Good afternoon, and welcome to the 2019 annual general meeting of Novo Nordisk. I'm pleased to welcome all shareholders for this meeting. First, a few technical remarks. As in previous years, the general meeting will be webcasted live in Danish and in English to allow shareholders worldwide to follow the meeting. The annual general meeting will be conducted in English, and shareholders will be entitled to speak in Danish or in English. Simultaneous translation from English to Danish and from Danish to English is available through the headphones available from all our employees. Channel 1 is English and channel 2 is Danish. You have received an electronic voting device called an e-voter at the entrance, and we only expect to use this electronic voting device if shareholders request that items are put up for a formal vote.
The resolutions of the meeting will be recorded in the minutes in Danish and then translated into English. The minutes will be made available at our website within two weeks of today. It was an honor to be elected chair of the board of directors at the 2018 annual general meeting. I have a huge respect for the responsibilities that come with the role, and I'm doing my utmost to repay the trust by providing stable stewardship of the company. I have spent most of my professional life in the energy sector and seen many parallels with the pharmaceutical industry. Both industries are complex, highly regulated, and fiercely competitive. Much more importantly, they play a vital role in society, and both industries need to solve difficult issues. For the energy sector, it is how to provide more energy for a growing population while at the same time reducing emissions.
For the pharmaceutical industry, the issue is how to continue to deliver innovation while at the same time provide access to modern medicine to more people. The decisions made in both industries have a huge impact for generations to come. In my role as a chair, I'm seeking to apply all the relevant insights I have gained in energy to apply in pharmaceuticals. Most importantly, I strive to always uphold the interest of the patients we serve and the shareholders who have invested in the company. I can say with absolute certainty that this is a goal shared by the employees of Novo Nordisk. For Novo Nordisk, 2018 has been a year of accelerated change. We have redefined the company's approach to research and development, reprioritized resources towards the key growth drivers, and continued to streamline and simplify the organization.
At the same time, we have delivered strong pipeline progress and successfully launched innovative products. Many of the challenges the company is confronted by are not new, nor are there any quick fixes. With the changes made across the organization in 2018 and a disciplined focus on prioritizing for growth, we are well on our way towards creating a simpler, more dynamic organization. An organization that is better equipped to deal with the volatile, rapidly changing business environment in which we are now operating. An example is the way that Novo Nordisk has redefined its approach to research and development and the execution on the new strategy that was set out last year.
Success in the long term can only be realized through the diversification of the product portfolio via entry into other therapy areas with significant unmet patient needs and where Novo Nordisk is in a position to serve. I see the culture in Novo Nordisk as strong. It's purpose-driven, patient-centered, and it is defined by the Novo Nordisk Way. This is a strong set of guiding principles that ensures that every day we make decisions that support patients, our employees, and our shareholders in the long run. As part of Novo Nordisk Way, we focus on the triple bottom line and conduct business so it balances financial, environmental, and social responsibilities. We see this as an important aspect of creating trust with stakeholders in the societies Novo Nordisk operates in. One topic that is important for Novo Nordisk is affordable medicine.
Although Novo Nordisk focuses on ensuring access to medicine for all patients with chronic diseases like diabetes, there are still some people who struggle to get access. This is a global problem and one we take very, very seriously and dedicate a lot of time to, and where we must continue to evolve our approach. Novo Nordisk's purpose is more relevant than ever. Driving change to defeat diabetes and other serious chronic diseases is imperative if we are to achieve a more sustainable development. The rising prevalence of these diseases is an unintended consequence of socioeconomic growth, and turning that tide will take more than providing medicines. I'm encouraged to see how Novo Nordisk seeks a broader role in shaping a society in which people everywhere can thrive. The access to insulin commitment, and the Cities Changing Diabetes partnerships are good examples hereof.
This is what motivated me to join the Novo Nordisk Board of Directors, remains a key driver for my engagement. I would like to present the members of the Board of Directors one by one. Apart from myself, the current board consists of the following shareholders' elected members: Jeppe Christiansen, Vice Chair; Brian Daniels; Andreas Fibig; Sylvie Grégoire; Liz Hewitt; Kasim Kutay, and Martin Mackay. The four employee elected members are Anne Marie Kverneland, Stig Strøbæk, Mette Bøjer Jensen, and Thomas Rantzau. This brings me to the members of the executive management. Together with me on the podium is Lars Fruergaard Jørgensen, the President and Chief Executive Officer.
In the audience, in the front row, we have the company's executive vice presidents, Mads Krogsgaard Thomsen, Chief Science Officer, responsible for research and development; Henrik Wulff, who is responsible for product supply; Camilla Sylvest, responsible for commercial strategy and corporate affairs; Todd Lange, who is head of North American operations based in the U.S.; Mike Doustdar, who is responsible for international operations and based in Switzerland; Karsten Munk Knudsen, Chief Financial Officer, responsible for finance, investor relations, and procurement; Lars Green, who is responsible for business services and compliance. Moreover, we have Jesper Brandgaard, who is responsible for Biopharm and legal affairs, who will retire from Novo Nordisk as of April 2019. Yesterday, he participated at his 135th board meeting. Pretty impressive.
I would like to thank Jesper for his tremendous contribution to Novo Nordisk during his role as Chief Financial Officer, later now on as Head of Biopharm and Legal. Before I give the word to the Chair of the Meeting, I would also like to present the company's auditors from PricewaterhouseCoopers, Mogens Mogenson and Mads Meldgaard, who are both present here today. To conclude my introduction, I can inform you that the Board of Directors, again this year, has appointed Attorney Claus Hergaard to act as Chair of the General Meeting. With these words, I leave it to Claus Hergaard to take us through the agenda for this year's annual general meeting. Thank you.
Thank you. I'm responsible for the more boring part of the meeting today, the formalities. One of the first obligations I do have, that is to confirm that the general meeting is actually legally convened and competent to transact business. I can assure you that I have checked it before I came up here. I'll just emphasize a few of the formalities that has to be complied with. They follow from the Danish Companies Act, but besides that, it follows from the articles of association of the company, primarily Article 6 and Article 7. The notice for the meeting here must be posted on the website of the company. That is the main way of giving notice to the meeting. Besides that, it has to be forwarded directly to those shareholders who have requested such information.
Finally, it has to be sent out as a stock announcement to the stock exchange. All this has to take place three to five weeks prior to the general meeting, here it took place Friday, the 22nd of February. Everything in accordance with the rules. A few things about the formalities for adopting the proposals on the agenda here. We have two proposals on the agenda, which include changes to the articles of association. That's item 7.1, with a reduction of the share capital, it is item 7.3, with the extension of the existing authorizations to increase the share capital at a later stage. Those two proposals can only be approved here if at least two-thirds of the total votes of the company are present. I can confirm that that is the case here.
Besides that, it has to be approved with a two-thirds majority of votes and capital if we get to a vote. All other items on the agenda can be approved with simple majority. A little about attendance here. A total of 923 people have requested admission cards. Out of this, 664 are shareholders. Five, 10 minutes ago, approximately a total of 400 had arrived here. Besides this, 597 shareholders have granted the power of attorney to the board. More than 2,000 shareholders, it is exactly 2,029, have voted prior to the meeting here by using the voting forms that have been made available at the investor portal of the company. A total of approximately 84% of all votes and 53% of the capital have been registered or have already voted for the meeting here.
The agenda, we have eight items on the agenda today, including item number eight, which is a shareholder proposal, which we of course will come back to when we get to item eight. As usual, the first two items on the agenda, the oral report and the presentation of the annual accounts, will be presented together. They will be presented by CEO Lars Fruergaard Jørgensen first, and then by Chairman Helge Lund. First, I hand over the podium to the CEO, Lars Fruergaard Jørgensen.
