First quarter report 2011 - Lundbeck is off to a good start in 2011 as key products maintain momentum
H. Lundbeck A/S (Lundbeck) reports first quarter revenue of DKK 4,103 million
growing 7% compared to the same period last year. The increase was driven by
positive development in all key products. Profit from operations was DKK 1,305
million, increasing 4% and corresponding to an EBIT margin of 31.8%.
* Continued solid growth in the key products Cipralex(®), Ebixa(®) and
Azilect(®), growing 6%, 12% and 15% respectively.
* Revenue from Xenazine(®) was DKK 208 million and increased 74%.
* Sabril(®) sales increased 123% to DKK 75 million.
* Operating profit before depreciation and amortisation (EBITDA) was DKK
1,540 million, increasing 4% and corresponding to an EBITDA margin of 37.5%.
* Net profit was DKK 930 million, corresponding to earnings per share (EPS) of
DKK 4.74.
* With the solid results for the quarter Lundbeck is on the way to deliver the
financial guidance for 2011.
Q1 2011 Q1 2010 Growth
Distribution of revenue
DKKm DKKm Growth at CER*
-------------------------------+-------+--------------
Cipralex(®) 1,537| 1,454| 6% 3%
| |
Lexapro(®) 741| 727| 2% 8%
| |
Ebixa(®) 687| 611| 12% 11%
| |
Azilect(®) 278| 240| 15% 15%
| |
Xenazine(®) 208| 119| 74% 71%
| |
Sabril(®) 75| 34| 123% 120%
| |
| |
| |
Europe 2,056| 1,982| 4% 2%
| |
USA 1,131| 1,044| 8% 12%
| |
International Markets 877| 734| 19% 14%
| |
| |
| |
Total revenue 4,103| 3,849| 7% 6%
* Constant exchange rates
In connection with the first quarter report, Lundbeck's President and CEO Ulf
Wiinberg said:
"It has been a good first quarter and several positive pipeline events have
improved our long-term outlook. In the beginning of the quarter our filing of
Onfi(TM) in the US was accepted by the FDA and recently Lexapro(® )was approved
in Japan, opening up the way for a launch in the second half of the year. We are
looking forward to being able to offer this treatment option in Japan."
Financial highlights and key figures
2011 2010 2010
Q1 Q1 FY
--------------------------------------------------------------------------------
Financial highlights (DKK million)
|
Revenue 4,103 3,849| 14,765
|
Operating profit before depreciation and amortisation |
(EBITDA) 1,540 1,478| 4,393
|
Profit from operations (EBIT) 1,305 1,254| 3,357
|
Net financials (38) (11)| (68)
|
Profit before tax 1,267 1,243| 3,289
|
Tax 337 298| 823
|
Profit for the period 930 945| 2,466
|
|
|
Equity 11,040 9,977| 11,122
|
Assets 18,572 16,874| 18,005
|
|
|
Cash flows from operating and investing activities 117 864| 2,462
|
Property, plant and equipment investments, gross 77 38| 383
|
|
|
Key figures |
|
EBITDA margin (%)(1) 37.5 38.4| 29.8
|
EBIT margin (%)(1) 31.8 32.6| 22.7
|
Return on capital employed (%) 10.3 11.1| 27.6
|
Research and development ratio (%) 15.4 16.3| 20.6
|
Return on equity (%)(1) 8.4 10.1| 24.8
|
Solvency ratio (%)(1) 59.4 59.1| 61.8
|
Capital employed (DKKm) 12,957 11,945| 13,039
|
|
|
Share data |
|
Number of shares for the calculation of EPS (million) 196.1 196.1| 196.1
|
Number of shares for the calculation of DEPS (million) 196.1 196.1| 196.1
|
Earnings per share (EPS) (DKK)(1) 4.74 4.82| 12.58
|
Diluted earnings per share (DEPS) (DKK)(1) 4.74 4.82| 12.58
|
Cash flow per share (DKK)(1) 4.13 4.67| 16.65
|
Net asset value per share (DKK)(1) 56.31 50.87| 56.71
|
Market capitalisation (DKKm) 23,926 20,377| 20,788
|
Share price end of period (DKK) 122.00 103.90| 106.00
|
Other
|
Number of employees (FTE) 5,715 5,708| 5,644
1)( )Definitions according to the Danish Society of Financial Analysts'
Recommendations & Financial Ratios 2010.
