H. Lundbeck A — Earnings Release 2015

Aug 19, 2015

Valby, Denmark, 2015-08-19 07:42 CEST (GLOBE NEWSWIRE) --

-- Lundbeck is initiating a restructuring programme which will reduce the
total cost base by approximately DKK 3 billion with full effect in 2017
-- Lundbeck will restructure headquarter functions and commercial operations
in Europe and other markets which are expected to lead to a reduction of
around 1,000 employees
-- In connection with the restructuring programme provisions and write-downs
at the level of DKK 1.7 billion will be made in the third quarter 2015
-- As part of the restructuring programme a reclassification of DKK 4.8
billion is included as research and development costs in the second quarter
2015. The reclassification is a change in accounting estimate based on
management’s reassessment of certain previously capitalized product rights
-- Financial guidance for 2015 is revised. Lundbeck now expects revenue around
DKK 14.0 billion and core EBIT to be around DKK 0.5 billion. Reported EBIT
is expected to be negative at around DKK 7.0 billion

Valby, Denmark, 19 August 2015 - H. Lundbeck A/S (Lundbeck) today announced a
new restructuring programme in order to significantly improve profitability and
improve the company’s value creation. Lundbeck needs higher profitability to be
able to invest in future profitable growth initiatives leading to better
treatments for patients and secure a competitive return on investment and
thereby secure value creation.

Kåre Schultz, President and CEO said:

“Together with my leadership team, I believe this programme will make Lundbeck
drive sustainable value creation for all our stakeholders. We are aware that
these decisions will affect many of our employees and we will strive to support
these employees as we implement the changes.”

In the past few years, Lundbeck has gone through major restructurings of its
European commercial infrastructure. However, it is necessary to further adjust
the commercial set-up primarily in Europe. Lundbeck intends to emphasize the
focus on the following products: Abilify Maintena, Brintellix, Northera, Onfi
and Rexulti. Furthermore, Lundbeck plans to capture savings through
restructuring of all headquarter functions, further minimize G&A functions at
affiliates and also expand the newly established Business Service Center in
Krakow in Poland. In R&D a number of cost reduction initiatives have been
identified including closure of selected early-stage projects.

Lundbeck expects that this restructuring programme will affect approximately
1,000 employees. Final estimates for programme costs, benefits and headcount
impact in all areas of the business are subject to completion of applicable
consultation processes.

Financial implications of the restructuring programme:

Following the proposed restructuring programme, Lundbeck expects to recognize
provisions for some DKK 1.1 billion for severance payments and restructuring
costs. Furthermore, in the third quarter, Lundbeck expects to recognize
approximately DKK 0.6 billion in impairment loss due to changed management
estimates of certain intangible rights and fixed assets.

It is expected that the programme will reduce the total cost base by
approximately DKK 3 billion in 2017.

When the restructuring programme is finalized, we expect to significantly
improve the company’s profitability and we expect to see positive reported
operating profit already in 2016 with further improvement in 2017. Further
details regarding the financial outlook will be presented in connection with
the announcement of the 2015 Full Year results in February 2016.

Reclassification of product rights

A reclassification due to management’s reassessment of certain product rights
has resulted in a change in accounting estimate for capitalization of milestone
payments, which were triggered prior to receiving final market registration
approval. The reclassification of certain product rights amounts to DKK 4.8
billion which has been recognized in research and development costs in the
second quarter 2015.

Previously, all material milestone payments triggered by an event have been
treated as a change to the fair value of the product rights. They have
therefore been capitalized, and when launched, amortized over the product’s
life cycle. Prior to receiving final market registration approval, there is
significant uncertainty as to whether the product will be approved and
launched, i.e. whether a product right exists at this stage. Consequently,
management now adopts a more conservative approach when these milestone
payments predominantly will be triggered by or relate to research and
development or pre-registration efforts.

The reassessment has not resulted in a change to Lundbeck’s accounting policies.

Financial guidance

The financial guidance for the fiscal year 2015 provided in connection with the
full year 2014 announcement on 5 February 2015 is revised.

For a full overview of Lundbeck’s financial guidance for 2015, please refer to
the corporate release concerning the financial report for the first six months
of 2015 announced on 19 August 2015 (release no. 566).

Lundbeck now expects core profit from operations (core EBIT) assuming constant
exchange rates to be around DKK 0.5 billion compared to the previous guidance
around DKK 0 for 2015. Following the announced restructuring programme,
Lundbeck is now also providing guidance for reported operating profit (EBIT),
which is expected to be negative around DKK 7.0 billion.

Lundbeck contacts

Investors: Media:

Palle Holm Olesen Mads Kronborg
Vice President, Investor Relations Director, Media Relations
PALO@lundbeck.com MAVK@lundbeck.com
+45 36 43 24 26 +45 36 43 30 00

About Lundbeck

H. Lundbeck A/S (LUN.CO, LUN DC, HLUYY) is a global pharmaceutical company
specialized in brain diseases. For more than 50 years, we have been at the
forefront of research within neuroscience. Our key areas of focus are alcohol
dependence, Alzheimer’s disease, bipolar disorder, depression/anxiety,
epilepsy, Huntington’s disease, Parkinson’s disease, schizophrenia and
symptomatic neurogenic orthostatic hypotension (NOH).

An estimated 700 million people worldwide are living with brain disease and far
too many suffer due to inadequate treatment, discrimination, a reduced number
of working days, early retirement and other unnecessary consequences. Every
day, we strive for improved treatment and a better life for people living with
brain disease – we call this Progress in Mind.

Read more at www.lundbeck.com/global/about-us/progress-in-mind.

Our approximately 6,000 employees in 57 countries are engaged in the entire
value chain throughout research, development, production, marketing and sales.
Our pipeline consists of several late-stage development programs and our
products are available in more than 100 countries. We have research centres in
China, Denmark and the United States and production facilities in China,
Denmark, France and Italy. Lundbeck generated revenue of approximately DKK 13.5
billion in 2014 (EUR 1.8 billion; USD 2.4 billion).

Lundbeck’s shares are listed on the stock exchange in Copenhagen under the
symbol ”LUN”. Lundbeck has a sponsored Level 1 ADR program listed in the US
(OTC) under the symbol ”HLUYY”.

For additional information, we encourage you to visit our corporate site
www.lundbeck.com.

Safe Harbor/Forward-Looking Statements

The above information contains forward-looking statements that provide our
expectations or forecasts of future events such as new product introductions,
product approvals and financial performance.

Such forward-looking statements are subject to risks, uncertainties and
inaccurate assumptions. This may cause actual results to differ materially from
expectations and it may cause any or all of our forward-looking statements here
or in other publications to be wrong. Factors that may affect future results
include interest rate and currency exchange rate fluctuations, delay or failure
of development projects, production problems, unexpected contract breaches or
terminations, government-mandated or market-driven price decreases for
Lundbeck's products, introduction of competing products, Lundbeck's ability to
successfully market both new and existing products, exposure to product
liability and other lawsuits, changes in reimbursement rules and governmental
laws and related interpretation thereof, and unexpected growth in costs and
expenses.

Certain assumptions made by Lundbeck are required by Danish Securities Law for
full disclosure of material corporate information. Some assumptions, including
assumptions relating to sales associated with product that is prescribed for
unapproved uses, are made taking into account past performances of other
similar drugs for similar disease states or past performance of the same drug
in other regions where the product is currently marketed. It is important to
note that although physicians may, as part of their freedom to practice
medicine in the US, prescribe approved drugs for any use they deem appropriate,
including unapproved uses, at Lundbeck, promotion of unapproved uses is
strictly prohibited.