Thank you, Claus. Thank you, Helge. Also, a warm welcome to our shareholders from me here today. For everyone in Novo Nordisk, 2018 was a year of change and significant progress. We delivered on our targets for sales and operating profit. We successfully launched Ozempic, our new once-weekly GLP-1 for people with type 2 diabetes, and we took crucial steps towards the regulatory submission of oral semaglutide. We also had to say goodbye to good colleagues, as we had to direct resources to future growth drivers. In 2018, we delivered on our growth guidance. The sales growth in 2018 of 5% measured in local currencies was in the top range we had announced at beginning of the year. Operating profit growth of 3% measured in local currencies was within the range.
Operating profit increased by 6% when adjusting for severance cost and the priority review voucher we used for oral semaglutide. The year was characterized by an intense flow of new clinical data, especially the results from the 10 PIONEER trials for oral semaglutide, which have enabled us to submit oral semaglutide for regulatory approval in the U.S. To ensure we carry this momentum through in 2019 and beyond, we have implemented a number of organizational changes throughout 2018 that has enhanced our ability to adapt and succeed in a rapidly changing business environment. Regrettably, we had to reduce the workforce by around 1,300 employees globally. It is important to understand that this has not been an exercise in cutting cost.
Rather, we have recognized the need to increase the agility of our business by freeing up resources for reallocation towards our future key growth drivers. We can see that this is already having a positive impact on our performance. We have a clear ambition to be a sustainable business, and our actions in 2018 has significantly strengthened our platform for sustainable growth. We are simplifying our way of working to become more robust and agile in the face of new challenges. We continue to create long-term value for patients and shareholders by driving innovation in-house and notably in increased collaboration with external partners. We have done this in a financially, environmentally, and socially responsible way, reaffirming our commitment to the triple bottom line principle that drives our approach to business. On this background, I'm satisfied with how the company performed in 2018.
I will now review some of the key developments in 2018 and end with some reflections on my priorities for 2019 and beyond. In 2018, the sales growth was 5% in local currencies and unchanged in DKK. The sales growth was driven by the diabetes care and obesity businesses, where the diabetes franchise grew by 4% and accounted for 73% share of growth. The GLP-1 segment grew by 18% and was a primary driver where Victoza sales increased by 9% and Ozempic realized DKK 1.8 billion in sales. Total insulin sales were broadly unchanged, reflecting 5% insulin sales growth in international operations, driven by solid Tresiba and Soliqua growth volume. This is offset by the U.S. insulin sales decline of 7%, mainly driven by lower realized prices in the basal insulin segment.
Within obesity, Saxenda grew by 60% measured in local currencies and hence accounted for 30% share of growth. Biopharm sales in local currencies were broadly unchanged, driven by the continued solid execution of our strategic priorities. The sales growth of 5% was driven by both North America operations and international operations. In North America operations, sales increased by 3% in local currencies, driven by GLP-1 sales increasing 19% and Saxenda sales increasing by 39%. In international operations, sales increased by 7%, where all regions apart from region Japan and Korea contributed to the growth. For the global insulin franchise, sales were broadly unchanged in local currencies, driven by North America operations declining by 7%, partly countered by 5% sales growth in international operations. The decline in North America was primarily driven by lower realized prices in the basal insulin segment.
The GLP-1 sales growth was 18% and was driven by the launch of Ozempic in North America and the continued solid market volume growth of the GLP-1 class. We have during 2018, taken a number of initiatives to strengthen our commercial execution. I believe we have entered 2019 well-prepared to bring value to patients by maximizing our broad product portfolio. One example of strong commercial execution has been the launch of Ozempic, which has now been launched in 11 countries. In the U.S., Novo Nordisk is expanding the market leadership with a combined new to brand market share of around 49%, driven by the uptake of Ozempic. In Canada, Ozempic continues to increase new to brand prescription market share, and Novo Nordisk combined new to brand prescription market share is now around 4%-81%.
Ozempic has also been launched in nine markets in Europe, and by the end of December 2018, Ozempic had gained around 13% total volume market share in the launched European countries combined. The rollout of Ozempic will continue in 2019. This brings me to R&D. 2018 was a year with a lot of exciting news from our pipeline that will further strengthen our product pipeline in the coming years. Most importantly was the successful completion of the Phase 3a program for oral semaglutide. Across the PIONEER trial program, oral semaglutide demonstrated statistically significant greater reductions in both HbA1c and body weight when compared to the leading SGLT2 and DPP4 inhibitors, as well as the leading injectable GLP-1 analogs, albiglutide and dulaglutide, in a Japanese population.
Following the completion of the PIONEER program, two applications for oral semaglutide have been submitted to the U.S. FDA for regulatory approval, one for treatment of glycemic control and a second application for cardiovascular risk reduction, both for adults with type 2 diabetes. Other highlights were for Ozempic, we have submitted an application for regulatory review by the U.S. FDA to obtain a cardiovascular risk reduction indication for adults with type 2 diabetes. A label update for Tresiba in the U.S. based on data from the DEVOTE trial demonstrating a 40% lower rate of severe hypoglycemia when compared to insulin glargine U100. Within obesity, we have initiated a phase IIIa program STEP and the cardiovascular outcome trial SELECT both with 2.4 mg injectable once weekly semaglutide for people with obesity.
Finally, within Biopharm, ESPEROCT, our long-acting factor VIII product, has been approved in the U.S. and submitted for regulatory approval in the EU and Japan. In addition, we have completed the two phase II trials for concizumab and are expecting phase III initiation in the second half of 2019. Furthermore, somapacitan, our once-weekly growth hormone, has completed phase II trials in children with growth hormone deficiency and phase III initiation is expected in second quarter of 2019. Furthermore, we have also successfully completed a phase III trial with somapacitan in adults. Following the completion of somapacitan, we will submit for regulatory approval in adults with growth hormone deficiency in the U.S. in third quarter of 2019. This ends my review of the key developments in 2019.
I encourage you to read our annual report, where you'll find more details about our performance and how we strive to do business in a financially, environmentally, and socially responsible way. Let's take a look at what is in front of us. With the decisions we have made in 2018, I believe we have created a solid platform for sustainable long-term growth for Novo Nordisk. Looking at 2019, we know it will be a challenging and exciting year with the continued rollout of Ozempic and hopefully regulatory approval of oral semaglutide in the U.S. With the breadth of our diabetes care product portfolio, a key priority for 2019 is to grow our market shares.
Within obesity, we will continue to expand our value market share leadership, and within Biopharm, we will continue the solid strategic execution of returning the franchise to growth, despite NovoSeven being affected by competitive product launch. Prices for insulin products will still be under pressure, especially in the U.S. Furthermore, Novo Nordisk will be negatively impacted by a DKK 2 billion impact due to the legislative changes in the U.S. Medicare Part D coverage gap funding. We therefore expect sales growth of 2%-5% in 2019, measured in local currencies. Helge Lund will provide more details on the financial outlook for 2019 in this presentation. Looking beyond 2019, Novo Nordisk has a large responsibility for the 425 million people in the world with diabetes, and the 650 million who have obesity, and the thousands who live with hemophilia or growth disorders. They are our reason for being.
We want to make sure that people who need life-saving insulin have access to it. We are doing that through a differential pricing policy for the least developed countries and through affordable options in the U.S. Through the differential pricing policy, we offer human insulin at a price that does not exceed 20% of the average realized prices in Europe, the U.S., Canada, and Japan. As of 2019, this guarantee includes 78 countries, the home for 124 million people with diabetes, as well as selected humanitarian organizations. As an example, the partnership we have with Red Cross that support people in conflict zones that need treatment. In the U.S., around 9% of the population does not have insurance coverage, meaning that many Americans need to make large out-of-pocket payments for the medicines.
It is a challenging situation that is not easily solved, because it is a combination of many factors that has led to a complex healthcare system. This means it will also require all parties in the U.S. healthcare system, including pharmaceutical companies like ourselves, to work together to find sustainable solutions to the problem. The debate in the media tends to focus on how the list price of insulin has gone up over the past 10-15 years. An often-quoted example is how the list price of our fast-acting insulin analog, NovoLog, has gone up by around 400% since 2001. The list price development since 2001 is not a true reflection of the net price Novo Nordisk gets for the medicines. Using the example of NovoLog, net price have increased 28% over the same period.