Management review
Lundbeck's development portfolio
Lundbeck is developing a number of new and promising pharmaceuticals for the
treatment of brain disorders. The pipeline projects are targeting areas where
Lundbeck currently has a market presence, such as depression, anxiety and other
psychiatric disorders, as well as new areas such as stroke and alcohol
dependence. Lundbeck's pipeline includes:
One compound under regulatory review
Five compounds in clinical phase III
Four compounds in clinical phase II
Three compounds in clinical phase I
Seven compounds in Lundbeck's pipeline have demonstrated clinical proof of
concept. Pipeline development is summarised as follows:
Regulatory review
In March, the US Food and Drug Administration (FDA) accepted for review a New
Drug Application (NDA) for the investigational compound Onfi(TM) (clobazam) as
adjunctive therapy in treating seizures associated with Lennox-Gastaut syndrome
(LGS) in patients two years and older. The filing was assigned a standard review
and an action letter is anticipated in the fourth quarter 2011.
In April, Lundbeck's partner Mochida Pharmaceutical Co., Ltd. (Mochida) obtained
approval of escitalopram 10 mg (Lexapro(®)) from the Japanese Ministry of
Health, Labour and Welfare (MHLW). Mochida and Mitsubishi Tanabe Pharma
Corporation (Mitsubishi Tanabe) will co-promote the product, and
Yoshitomiyakuhin Corporation, a subsidiary of Mitsubishi Tanabe, will
participate in the promotion. The schedule for the launch of Lexapro(®) will be
announced after its National Health Insurance price listing.
Clinical phase III
The four additional clinical phase III studies with Lu AA21004 in Major
Depressive Disorder (MDD) continues to recruit patients according to plan. The
studies are based on the clinical data obtained to date, which demonstrate
positive results for the potential efficacy and the tolerability profile of Lu
AA21004.
Two out of three studies have been completed in the clinical phase III programme
with nalmefene in alcohol dependence. The third study will report in the second
quarter of 2011 and a filing is expected in the second half of the year, pending
successful completion of the last pivotal efficacy study.
The clinical phase III studies with desmoteplase in ischaemic stroke, DIAS-3 and
DIAS-4, are experiencing slow patient recruitment and several initiatives are
ongoing in order to speed up recruitment.
The pivotal program with zicronapine is ongoing. The first study in the
programme is focused on schizophrenia and is expected to enrol 160 patients. The
pivotal program is planned to include additional phase III studies to further
investigate the compound's benefit and risk profile.
Clinical phase II
Lu AA24493 is in clinical phase II in the treatment of Friedreich's ataxia and
in clinical phase I in the treatment of acute ischaemic stroke. Ongoing studies
in both programmes are expected to report data in the first half of 2011.
Clinical phase I
In March, Lundbeck initiated clinical phase I studies with Lu AF11167 in order
to investigate safety, tolerability and the pharmacokinetic profile of the
compound in humans. Lu AF11167 is a new compound inhibiting a phosphodiesterase
enzyme primarily expressed in the brain and with relevance in a number of both
neurological and psychiatric diseases in humans.
Financial forecasts and forward-looking statements
Financial forecast 2011
Financial guidance for the full year 2011 is unchanged. Lundbeck continues to
expect revenue of DKK 15.3-15.8 billion, EBITDA of DKK 4.3-4.6 billion and EBIT
of DKK 3.3-3.6 billion. Net profit for 2011 is expected to reach DKK 2.3-2.6
billion.
2010 2011
Financial forecast 2011 actual forecast
DKK million DKK billion
-----------------------------------+-----------
Revenue 14,765| 15.3-15.8
|
EBITDA 4,393| 4.3-4.6
|
EBIT 3,357| 3.3-3.6
|
Net profit 2,466| 2.3-2.6
|
Effective tax rate 25.0%| 26-28%
Forward-looking statements
Forward-looking statements provide current expectations or forecasts for events,
such as product launches, product approvals and financial performance. Forward-
looking statements are subject to risks, uncertainties and inaccurate
assumptions. Actual results may differ from expected results. Factors that may
affect future results include fluctuations in interest rates and exchange rates,
a delay in 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 a competing product,
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 their interpretation and unexpected growth in costs
and expenses.
