can't comment on their activities, other than to say and to reiterate that ours was for technical reasons slightly negative price impact in the Q1. But that's still our anticipation that we will have zero to single digit positive price effect for 2015 in the US. And then Mads rightly it's pointed out that it might be tactically bright to look at semaglutide as opposed to liraglutide when you're looking at new indications.

Yes. Well, clearly, that is a very good point. You could say pharmacologically speaking, at this point we don't know whether the Newsome Group's results hinged upon improvement of metabolic status, i.e. glycemic control or reduced energy intake. But you can say either way semaglutide seems to do more over and above liraglutide and henceforth ultimately it would make sense to develop semaglutide with a long patent life and the profile it has for NASH. That doesn't mean that you can't do your early exercises with an in-market product such as liraglutide, though. It is true the patent expires 2023, where it's 2031 for semaglutide. And then on the once-daily, that's an interesting thought. And obviously that would give you a situation where the peak to valley fluctuation would be within 1% from peak to trough, if you did that with a half-life that we have for [sema]. So that is of course something one could consider as a lifecycle management activity.

Yes, and back to the budgets, the R&D budgets, you can imagine that if you start looking at semaglutide as a once-weekly injection as a once-daily as an oral, if you look at it as something for diabetes and you look at it for something for obesity, then I would sort of believe Mads when he says he will be able to find exciting projects to grow the R&D budget.

Our following question comes from Simon Baker. Please go ahead.

Thanks for taking my questions. I've got two. One on gross margin and one on oral semaglutide. Firstly on the gross margin. One of the reasons why the gross margin has been so strong and increasing over recent years is a result of the investment, heavy investment in the last decade. So I just wanted to check where we were in terms of capacity utilization at the moment. And secondly on oral semaglutide. Given the data that we've seen, I'm surprised that you talk about whether to proceed to Phase 3 rather than how to proceed to Phase 3. So I was just wondering if you could give us a little bit more color on the trends across the doses in terms of efficacy and side effect so we can have a better feel for where and indeed if there is a sweet spot within the doses that you tried in the Phase 2 study. Thank you.

Thank you, Simon. It's a brilliant observation. Let's start with gross margins again, Jesper Brandgaard.

Well, in relatively diverted into investment outlook, and I think what we can say is that we have a comfortable capacity situation at present. Of course when we're moving into new areas like, for example, oral semaglutide, this is an area that will require substantial investment from our side, not only in significant API capacity, but also in solid dosage form facilities which we don't have at present in that scale. Just reminding you from the oral data that the volume of API that is needed for a patient on daily treatment of semaglutide compared to once weekly where the dose in the trial was just one microgram coming up against the much higher volumes that was utilized in all trials, I think that is going to be very significant. And hence, you should anticipate that you would see us initiate investments once we take the decisions on moving into Phase 3, if that is taken. And we have hinted towards an increase in our current spend level where the investment level is 4% to 5% in fixed assets over sales on a yearly basis. And see that move up at a level of about a percentage point and do that for a period of five years, that also is an indication of how long time it will take to construct such a facility and have it qualified and ready for commercial launch. So substantial investment will follow from that. Apart from that I would feel overall reasonably comfortable in maintaining the current guidance we have for the investment levels.

Thank you. Before I just hand over to Mads, just one small detail, which you should bear in mind is center which we will with the Tresiba launch in the US and the Tresiba launch elsewhere will be cannibalizing Levemir business we have in a way a productivity improvement in that we use four times as much insulin molecules when we inject Levemir than when we do with Tresiba. So there are some benefits in that regard, at least as it comes to API production. But Mads, whether or how?

Yes, well, first of all, I think as a matter of principle, our Company, before we'd made a Phase 3 stop/go decision, we'll always say if and when. So that's a matter of principle. But when you ask me is there a sweet spot, we cannot reveal all the data. They will of course both be presented and published at the relevant point in time. But I can give you a little hint in that we say we go from 0.7 to 1.9 percentage point [AIC] reduction throughout the dose range. That implies by definition that already at the 2.5 milligram you must have a 0.7% reduction compared to a placebo reduction of only 0.3. So there if you are a pharmacologist and can make your own dose response curves, you will probably also reach the conclusion that 40 milligrams would likely be on the high side. That's as far as I will go.