The list price is meant as starting point of a negotiation with the big purchasers of medicine in the U.S. Due to intense competition between drug manufacturers negotiating for formulary position, rebate levels have increased dramatically over the years, and in 2018, Novo Nordisk rebates and discounts consumed 68% of gross sales in the U.S. Since 2015, our insulin net prices have declined, and the majority of the people in the U.S. covered with healthcare insurance are today able to get our insulin with a low co-pay, typically around $1-$1.50 a day. Unfortunately, some patients are left to pay the list price due to either the insurance plan design or lack of insurance. We are committed to actively working with the stakeholders in the healthcare system to find suitable and sustainable solutions to this problem.
However, I would like to underscore that any person in the U.S. in need of insulin can buy Novo Nordisk human insulin for around $25 per vial, which corresponds to a daily treatment cost of a couple of dollars. As a result, nobody should go without insulin due to lack of affordability. While human insulin is not the latest generation of insulin, it is indeed a high-quality, effective medicine, which actually accounts for more than 44% of all the insulin we sell globally. Around 500,000 Americans are using Novo Nordisk human insulin through our affordability programs. In conclusion, my vision is that Novo Nordisk, during my tenure as CEO, will have solidified its position as the world's leading diabetes care company, that we have become the world's leading company within medical treatment of obesity, and that we are among the leading companies in hemophilia.
We should also be recognized by our employees, the patients we serve, our shareholders, and other stakeholders as an outstanding company, both for what we do and how we do it. I thank you all for your support. I'll now continue and present the annual report. The electronic annual report for 2018 was available 1st of February 2019, together with the financial results for 2018 and together with outlook for 2019. The printed version was forwarded on the 22nd of February 2019 to all shareholders who so wished, and I hope that those of you who need it have taken a copy at the entrance. Let's start by looking at the financial highlights of the consolidated financial statement.
We ended 2018 growing sales by 5% in local currencies, which was in the top of the range of 2%-5% sales growth guidance we had communicated in the beginning of the year. Operating profit increased by 3% in local currencies, which was within the 1%-5% guidance range. Operating profit increased by 6% when adjusting for severance cost and the priority review voucher for oral semaglutide. Let's have a look at the cost development. Cost related to production was flat in Danish kroner, resulting in a gross margin of 48.2%. Sales and distribution cost increased by 7% in local currencies and by 4% in Danish kroner. The development reflects higher promotional activities in North America Operations and International Operations to support Victoza, Saxenda, and the launch activities for Ozempic.
Research and development cost increased by 8% in local currencies and by 6% in Danish kroner, reflecting higher cost for both research and development, as well as the expense of the priority review voucher used for oral semaglutide. Administration cost increased by 7% in local currencies and by 3% in Danish kroner. The high administrative cost were impacted by severance-related cost. Operating profit increased by 3% in local currencies and decreased by 4% in Danish kroner. Net financial items showed a gain of DKK 367 million compared with a loss of DKK 287 million in 2017. This development reflects a gain for the full year 2018 on foreign exchange forward contracts hedging, especially the US dollar, partly offset by the cost of hedging due to the interest rate differentials versus the Danish kroner. The effective tax rate for 2018 was 18.9%.
The effective tax rate is impacted by non-recurring changes in tax provision related to settlement of international tax cases covering multiple years. Furthermore, net profit increased by 1% and earnings per share increased by 4%. The balance sheet total increased by DKK 8.4 billion to DKK 110.8 billion from the end of 2017 to the end of 2018. The increase in total assets is primarily driven by noncurrent assets due to an increase in property, plant, and equipment, primarily due to ramp of diabetes production investment in the U.S. and high investments in intangible assets. Free cash flow was DKK 32.5 billion in 2018 and showed a flat development compared to last year and reflects increased investments in property, plants, and equipment, as well as investment in intangible assets, offset by timing of rebate payments in the U.S. and higher net profit.
This was the presentation of the profit and loss statement and balance sheet. Helge will now describe the proposed returns to shareholders for 2018.
Thank you, Lars. Novo Nordisk has in 2018 delivered on our guidance for sales growth and operating profit and achieved important research and development milestones, especially in the completion of the PIONEER program for oral semaglutide. An important element of operating the business is creating returns to the owners of Novo Nordisk. Novo Nordisk focuses on returning cash to shareholders whenever feasible through both dividend payments and share repurchases. Since 2015, dividends paid to shareholders per year have increased with 10% on average, and dividends have actually increased for 23 consecutive years. In 2018, the dividend payout ratio was 50.6%, which is in line with our pharma peer group. Furthermore, Novo Nordisk has for many years bought back shares to return cash to shareholders, which has resulted in 2% reduction of the share capital every year since 2015.
The proposed total dividend for 2018 will be elaborated upon later in the presentation. Let me also give a description of the remuneration of the executives for 2018. The remuneration is designed to attract, retain, and also motivate the members of the executive management to align the interest of the executives with those of the shareholders. Executive remuneration is evaluated annually against relevant benchmarks of Danish and other Nordic companies, as well as European pharmaceutical companies similar to Novo Nordisk in terms of size, complexity, and also market capitalization. The collective remuneration package of executive management comprises several components, including a short-term cash-based incentive program and a long-term share-based incentive program. The short-term cash-based incentive program is designed to incentivize individual performance. The incentive is linked to the achievement of a number of predefined functional and individual business targets for each executive.
In 2018, the average cash bonus for the executive management was 84% of the maximum cash bonus. The share-based long-term incentive program is designed to promote the collective performance of the executive management and align the interest of the executives and shareholders. Share-based incentives are linked to both financial and non-financial targets. In 2018, Novo Nordisk exceeded the planned incentive target for economic value creation, primarily driven by higher operating profit, lower effective tax rate, and partly offset by unfavorable net impact from currencies. Sales were above the target level in local currencies. All of the non-financial targets were reached. On this basis, 70% of the maximum share allocation will be allocated to the participants. The shares allocated have a three-year vesting period.
The number of shares allocated may be reduced or increased by up to 30%, depending on whether the average sales growth per year in the three-year vesting period deviates from the target set by the Board of Directors. You can see a breakdown of the executive remuneration in the annual report. The remuneration of the executives has been implemented in accordance with our remuneration principles as approved by the annual general meeting. I will close with a few words about what to expect in 2019. In the statutory annual report, we have presented the outlook for 2019 as described on the slide behind me. Sales growth is expected to be in the range of 2%-5% measured in local currency.
This reflects expectations for robust performance for the portfolio of new generation insulin and the GLP-1 portfolio, now comprising both Victoza and Ozempic, as well as a solid contribution from our obesity product, Saxenda. Sales growth is expected to be partly countered by intensifying global competition, both within diabetes care and biopharmaceuticals, especially within the hemophilia inhibitor segment, as well as continued pricing pressure within the basal insulin segment in the U.S. Furthermore, sales will be negatively impacted by approximately DKK 2 billion due to legislative changes to the U.S. Medicare Part D coverage gap. Operating profit growth is expected to be in the range of 2%-6% growth measured in local currencies.
The expectation for operating profit growth reflects the outlook for sales, and given the appreciation of the U.S. dollar and the related currencies versus the Danish kroner, reported sales growth is expected to be around two percentage points higher than the local currency level, and reported operating profit four percentage points higher. Furthermore, based on the updated accounting principles for leases and the investment level, the long-term financial target for operating profit after tax to net operating assets has been adjusted from 125%-80%. The target for cash to earnings has been adjusted from 90%-85%, reflecting the investment level. The target for operating growth remains unchanged. This concludes my presentation. Thank you.
Now the shareholders have the opportunity to ask questions or to comment on what we have been hearing, including the annual accounts. The first speaker will be Claus Berner Møller from ATP.