Revenue
Total revenue for the first quarter was DKK 4,103 million corresponding to an
increase of 7% compared to the same quarter last year.
Q1 2011 Q1 2010 Growth Q4 2010
Total revenue
DKKm DKKm Growth at CER DKKm
-----------------------------+-------+---------------------+
Cipralex(®) 1,537| 1,454| 6% 3% 1,456|
| | |
Lexapro(®) 741| 727| 2% 8% 520|
| | |
Ebixa(®) 687| 611| 12% 11% 585|
| | |
Azilect(®) 278| 240| 15% 15% 271|
| | |
Xenazine(®) 208| 119| 74% 71% 172|
| | |
Sabril(®) 75| 34| 123% 120% 56|
| | |
Other pharmaceuticals 538| 575| (6%) (9%) 415|
| | |
Other revenue 39| 89| (56%) (56%) 55|
| | |
Total revenue 4,103| 3,849| 7% 6% 3,530|
Revenue from Cipralex(®) (escitalopram) for the treatment of mood disorders rose
to DKK 1,537 million, an increase of 6%, or 3% at constant exchange rates.
Revenue from Lexapro(®), escitalopram marketed in the US by Forest Laboratories,
Inc. (Forest), was DKK 741 million for the quarter. This was an increase of 2%,
or 8% at constant exchange rates, compared to the same period last year. The
increase was due to an increase in Forest inventories during the quarter.
Ebixa(®) (memantine) for the symptomatic treatment of Alzheimer's disease
generated first quarter revenue of DKK 687 million, an increase of 12% compared
to the same period last year. The increase corresponds to 11% growth at constant
exchange rates. Lundbeck has the marketing rights to Ebixa(® )in most of the
world, except Japan and the US.
Revenue from Azilect(®) (rasagiline) for the treatment of Parkinson's disease
was DKK 278 million, an increase of 15% compared to the first quarter last year.
Lundbeck has commercial rights to Azilect(®) in Europe (in co-promotion with
Teva Pharmaceutical Industries Inc. in France, Germany and the UK) and some
markets outside Europe, including six Asian countries.
Xenazine[1] (tetrabenazine) for the treatment of chorea associated with
Huntington's disease generated revenue of DKK 208 million in the first quarter,
an increase of 74%, or 71% at constant exchange rates compared to the same
period last year. Xenazine(®) was launched in the US in November 2008.
Sabril(®) (vigabatrin) for the treatment of refractory complex partial seizures
(rCPS) and infantile spasms (IS) generated first quarter revenue of DKK 75
million, increasing 123%, or 120% in constant exchange rates compared to first
quarter 2010. Sabril(®) was launched in the US in September 2009.
Other pharmaceuticals, which comprise the remainder of Lundbeck's products,
decreased 6% to DKK 538 million. This was primarily due to an expected decrease
in revenue from Lundbeck Inc.'s more mature products.
Other revenue was DKK 39 million, compared to DKK 89 million for the same period
last year.
Europe
First quarter revenue in Europe increased 4% compared to the same quarter last
year. The increase was driven by the continued growth in Ebixa(®) and
Azilect(®).
Q1 2011 Q1 2010 Growth Q4 2010
Revenue Europe
DKKm DKKm Growth at CER DKKm
-----------------------------+-------+---------------------+
Cipralex(®) 991| 1,007| (2%) (3%) 984|
| | |
Ebixa(®) 574| 514| 12% 11% 501|
| | |
Azilect(®) 254| 218| 16% 16% 245|
| | |
Other pharmaceuticals 237| 243| (2%) (4%) 211|
| | |
Total revenue 2,056| 1,982| 4% 2% 1,941|
Cipralex(®) generated first quarter revenue of DKK 991 million in Europe and
continues to gain market shares and reinforce its leading position in most
countries in Europe. However, revenue decreased 2% compared to the first quarter
last year, due to the launch of generic escitalopram in Spain, Norway and
Finland in 2010 as well as price decreases and health care reforms implemented
in some countries during last year. At the end of February 2011, Cipralex(®)
held a market share in value of 20.4% of the European antidepressant market,
compared with a market share of 20.2% a year earlier.