Thank you very much, Mads. I think if this meeting continues then it'll start to get exciting, breaking news. We will wait with that until we get to the half-year result. Next question, please?

Our next question comes from Vincent Meunier from Morgan Stanley.

Hello, gentlemen. Thank you for taking my questions. The first one is on semaglutide in obesity. What are your plans here? Would you wait for the launch of semaglutide in diabetes before starting the Phase 3 trials in obesity? Or would you wait for the commercial success of Saxenda to do so? And the second question is on the GLP-1 market trends, can you elaborate on the feedback from the marketplace from the launch of Trulicity, and where do you think patients are coming from, and what's the impact for Victoza? Thank you.

Thank you very much. Mads first, semaglutide, obesity, and how do you see that situation?

Yes. Well, so what we can say is that we have systematically seen higher efficacy level on body weight for semaglutide versus liraglutide. And to wait for a slow ramp-up of Saxenda sales, which we have communicated is not happening overnight, because it's a very immature market, that would mean that you obviously use many years of panelizing to do so. Do bear in mind that you can't start Phase 3. What you have to do is, even though we've done dose range finding for semaglutide in Type 2 diabetes, you have to repeat your dose range finding and actually start with Phase 2. So what you should expect to see is Phase 2 where you then select doses that will then ultimately be taken into Phase 3. Will that coincide with the timing of when semaglutide is approved for diabetes? Maybe. It's probably in the same ballpark.

Thank you very much. And then with regards to the Trulicity launch, it is still so early days that we don't have really, really proper market now in Japan where the patients are coming from. They are growing their share and we are losing slightly as a result of that and the albiglutide. But we're holding on nicely and the market is expanding. So that's the key thing. We'll come back to you at half year with more information. We'd like to take the final question, please.

Our next question comes from Ronny Gal from Bernstein.

Good morning, thank you for taking my question. I have two. First, can you comment a little bit about Norditropin? You kind of mentioned that product should at some point flatten, but it seems to be doing -- continues to do quite well. A little bit about the future of that market as a transition to weekly product. And second, could you give us a little bit of feedback about the market, the expected pricing impact of the Lilly launch of their biosimilar Lantus in Europe?

With regards to Norditropin, you are absolutely right. It has in fact also surprised us how strong this product became last to the market almost in the United States now holds more than 50% market share in the US. Due to extremely good execution on the part of our people in the US adding service product, developing new device to launch in the United States and also helped, I have to admit, by some product withdrawal from the competition. So we look like we are having a very, very strong platform in the US market. And I would like Mads, perhaps if you would comment on how you see the competitive landscape as it relates to weekly formulations of growth hormone.

Yes. Well, obviously, there's an ongoing debate about once-daily or once weekly GLP-1, once-daily or once weekly this that and the other. And of course the same will happen for growth hormone. I have to say though that the jury's out; Novo Nordisk is -- we're excited about our own Phase 3 program called NN8640, but you have to bear in mind that growth velocity of these kids will not be improved. So this is a convenience factor rather than anything related to the treatment outcomes. So they will probably ultimately also be a split between once-daily and once weekly offerings in this market as we'll see it for GLP-1 as well. And I think Novo Nordisk is poised to take advantage of that since as last mentioned, we're constantly innovating both on formulation enhancing, temperature stability, better automatic devices and so on and so forth. And even when we get to market with a once weekly offering, we'll do the same thing once more.

And with regards to the final, final question about what are our expectations on the launch and impact of biosimilar Lantus from Eli Lilly in Europe, well, in reality, you should ask Eli Lilly on the pricing side. But we have previously at least been speculating that the price level will be somewhat like 10% to 20% lower than the current marketed branded product. And that's primarily the competition will be between biosimilar and the branded product and not influence others in the category.

So you don't expect it to have to match that price discount?

No.

Thank you.

With that, ladies and gentlemen, we want to thank you for your interest and interesting questions. We will be back after the summer holidays with our first half-year results and some more exciting news. Thank you very much.

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.