Thank you for the floor. My name is Claus Berner Møller, and I represent ATP. I would like to begin by thanking for the report. The performance in 2018 for sales growth measured in local currencies was 5% and in the very high end of the outlook of 2%-5% from the beginning of the year. This is very satisfactory when we take into account the negative price pressure on insulin products in the U.S. and the fierce competition in the haemophilia area. The growth originating from the GLP-1 diabetes products, Victoza and Ozempic, the obesity product Saxenda, and some of the new insulins will deliver the growth.
In 2019, the sales development in diabetes and obesity still looks promising because of the GLP-1 products, and I believe these products will be the main reason why Novo Nordisk will reach the growth expectation of 2%-5% in local currency. On the other hand, funding the Medicare Part D coverage gap and presumably the sales from the Biopharm business will be a drag. I would like to emphasize that I think 2018 was a year where we saw the right corrective actions come into place, and I am satisfied with the development in diabetes and obesity. On the other hand, the Biopharm business has seen a decrease in sales for several years, illustrating the lack of breakthrough innovation. In order for Novo Nordisk to become successful in the Biopharm business over the coming years, the company needs to expand leadership in haemophilia and other therapeutic areas.
I appreciate the new, more aggressive attitude regarding R&D, collaborations, and acquisitions, but the company has not succeeded in making a transformative acquisition in Biopharm. I would like to ask the following question: When and can we expect a more positive financial development in Biopharm? Last year at the general meeting, the proposed change to the remuneration principle was approved, and ATP supported the proposal. On the other hand, ATP also said that the total salary to the CEO is at the top end in Scandinavia and other countries in northern part of Europe, which is the correct benchmark.
In 2018, the fixed base salary for the CEO increased to DKK 10.7 million from DKK 8.5 million, and is still below the fixed base salary paid for the former CEO. The maximum total remuneration, which is the total salary to the CEO, if he achieves all the goals, is around DKK 50 million, which is a higher maximum total remuneration than the former CEO could receive. ATP still support the salary to the CEO if the bar for getting the maximum long-term incentive to be a stretched target and because of a clear alignment between the chosen key performance indicators and the shareholders. Once again, I wish to remind the board of directors that it is a very high salary, and that the internal social cohesion in Novo Nordisk should not be damaged.
Finally, I fully support the strategy. Novo Nordisk should perhaps be more brave in the Biopharm business. In diabetes and obesity, the future looks very promising when oral semaglutide enters the different markets in 2019 and 2020. I expect Novo Nordisk to be a fast-growing company again in a few years. I just want to wish Novo Nordisk and their employees all the best for 2019. Thank you.
There was two very specific questions, which I'll invite the chairman to answer. After the chairman, it will be Michael Thøgersen from the Danish Shareholders' Association.
Thank you, Claus, for your important question. I can just assure you that Biopharm is high on the agenda of the board of directors. Returning Biopharm to growth is also one of the strategic priorities in the Novo Nordisk organization. This part of the business needed more leadership, so when Jesper exited the CFO position a year back, he has provided leadership to the Biopharm business that I think have secured more energy around the business. Jesper and his team, I think, has achieved a lot during the year. We are making progress, and we would like to make even more progress. We think there are more opportunities with the products we already have in the markets by being better at capitalizing on the opportunities of the products. We also are making good progress in the internal pipeline that we have in Novo Nordisk.
On the M&A side, or in how we source in products, we have decided to embark on a strategy where we look more outside the company, complementing what we are doing internally. We have had a couple of opportunities that we have succeeded in, but we have not yet made a significant acquisition or alliance as you have been discussing. We are continuing to look at opportunities to complement this part of the business. In terms of 2018 and a reflection on that, I think we have made good progress. Broadly, the sales is flat, so I think we have turned the tide. There is more to do. On executive compensation, this is a difficult, challenging topic for all companies.
I think the balance we have to find is to develop and mature a system where we can be competitive in terms of attracting and retaining and motivate the best talent wherever they are in the world, because Novo Nordisk is a global company, and unless we can compete for the best talent, we will not win in the market. At the same time, we need to be conscious of the fact that the system we have need to be justified with all our stakeholders, and also be justified and understood by the society in general. There is more to do in this area. Therefore, the board has decided that during this year, we will work on trying to evolve our system in consultation with the shareholders so that we can present, hopefully, a new platform, and new principles at the annual general meeting next year. Thank you.
The next speaker will be Michael Thøgersen from the Shareholders' Association. While you come up here, I would like to know if anybody else wants to speak afterwards. I've noted Bjørn Hansen. Yes, and there are two.
Good afternoon. Yes, my name is Michael Thøgersen, and I represent Danish Shareholders' Association. Many of our members have shares in Novo Nordisk. I would like to comment on the financial results for 2018. The numbers are very high. They are also very stable. A net sales of DKK 112 billion, a net profit of DKK 18 billion. I could actually copy this statement from last year. Is this good or bad? Well, if you speak of bonds with fixed interest rates, this stability is to be expected. However, I do not consider Novo Nordisk to be a bond. Yes, I realize that competition among the three major players in the field is fierce, and the infight with the middlemen in the U.S. is unprecedented. However, Novo Nordisk is in a growing market. Unfortunately, one might add, and as a stockholder, I would expect some growth in the future.
Ozempic was approved by FDA in 2017 and brought to the market in 2018. A one-week injection instead of a daily injection is a major enhancement of the quality of life of patients. I suppose this will erode the market for Victoza. Will there still be a market for Victoza? Most people are very conservative. Once a treatment has shown its success, people tend to stay with it. A few comments on this would be welcome. A similar question could be asked about the oral GLP-1 medication. Will it erode the market for Ozempic, or do we speak about different patients with different needs? Novo Nordisk has had some bad publicity in the press lately. It is claimed that many patients in the U.S. cannot afford the medication due to the high increases in prices. This is, of course, very unfortunate.
However, the system in the U.S. is very different from ours here in Denmark. It is mostly based on insurance. I find it difficult to judge what is right and what is wrong from the press. So that we know that people do not have to suffer from lack of traditional insulin. What I would encourage you to make sure that not just the people in this room, but the public in general, especially journalists, know about the ups and downs, about the pros and cons of this. Again, bad publicity is easy to get. Another issue is the layoff of 1,300 employees globally. I'm not claiming that this is a wrong decision. I do not know all the details. However, it is a fact that bad publicity tends to stick like glue.
It's easy to get, it's difficult to wipe away. The layoff of 1,300 employees takes a lot of explaining in order to ensure that the public knows it is a natural development and not a sign of weakness, market disadvantages, or inadequate planning and foresight. I've learned that it's mostly due to changes in the research and development sections. R&D has not performed the way it was only a few years ago. However, a commentary would be welcome. To stay in that line, the remuneration of the executive management in total has risen from DKK 122 million to DKK 182 million, an increase of 49%. I'm not saying that the executive management has not done a good job and performed according to the plans and met the targets as they were defined by the board of directors and subsequently confirmed by the annual general meeting.
I notice that the management team has been expanded. However, net sales and net results have been unchanged for three consecutive years. I would have expected an increase in remuneration of this significant size to be somewhat reflected in sales increase and/or in net profit increase. Finally, a word about legal actions. They come in two different groups: side effects and disappointed investors. Speaking about the latter, I would like to hear the opinion of management to the following. If disappointed shareholders win in the U.S. court and are being compensated, and other shareholders who are not participating in the court case are not being compensated, then these other shareholders will suffer a loss. Does this mean that every shareholder should join in and be part of the court case just to make sure?
In Berlingske of January 2, the management of Novo Nordisk gives the impression that the possible compensation to disappointed shareholders will be of minor importance, but one can never know. Finally, I wish you all the best for 2019. Thank you very much.
I'll invite the Chairman to answer the questions. Following the Chairman, it will be Mr. Bjørn Hansen. Lars Fruergaard.