Revenue from Ebixa(®) rose to DKK 574 million during the quarter. At the end of
February 2011 the product held 19.2% of the European Alzheimer's market measured
in value, compared to a market share of 17.2% at the same time in 2010. Italy
continues to experience high growth as a consequence of the reimbursement
received in 2009 and the launch of the once-daily formulation in the country. In
February 2011, Ebixa(®) had a market share in Italy of 29.4% compared to 21.2% a
year earlier. Ebixa(®) revenue was negatively impacted by healthcare reforms in
Greece and price reforms in Spain, which were not in place in the first quarter
of 2010. Memantine, the active ingredient in Ebixa(®), is the second-most
prescribed pharmaceutical in Europe for the treatment of Alzheimer's disease.
First quarter revenue from Azilect(®) amounted to DKK 254 million, an increase
of 16% compared to the first quarter of 2010. Azilect(®) now holds a market
share in value of 11.5% of the total European Parkinson's market (February
2011). This compares to a market share of 8.7% at the same time in 2010.
Azilect(® )continues to gain market share in Europe, as it is increasingly
recognised as an effective and easy-to-administer medication. The reimbursement
of Azilect(®) in France last year continues to support sales. At the end of
February, Azilect(®) had achieved a market share in France of 14.3%. The price
reform in Spain had some negative impact on sales.
Revenue from Other pharmaceuticals was DKK 237 million, a decrease of 2%
compared to last year. The decrease was primarily driven by decreasing revenue
from Cipramil(®).
USA
Lundbeck's first quarter revenue in the US was DKK 1,131 million, an increase of
8%, or 12% at constant exchange rates, compared to the first quarter 2010. The
growth was driven by the newer products Xenazine(®) and Sabril(®).
Q1 2011 Q1 2010 Growth Q4 2010
Revenue USA
DKK million DKK million Growth at CER DKK million
---------------------------------+-----------+-------------------------+
Lexapro(®) 741| 727| 2% 8% 520|
| | |
Xenazine(®) 184| 107| 72% 69% 171|
| | |
Sabril(®) 75| 34| 123% 120% 56|
| | |
Other pharmaceuticals 131| 176| (26%) (27%) 80|
| | |
Total revenue 1,131| 1,044| 8% 12% 827|
Revenue from Lexapro(®) was DKK 741 million for the quarter, an increase of 2%,
or 8% at constant exchange rates, compared to the same quarter last year. The
increase is due to an increase in Forest inventories during the period, caused
by timing of deliveries around the end of the quarter. No longer term impact is
expected on the reduction of inventories towards patent expiry. At the end of
February, Lexapro(®) held a market share in value of 24.1% of the US aggregate
market for antidepressants, compared to a market share of 24.2% in February
2010.
Prepayments from Forest, recorded in Lundbeck's balance sheet as the difference
between the invoiced price and the minimum price of Forest's inventories, were
DKK 564 million as of 31 March 2011. This compares to DKK 718 million as of the
end of March 2010. At the end of the first quarter, the inventory levels
corresponded to approximately seven months of commercial supply.
Revenue from Xenazine(®) was DKK 184 million for the quarter, an increase of
72% compared to the first quarter last year. The positive trend from the
previous quarters continues as Xenazine(®) sales are progressing well and are on
track to meet our expectations.
Sabril(®) revenue for the quarter was DKK 75 million, growing 123% compared to
the same quarter last year. In the quarter, the performance of Sabril(®) has
been driven by increased compliance rate among existing patients as well as
higher doses used.
First quarter revenue from Other pharmaceuticals in the US was DKK 131 million,
a decrease of 26% compared to same quarter last year. The decrease in sales is
mainly due to the temporary withdrawal of NeoProfen(®) from the market, as well
as impact from the launch of generic chlorothiazide (Diuril(®)) in December
2009.