Does that mean that I'm now the Chairman? No. Thank you to Dansk Aktionærforening and Michael Thøgersen for again being here and supporting Novo Nordisk. I'll cover the first questions. The first question was related to our growth. You're correct that measured in reported terms, growth is flat. Measured in local currencies, we did actually grow our sales by 5%. We saw some negative currency impact here. When we guide for 2019, we expect a growth of 2%-5%. In 2019, as Helge alluded to, we actually expect a positive contribution from currencies, so 2 percentage points above that. The underlying business in Novo Nordisk grew in 2018, and we also expect that it will grow in 2019. To your question on Ozempic, whether Ozempic will cannibalize Victoza, and again, whether oral semaglutide will eventually cannibalize Ozempic.
Today, our Victoza business is doing well because the GLP-1 market is growing. We see a significant shift away from the once-daily injection, being Victoza, to the once-weekly injections. With a stay time of around three to four years, those patients who today start on Victoza will eventually migrate out. We see a gradual conversion to the weekly product, Ozempic, and that is a part of our plan. Again, the underlying dynamics of the GLP-1 class is very positive in the U.S., growing more than 25%. It's a growth of the market that matters the most for us. On oral sema, this is the first time in history that it has proven possible to actually put a large molecule into a tablet. This is indeed breakthrough science from our colleagues in R&D.
When you look at treating type 2 diabetes, patients typically start on diet and exercise. They go on tablet-based medicines. When that is no longer enough, you go on injectable treatment. We see a very large opportunity when we launch oral semaglutide, because in the tablet, you get the same efficacy like you have in Victoza today. A very easy prescription for a physician to give to a patient. When oral sema is no longer enough, you can actually go to Ozempic, which is, say, the injectable version of the same molecule, which works even better. We see a distinct position for both oral semaglutide and Ozempic, and we believe we can support these patients with very efficacious type 2 diabetes treatment for a long period of time.
I'm glad you like my explanation about the U.S. affordability issues. I'd just like to once again underline that when we look at the U.S. population of people with diabetes, nine out of 10 have good access to our products and other products. That is based on the rebates we pay. By the rebates we pay, we gain formulary access, and patients who have healthcare coverage, they get the medicines. We're talking about those who unfortunately have ended up with low-quality insurance where there are high deductible elements. In Danish, selvrisiko, the first few thousand DKK you pay yourself. Even though that we have already paid rebates to the supply chain in the U.S., the middlemen, when those patients go to the pharmacy and pick up their insulin, for instance, they do not get access to that rebate when they are under their deductible, selvrisiko.
There's a recent proposal in the U.S. that would force those rebates to go to the patients, and we support that because it would mean that all patients would have access to the rebate we pay and thereby a significant lower drug cost. As explained before, there is a solution today where all Americans can get affordable insulin from Novo Nordisk. If you have DKK 25, you can buy a vial of insulin. For most Americans, that will bring the daily treatment cost down to DKK 1 to DKK 2. I would claim that all Americans can get insulin from Novo Nordisk. I would also like to follow up on your encouragement of getting this message better out. There are some journalists over here. I hope they make some good notes. I'll make sure to engage in getting that story out in a good way.
To the point of laying off around 1,300 good employees, this is something we do not take lightly in the company. We were in a situation where we saw a significant change in our business environment. We had to make some tough prioritizations about how we allocate resources. We have fantastic growth opportunities in Novo Nordisk. It's really important that we make the reallocation necessary to make sure that we back Ozempic, back oral semaglutide with the resources that's required to make sure it gets to the patients, and we do well in the markets. Also, Mads Krogsgaard and his team has done an update of our research strategy, meaning that we need to aim for higher level of innovation, and also we need to build new capabilities, new competencies, install new technologies, so we can develop breakthrough medicines also in the future.
That has meant that we needed new skills and extra resources. That meant we unfortunately had to reduce in other areas. I leave the remuneration topic to Helge and just comment on the legal aspect. It's correct that there are a number of legal cases coming out of the U.S. We do not agree with the claims that have been made against us. I hope you understand that when we are in an ongoing litigation, we cannot start making detailed comments here because that would actually be used as part of the case. We believe we have a good position, but we can unfortunately not comment on the specifics in detail. Thank you. Over to you, Helge.
Thank you, Michael, for your question. To remind the participants at the meeting, the question was on the total increase of remuneration from 2017 to 2018 of all the executive team. Just to say again that the remuneration system is developed to attract and retain top talent all around the world. Secondly, and importantly, we are benchmarking the compensation system in Novo Nordisk with relevant Danish, Nordic, and European companies. The primary reasons for the increase for the total team from 2017 to 2018 is basically three factors. One is that we increased or changed the long-term remuneration scheme approved by the shareholders last year. Secondly, there are more members of the executive team this year than last year.
Finally, since there have been a number of new executives on the team, there is phasing of salaries of some of these individuals that also play into it. Those are the three main factors explaining the increase from 2017 to 2018. Thank you.
The next speaker is Mr. Bjørn Hansen, and I also noted the lady down here thereafter. Anybody else who would like to speak later? Kjell Beyer, I have noted.
Thank you for the word. I understand English, German, Norwegian, Swedish, and I speak in Danish. Thank you very much for the report and your report here today. Helge Lund, we can't really hear his Norwegian. His English is very good. He's easy to understand. Lars Fruergaard, an excellent manager. A few days ago, I proposed at Danske Bank to put a ceiling, to put a cap on remuneration. I'd like to propose DKK 2 million per month. That's DKK 24 million per year. A.P. Møller, they've already changed their remuneration policy. You do deliver very well. You make a good living. That's fine. These crazy things we've seen, Nets, DKK 600 million. Come on. Then what you do is maybe we'll start up here instead, Nets. No, now we've got Brexit, so we're not going to do it. The CEO was still there.
There was something there with Nets that wasn't good with the company Nets. It is very negative. Novo is not a negative company. It's a super company, really doing well. I've sent some questions to you. 10 days after, I got the first replies. There could be things you couldn't really reply to initially, but you're good people. Really good people. I have to ask you, so as not to see price drops of the share. In Berlingske, the newspaper on the 1st of January 2016, DKK 1 billion and 40 million was the value of the Novo shares. Few months later, there'd been a share drop, price drop, so that every one of the 5.5 million Danes, if they had all had shares, would have lost DKK 78,981. I haven't translated that into EUR or U.S. dollars. Sorry about that.
We want to avoid things like that because there is a fight in the market. It could be political, it could be financial, it could be a matter of restructuring. I would just suggest that you should cooperate with Coloplast or others. The same with Ambu, with the company Ambu. There are also other companies that are making good progress in Germany. Those are those working in renewable energy. They know about you. They go and take a look at the price for the share. This is not renewable energy. We've heard so many good things about Novo. The people I talked to went to check out your share price and took a look at your company. Lars Fruergaard and Novo Nordisk, you did send me material in Danish and in American English.
I just thought you should send about 10 pages to everybody explaining the potential in the European Union. We need to stabilize so we do not have more than 50% of our revenue in the U.S. All of a sudden, maybe our dividend will go down because the banks have to get some of the money if there are problems in the U.S. I don't know. There was one more thing I noted, which was that at Novo Nordisk, via Novo Holdings, which is also a main shareholder of Chr. Hansen and Novozymes, two other really good companies. Novo Holdings, that's really nothing. I shouldn't have to go to the authorities to get insight into information about Novo Holdings. You're doing very well. You're giving money back to society, but it would be nice to know more about that.
Perhaps, sometimes what we've seen, unfortunately, we saw that recently, a big loss. Well, not a loss yet. Half of DKK 8.7 billion has disappeared through the attempt to make an acquisition in the U.K. I send in some questions, I'm not going to read them out, but I would hope that that situation could be corrected. Our British friend who is also on the board here. It is really linked to all of it, the thing is that Novo Nordisk should try and protect its share price. Thank you very much for your attention.
While the Chairman and the CEO enjoy that they are good people, I'll invite the next speaker up here so we take a couple of questions. It was a lady on the Oh, here. Yeah.
Hello. Thank you for letting me have the word. I'm Susanne Roel, retired in 2018 after more than 43 years in Novo Nordisk. First, a short background for the question. When looking at standard attrition rates in the pharmaceutical industry and looking at the pipeline as stated in the annual report, that pipeline is by no means large enough to support the long-term growth intention of the company. R&D strategy has changed, lastly, the question is, how many years do you think it will take you to rebuild a pipeline big enough to sustain the long-term intended growth?
That was specific questions. Before I give the word to the Chairman, I think Keld Bayer would like to speak, and we'll get your questions and comments, too, then I'll ask the Chairman to answer.
Thank you. I am Keld Bayer. First of all, I just want to congratulate you with a good result. You can't always grow all the time. Sometimes you reach the ceiling, right? For how much you can grow. I think it's well done that you can maintain a good result and a good revenue. The worst thing that can happen is a decline, and you haven't experienced that. In the financial statements on page 17, you are dealing with the environment quite briefly. I don't know how much it costs Novo to take part in all this CO2 thing that's really so much debated. There are really other threats than CO2. Threats that help create the CO2 problem. There is geoengineering or the chemtrail. Those are the planes up in the air, these long white stripes that you see. This is not water, it's nanoparticles. It's toxic stuff.
It's aluminum, it's barium, and it's lithium and other substances that they're actually spraying, and they ruin our health. It goes to our brain. More and more people get dementia. My question to you obviously is, the things that you do here, I mean, that they do they also influence people with diabetes? All this geoengineering and all that, does that influence people with diabetes? Another threat is 5G, the 5G network. They want to put up these masts everywhere that give radiation. Can we tolerate that? What about people that have diabetes? Can you get diabetes because of all that stuff? I'd like to show you this little slide. It has to do with chemtrail. It's a plane spraying substances.
Here you can see they have these tubes that they use to spray the chemtrail, and here is a plane full of containers with the toxic substances they are spraying out into the air. We really need to discuss that here. I asked Jesper Theilgaard at a meeting. "That's conspiracy theory," he said. That's true. Whatever CNN is not writing is conspiracy, isn't it? Now, fortunately, there are other people. President Trump, no, let me say. He has written that he wants to stop the chemtrail, while Jesper Theilgaard, the meteorologist says it's a conspiracy, but Trump says, "Yes, it does exist." NASA, in another video, they have also admitted that it is going on. I have to say, where is the Danish society here? Is this something that Novo could address?
Could it influence people that you're responsible for that have diabetes and so on and so forth? Should that be addressed? Is there a threat here that we really can't see the consequences of? I would like to hear from Novo, whether you understand this and you know what's going on. Also with the 5G radiation, there'll be these masts, very many of them that will be put up, and the chemtrail. Could there be things that are very damaging to our health? If you have any knowledge about that. Thank you very much for your attention.
Difficult questions. Will it be the chairman or will you hand that to your CEO?
Thank you. I am not sure all were questions or statements. I will try to make some comments to them. Obviously, we are not planning for decrease in share price or the like. There was some consideration about collaborating with different types of industries. We focus in the pharmaceutical industry where we actually do more and more collaborations. I believe they will help us to sustain growth. To Susanne Roel's question on how long time it will take to build the pipeline. I would like to start by saying that I believe we have a late-stage pipeline and also products on the market now to drive growth in Novo Nordisk for many years. I also agree with you that as we grow to a large company, it takes more and more to replace that.
That is exactly why we have refocused our research strategy to make sure we get an appropriate level of innovation height in our products, because when you come with significant innovation, you have a higher likelihood of getting to the market and having a big impact in the market. Of course, there will be attrition while doing this, so that will take several years to build the products from research that we are going to sell to the market. That is typically, say, a 10-year journey. I believe we have a good portfolio both of launch products and also ideas in the early phases. On the environmental impacts, to my knowledge, there is no direct link to diabetes on the ideas that Keld Bayer bring up. Unfortunately, I do not think it is the diabetes angle that is going to move this on the agenda in Denmark. Thank you.
I have noticed no more wishes for speaking. Is that correct? There is one more. Please come up here. While you come up here, please let me know if any more speakers would like to get up. Otherwise, I will close the list.
I am Steen Møller. I would like to add something to what Bjørn Hansen said. I have seen the expression morally repugnant. I have seen that in the paper recently, and that is what comes to mind when I see these fee figures, not because I do not think that our CEO is worth his pay of, Bjørn Hansen proposed DKK 2 million a month. If our CEO is to gain more, why not buy shares? You get a dividend and you bucket shares, you get the price increase, and you have the advantage of knowing what is going on in the company. The rest of us just have to guess. Buy shares. If you buy shares, I can agree to your getting a much higher fee.
Would that give a comment from the chairman?
As I said earlier, the compensation program that we have in Novo Nordisk is a balance of base pay and short-term incentives, which is cash-based, and a long-term incentive program that is based on shares. There's also an obligation for the executive to own a certain part of a multiple of their base salary in shares. The executive team in total are heavily incentivized with the shareholders to make sure that the company develop in the best possible way. Thank you.
No more speakers? If that is the case, I close the speaking list. That means that item 1 has been finished, that the general meeting take note of the report that we have listened to. The second item was the presentation of the statutory annual account for 2018 that have been presented and also discussed. Any other issues in that respect? Otherwise, I expect that we can consider that to be adopted. That brings us to item number 3, which is actually two proposals. There is a tradition here for having a preliminary approval of the year fees for the board of directors for the coming year, and then a final approval the next year when the year has passed. That means that we have in 3.1 a question with regard to approving the actual remuneration for 2018, which was actually pre-approved a year ago.
In 3.2, approval of the level of remuneration for the board of directors for 2019. I call for the chairman.
This brings me to the item 3 on the agenda, approval of the actual remuneration of the Board of Directors for 2018, and the remuneration level for 2019. The remuneration consists of a fixed annual base fee, a multiplier of the fixed base fee for the Chairmanship, and the members of the Board committees, and fees for ad hoc tasks, and a travel allowance as showed in the slide behind me. At the annual general meeting in March 2018, it was decided to increase the annual base fee for Board members from DKK 600,000 to DKK 700,000. The actual remuneration for the members of the Board for 2018 amounted to DKK 17.2 million, and corresponds to the remuneration level approved by the annual general meeting in March 2018. You can see a breakdown of this amount in the annual report.
The remuneration of the Board has been implemented in accordance with our remuneration principles and as approved by the annual general meeting last year. On this background, I propose to the general meeting to adopt the actual remuneration for 2018. The remuneration level for 2019, it is proposed that the Board fee continues to be composed of a fixed annual base fee for the members and an additional fee for additional tasks, such as committee work. Furthermore, the Board is proposing to keep an identical remuneration level as for 2018. The travel allowance should, however, be denominated in DKK instead of EUR, but at an identical level as in 2018. Furthermore, the proposal on remuneration reflects that the Board of Directors has decided that the Research and Development Committee should be a permanent committee, reflecting the importance of building a long-term product pipeline for Novo Nordisk.
The proposed remuneration level is as shown on the slide behind me. I propose that the general meeting adopts this remuneration level for 2019. With this, I will give the floor to the Chair of the Meeting.
Questions? That is not the case. That means that I will consider both proposals to be adopted. That was three. That brings us to a very interesting item 4, which is the distribution of dividend, and I hand the floor back to the Chairman.
This brings me to item 4 on the agenda, resolution to distribute the profit. In August 2018, Novo Nordisk paid an interim dividend of DKK 3 per share. The board proposes that the final dividend for 2018 is DKK 5.15 per share to be paid in March 2019. The total dividend for 2018 is DKK 8.15 per share. The total dividend increased by 4% compared to 2017, corresponds to a payout ratio of 50.6%. No dividend will be paid on the company's holding own shares. Moreover, the board of directors approved a new share repurchase program for up to DKK 15 billion to be executed over the course of 12 months, starting February 2019. The total program may be reduced in size in case of a significant bolt-on acquisition during 2019.