International Markets
Revenue in International Markets, which comprises all of Lundbeck's markets
outside Europe and the US, was DKK 877 million for the quarter. This is an
increase of 19% compared to the first quarter 2010, or 14% at constant exchange
rates. The growth was driven by Cipralex(® )and Ebixa(® )as well as an increase
in Other pharmaceuticals.
Revenue Q1 2011 Q1 2010 Growth Q4 2010
International Markets
DKK million DKK million Growth at CER DKK million
---------------------------------+-----------+-------------------------+
Cipralex(®) 546| 447| 22% 16% 472|
| | |
Ebixa(®) 113| 97| 17% 13% 84|
| | |
Azilect(®) 24| 22| 5% 11% 26|
| | |
Other pharmaceuticals 194| 168| 15% 9% 125|
| | |
Total revenue 877| 734| 19% 14% 707|
Cipralex(®) generated first quarter revenue of DKK 546 million in International
Markets, an increase of 22% compared to the first quarter last year, and
corresponding to an increase of 16% at constant exchange rates. The
reimbursement of Cipralex(®) in the Canadian provinces of Ontario and British
Colombia continues to support revenue growth in the country and now holds a
market share in terms of value of 14.6% in Canada (February 2011), compared to
10.7% at the same time last year. Canada is now the second largest Cipralex(®)
market worldwide. At the end of February 2011, Cipralex(®) held a market share
in terms of value of 11.9% of the aggregate market for antidepressants in
International Markets[2], compared to a market share of 10.8% in the same period
last year.
Ebixa(®) generated first quarter revenue of DKK 113 million, an increase of
17%, or 13% at constant exchange rates, despite a continued negative impact from
generic competition in Canada. In February, Ebixa(®) held 8.3% of the total
market in terms of value of pharmaceuticals for the treatment of Alzheimer's
disease in International Markets(2). This compares to a market share of 9.4% in
February 2010. The decline in market share is a consequence of the launch of
generic memantine in Canada.
Other pharmaceuticals generated revenue of DKK 194 million during the quarter,
an increase of 15%, or 9% at constant exchange rates, compared to the same
quarter last year. The increase was due to a possible development in some of
Lundbeck's mature products as well as quarterly fluctuations in sales.
Expenses
Total costs for the quarter were DKK 2,798 million, an increase of 8% compared
to the first quarter last year.
Q1 2011 Q1 2010 Q4 2010
Distribution of costs
DKK million DKK million Growth DKK million
----------------------+-----------+-----------+------------------+
Cost of sales | 781| 698| 12% 802|
| | | |
Distribution | 905| 820| 10% 949|
| | | |
Administration | 479| 448| 7% 515|
| | | |
Research & Development| 633| 629| 1% 943|
| | | |
Total costs | 2,798| 2,595| 8% 3,209|
Total cost of sales increased 12% to DKK 781 million. This corresponds to 19% of
Lundbeck's total revenue, compared with 18% in the first quarter of 2010. Cost
of sales for the period was affected by the higher cost of goods sold due to
increasing sales of in-licensed products (i.e. Xenazine(®), Azilect(®) and
Ebixa(®)).
Distribution costs were DKK 905 million, corresponding to an increase of 10%
compared to the first quarter last year. The increase in distribution costs is
related to launch costs for new products and pre-launch costs for Onfi(TM) and
nalmefene. Administrative expenses were DKK 479 million, increasing 7% and
corresponding to 12% of the total revenue for the period, which was at the same
level as first quarter last year. SG&A costs were DKK 1,384 million, compared to
DKK 1,268 million in the same period last year. The SG&A margin for the period
was 34% compared to 33% in the same period last year.
R&D costs for the quarter were DKK 633 million compared to DKK 629 million in
the same period last year.
Operating profit before depreciation and amortisation (EBITDA)
EBITDA was DKK 1,540 million, compared to DKK 1,478 million for the first
quarter of 2010. EBITDA margin for the period was 37.5%, compared to 38.4% in
the same quarter last year.
Depreciation, amortisation and impairment charges
Depreciation, amortisation and impairment charges, which are included in the
individual expense categories, amounted to DKK 235 million compared to DKK 224
million in first quarter last year.