With that, back to you, Claus.
Questions, comments? I'll consider the proposal to be approved, that was item 4. That brings us to item 5, which is the election of members to the board of directors, including the chairman and the deputy chairman, the vice chairman. In accordance with articles of association, the general meeting have to elect between 4 and 10 members, they will be elected for one year. The general meeting will elect the chairman and the vice chairman directly. It's considered to be good corporate governance to reflect the results of self-evaluation in the board at the general meeting, that will be briefly described by the chairman.
Let me start with a few words on the collaboration in the board. We conduct a self-evaluation every year to see how we then perform. The self-evaluation includes all members of the board of directors and of the executive management team. In 2018, the self-evaluation was facilitated internally and evaluated topics such as board dynamics, strategy, executive succession, and board composition, to mention a few. In addition, each individual member of the board and executive management is provided with feedback from all other board members and executives on their individual performance. The self-evaluation revealed, in general, good performance by the board and good collaboration between the board and the executive management. The evaluation also resulted in a continued focus on the corporate strategy process, including the implementation of the research and development strategy, sourcing of external innovation, and commercialization of the company's products.
Furthermore, we have an increasing focus on the company's development of people, culture, and leadership. Over to you, Claus.
As mentioned, the general meeting have to elect between four and 10 members. Presently, the board of directors consists of eight members appointed by the general meeting, plus the four members appointed by the employees of the company and of the group. The proposal, as it follows from the documentation and the notice, is now to elect nine members to the board of directors for one year. With regard to all the proposals which will be mentioned now, I can make a reference to exhibit one, to the notice to the general meeting, where details with regard to other executive positions, board positions, is mentioned. First of all, it is the proposal of the board that Mr. Helge Lund is reelected as Chairman of the Board.
It is also the proposal of the board that Mr. Jeppe Christiansen is reelected as Vice Chair of the Board of Directors. Besides that, the board proposes to reelect Brian Daniels, Andreas Fibig, Sylvie Grégoire, Liz Hewitt, Kasim Kutay, and Martin Mackay. In addition to this, the board of directors proposes the elections of Laurence Debroux. I will give the word back to the Chairman to elaborate on the proposal.
Laurence Debroux is a French national and is Group Financial Officer and Executive Board Member of Heineken, based in the Netherlands, and member of the board of Exor and of HEC Paris. Prior to this, she was Chief Financial Officer at JCDecaux in France, and before that, she had a number of different positions at Sanofi-Aventis. You can see her CV on the slide behind me. Her detailed qualifications are also described in the notice convening this general meeting, and we recommend the election of Laurence Debroux due to her significant experience with financial and accounting practices, extensive global experience within the pharmaceutical industry, and experience from executive positions in major international companies. The selection process was undertaken by the nomination committee and with the assistance of an executive search firm.
Several suitable candidates were identified, it was a requirement that the diversity was taken into account with regard to the experience, background, gender, and origin. If Mrs. Debroux is elected today, the board will consist of six male and three female shareholder elected members and two Nordic and seven non-Nordic shareholder elected members. Consequently, the board has fulfilled its ambition of having at least two shareholder elected board members with Nordic nationality and at least two shareholder elected with nationality other than Nordic. The board has also fulfilled its ambition of having at least three shareholders elected board members of each gender, they will continue to work on securing a diverse board and in coming period review our diversity ambition. Thank you.
Comments? Other candidates? That does not seem to be the case, I'll congratulate you, the nine, with the reelection and the election for the coming year. In addition to the members of the board appointed by the general meeting, as mentioned, the employees have appointed members to the board of directors, that takes place every four years, that was the last time in 2018. As you can see behind me, it is Mette Bøjer Jensen, Anne Marie Kverneland, Thomas Rantzau, and Stig Strøbæk. Congratulations to the full board for the coming year. That brings us to item number six, which is the appointment of the auditors, where the board proposes reappointment of PricewaterhouseCoopers. Now the rule is that it has to be mentioned, at least in the notice, but also here, that this follows a recommendation from the audit committee.
The audit committee declare that they have not been influenced by third parties, nor subjected to any clause of contract limiting their choice. Normally, there are no other candidates for this item here, I'll still ask you. Otherwise, I'll congratulate PwC. They are present here with another year of hard work. That brings us to the item number seven, which is the proposals by the board of directors. Here we have a few. We have four items. The first three I will go through, they are purely technical in my opinion, I'll just do it briefly. The first one, 7.1, is a proposal to reduce the share capital with DKK 10 million.
That is more or less just a question of bookkeeping because it's a cancellation of shares which have been repurchased on the market as a part of the repurchase program, which have been described before, it's what the company have been doing for several years. Any comments? It has to be approved with a two-third majority, we also have to have a quorum, which we have. No comments. I consider it to be approved. The next one is item number 7.2, which is an authorization to repurchase own shares, basically, all listed companies in Denmark ask for a authorization to be able to repurchase own shares. Here, that is also the case. The company only asked for it for one year.
It could be for five years, but only asked for one year, considered to be good corporate governance, and it's being limited to 10% of your share capital. Besides that, there is a total cap on the acquisition of also 10% and also on the purchase price, which should be following the quoted price plus minus 10%. Any issues, questions? Otherwise, I consider that to be granted. That can even be done with simple majority. The next one, 7.3, is authorizations to the Board of Directors to increase the share capital. Here, there are in the articles of association, standard authorizations to the Board. There are three. There is one that could be used to issue shares to the employees. There's another one that can be used to issue shares with preemptive rights and a third one without preemptive rights.
The wish is to have them renewed, to have them reduced, so they only count for 10% of the new share capital after the reduction, and all for a two-year period, where the maximum under the law is five. Any issues? Otherwise, I consider them all to be approved with more than two-thirds majority. That brings us to item number 7.4, which is the changes to the remuneration principles, I would like to see the Chairman here.
We have reviewed Novo Nordisk remuneration principles and proposes two adjustments. First adjustment is in relation to the executive management. Novo Nordisk has, for many years, been able to reclaim incorrect payouts of incentives based on misstatement of data. In order to align with the Danish recommendation on corporate governance, the Board proposes that should be possible to reclaim incentives regardless of whether the misstatement originates due to willful misconduct or gross negligence. Furthermore, in relation to the Board, it should be reflected that the Research and Development Committee has now become a permanent Board committee. Thank you.
The full document is attached to the notices for the meeting here as exhibit two. Any comments? Otherwise, I'll consider it to be approved with a simple majority, which is required. That brings us to item number eight, which is a shareholder proposal from Mr. Frank Aaen, I understand from Mr. Frank Aaen and Peter Veldlon that it will be Mr. Peter Veldlon motivating the proposal. Thank you for the floor.
Thank you. It's not every day that Berlingske Tidende in a leader criticizes a Danish company for having too large a profit. A profit rate of more than 40% is difficult to digest, even for a conservative newspaper, and especially because this exorbitant profit is based on reductions in the healthcare system. In the United States, we have seen more than 60% increase in general, NovoLog has been increased 400% to 500%. Consequences for patients have been fatal. A study carried out by Yale researchers has shown that one quarter of American diabetics have rationed their medication. There are reports of deaths caused by the lack of possibility of buying medication. An American diabetes patient has talked about his experiences in having to ration your medication.
He said, "When you can't afford the one thing that keeps you alive, it feels like your worst nightmare is coming true. I've never in my life felt so helpless." We have to admit that it's not only Novo's fault that the prices of medication are skyrocketing and patients can't afford them. The healthcare system in the paradise of liberalism leaves a lot to be desired and with its insurance-based system. It's also true that Novo offers elderly or poor patients lower prices through Walmart. Even in the Danish system, we must see that a large part of the extra money given to the healthcare system goes directly into the pharma industry, of which Novo is part.
Novo is one of the pharma companies which has the highest profit rates, this means that resources of the healthcare system are not spent on patients or on staff, but they go to the pockets of the shareholders. Yes, of course, there are costs related to developing, producing, and selling drugs. That's true of all productions. Even when everything has been paid for, there's still a profit of 40%, money is flowing rapidly into the pockets of you shareholders, while at the same time, we have diabetics who cannot afford the medication they need, we see that healthcare personnel are being put under irresponsible pressure, the whole healthcare system is being threatened. That is not just. It would be wise if you shareholders listened to this leader article of the February in Berlingske Tidende.
Novo shareholders should face the fact that it is possible to live with a profit margin of less than 40% and still be able to develop new and necessary medication. That is why I recommend that you vote yes to our proposal number 8.1.
I appreciate the interest in Novo Nordisk shown by the shareholder and also the concrete proposal. However, we do not support the proposal from the board. Pricing of Novo Nordisk's pharmaceutical products is agreed with healthcare authorities and buyers around the world in competition with other pharmaceutical companies. The agreed prices reflect the innovation, clinical benefits, and risks that has been undertaken by Novo Nordisk in developing the pharmaceutical products. As Lars mentioned earlier, affordable medicine is important for Novo Nordisk. We have ensured that Novo Nordisk human insulin is available at affordable prices through differentiated pricing policy covering 125 million people with diabetes and through affordable options in the U.S. It is important for us to drive the business in a sustainable way.
To ensure people with chronic diseases have access to Novo Nordisk medicines, we need to negotiate prices with purchasing organizations in the U.S. and with health authorities in most countries around the world. The profit Novo Nordisk generates is used to finance innovation of new medicines through research and development and capital expenditures. What is left is distributed to shareholders through dividends and share buyback. We believe that the earnings generated should be returned to the shareholders to allow our shareholders to make their own choices of how the returns from their ownership in Novo Nordisk are used. In 2018, 84% of earnings were converted to cash and returned to the shareholders through dividends and the share repurchase program. In 2018, the dividend payout ratio, as I mentioned earlier today, was 50.6%, which is in line with our peer group also.
We bought back shares worth DKK 15 billion, equivalent to 2% of the outstanding share capital during 2018. We thereby returned 105% of the free cash flow generated in 2018 to our shareholders. We believe that the current model is serving our shareholders well. Back to the Chairman. Thank you.
Any other comments? You want to comment again?
Thank you, and thank you for your replies. Just two very brief comments here. It's clear there are costs towards research and development, but you have taken that into account. Medicines are developed that never reach the market. Still, when you paid the costs, you still have a profit ratio of 40%. You mentioned that this is an opportunity for shareholders to choose. Yes, as a health service, we also want to do that. Did you watch the documentary on DR2? "I Failed My Patients" it was called, a documentary. It was nurses and doctors explaining how they have to make completely unreasonable choices. They have to make choices. We too, in the health services, have to do that. We need to prioritize.
One of the low-hanging fruits, one of the areas where we could start prioritizing, will be by saying that we shouldn't pay too high a profit to the pharmaceutical industry, and we are doing that today. That's why I think it would be significant if Novo, as a company, would assume this responsibility and say, "Yeah, this is our contribution towards having a well-functioning health service." Thank you for your time.
I've noted no other comments. Is that correct? No more comments from the chairman. Otherwise, we will go to the votes. The shareholder has asked for a formal vote. We'll show a short video of 45 seconds just to show how you use this nice little electronic thing.
e-voter is your personal ballot that you must use to cast your votes. Your e-voter was registered on your arrival. You can only vote when voting is open, which will be shown on the screen of your e-voter. When voting is not open, any entries you make will not be registered. You must wait until the voting opens. When you want to vote for or against a resolution, you must only use the buttons just below the screen. To vote for, press the button below FOR. To vote against, press the button below AGST. To cast a blank vote, press the button below BLK. Your e-voter sends your vote to the recipient. When your vote is received, you will receive a receipt on the screen of your e-voter showing how you have voted.
It is important to make sure that you get the receipt, as this is your confirmation that your vote has been received. It can take up to 20 seconds before you receive your receipt. For as long as voting is open, you can change your vote by pressing a new button. When voting is completed, the results will be presented. If you need help, please contact a representative of the company. Please remain seated and raise your hand.
That's very difficult to understand. Only three buttons are relevant here, the top ones. There is one For and one Against, and ignore the third one, which is Blank. We can open the vote now. Now you can see if you are in favor of the proposal from Mr. Frank Aaen as presented by Peder Hvelplund, you vote For. If you are against as a board is, press Against. You should very fast get a sign that says that you have voted. Does anybody have problems, challenges relating to the voting, I mean? Yes, we have one marking here. I'm sure we'll solve that very fast. We have one more here, and here. We'll solve that very fast. In the meantime, if you have regretted what you voted, you can do it all over again as long as it is open. Anybody who still have an issue?
We have a lady here on the second row. Assistance is on the way. Anybody else? Has it been solved? Are we done? No outstanding issues, because when I close, I can't reopen. We consider the vote to be over now. We turn it off. The light should go out shortly, not in the room, but on the voter. It went out on mine, and now they are calculating over there, and I'll get a result, and we can see it on the screen. As soon as we have that result, we have actually fulfilled the part of the agenda, which is important. The only thing left is miscellaneous at the end, where it's possible to come up here if you wish to do so, but you cannot have any decisions on anything.
I can see that Keld Bayer wants to come up afterwards, but let's get the vote done first. I have it here. Let's get it on the big screen. I think that we can say that it was voted down with 99.61%. That leaves us with miscellaneous. Keld Bayer, I understand you want to have a brief comment.
Yeah. I didn't get much of a reply to the problems I raised. I don't want to blame you. You don't know about chemtrail and 5G. What we're seeing in Denmark is that there is censorship on the internet. There are things that people don't like. Google and YouTube, they delete things. I still have a song about chemtrail on YouTube under my name, Keld Bayer. "Himlen Skød Flue" is the name of the song. It explains what's happening with us when we get all these substances up in the air. We haven't been told why they do it, but there are some very rich people in the world who are trying to get more power than we would want. They're doing strange things, and the chemtrails are one of them. They're trying to make this kind of an umbrella covering the whole globe.
It influences the weather. We don't know what our weather's really like anymore. They're doing that chemtrail. They've been doing that for many years. You can laugh a bit about it if you want, but in California, they had all these big fires, and they've had them because of the chemtrail that they've been doing six or seven years in that particular area. That's why everything got so dry. It's funny. It's where they want to have a railway system. Then you can. The trees are lost, and everything is sort of very dry. There were fires there, too. They can actually sort of manage that via the chemtrail. The aluminum that they're using enters the trees, and the trees are really burnt in the roots. What's that got to do with Novo? Somebody is shouting.
It's got to do with Novo because Novo must understand that there are things happening in the world that could have an influence on our health and where Novo could perhaps take some action. They could make sure the government could take some action, or maybe they could have some medicine is ready.
In regards to your actual questions, there was a clear answer from the chairman that this has no influence on the diabetes situation. My opinion is that it's not relevant for the company here, I don't think it requires an answer. I have seen nobody else wanting to speak, I'll hand over the floor to the chairman to close the general meeting.
I would like to thank all the shareholders for being here today. Furthermore, I would like to thank the chair for the meeting for having guided us very professionally through this general meeting as always, and hereby declare that the general meeting is closed. The shareholders are invited to have coffee in the areas on your right-hand side, and the staff will guide you there. Furthermore, you can also meet the members of the board and executive management there, and you're also invited to stay and attend this informal shareholders meeting that will start here at 5:00 P.M. If you have no admission card, please contact the Novo Nordisk staff at the entrance. Please return the important e-voter and headset at the exit on your right-hand side. Thanks a lot, and bye-bye.