Depreciation, amortisation and Q1 2011 Q1 2010 Q4 2010
impairment charges per expense
category DKK million DKK million Growth DKK million
------------------------------------------------+-----------+------------------+
Cost of sales 54| 53| 2% 76|
| | |
Distribution 103| 85| 20% 96|
| | |
Administration 18| 20| (11%) 16|
| | |
Research & Development 60| 66| (9%) 77|
| | |
Total depreciation, amortisation and | | |
impairment charges 235| 224| 5% 265|
The increase in amortisation and depreciation included in distribution costs is
due to increased amortisation of Lundbeck Inc. products.
The decrease compared to the fourth quarter last year was due to a number of
projects and assets having had their last depreciation during Q4 2010.
Profit from operations (EBIT)
EBIT for the first quarter of 2011 amounted to DKK 1,305 million, which
corresponds to an increase of 4% compared to the same period in 2010 (DKK 1,254
million). The EBIT margin for the period was 31.8% compared to 32.6% in the same
period the year before.
Net financials
Lundbeck generated net financial expenses of DKK 38 million in the first
quarter, compared with net expenses of DKK 11 million in the first quarter of
2010.
Q1 2011 Q1 2010 Q4 2010
Net financials
DKK million DKK million DKK million
-------------------------------------------------------+-----------------------+
Interest on financial assets and | |
liabilities measured at amortised cost (13)| (26) (33)|
| |
Net interest income, incl. net gains on the | |
bond portfolio (13)| (26) (33)|
| |
Net gains regarding the trading portfolio -| - (1)|
| |
Net exchange gains (23)| 23 37|
| |
Net currency items relating to financial | |
items (23)| 23 36|
| |
Net gains on available-for-sale financial 1| - 10|
assets, incl. dividends | |
| |
Other financial income, net (3)| (8) (3)|
| |
Net financials (38)| (11) 10|
Net interest income, including realised and unrealised gains and losses on the
bond portfolio, amounted to a net expense of DKK 13 million, as compared to a
net expense of DKK 26 million in the same period in 2010. The difference was
primarily due to a smaller loan portfolio in 2011.
Accounting translation of currency items amounted to a loss of DKK 23 million
for the quarter, primarily due to a decrease in the USD/DKK exchange rate.
Tax
The income tax expense for the period was DKK 337 million, compared to DKK 298
million in the same period last year. This corresponds to an effective tax rate
of 26.6% for the quarter.
Profit for the period
Profit after tax for the first quarter of 2011 was DKK 930 million, compared to
DKK 945 million in the same period last year.
Cash flows
Lundbeck had a positive cash flow during the quarter of DKK 108 million,
compared to an outflow of DKK 647 million in the same period last year.
Q1 2011 Q1 2010 Q4 2010
Cash flows
DKK million DKK million DKK million
--------------------------------------------------------+-----------------------
Cash flows from operating activities 809| 915 (111)
|
Cash flows from investing activities (692)| (51) (606)
|
Cash flows from operating and investing |
activities 117| 864 (717)
|
Cash flows from financing activities (9)| (1,511) 5
|
Change in cash 108| (647) (712)
|
|
|
Cash at beginning of period 2,294| 1,960 2,995
|
Unrealised exchange adjustments for the (13)| 17 11
period |
|
Cash at end of period 2,389| 1,330 2,294
|
|
|
Securities 653| 53 54
|
Interest-bearing debt (1,917)| (1,968) (1,918)
|
Interest-bearing net cash and cash |
equivalents, end of period 1,125| (585) 430
Operating activities generated a first quarter cash inflow of DKK 809 million,
compared to an inflow of DKK 915 million in the same period last year.
Cash flows from investing activities represented an outflow of DKK 692 million
mostly due to investments in a money market fund in the first quarter of 2011.
Cash flows from financing activities equalled an outflow of DKK 9 million
compared to an outflow of DKK 1,511 million in the same period last year, which
was impacted by repayment of loans related to the acquisition of Ovation
(Lundbeck Inc.).
Cash as of 31 March 2011 was DKK 2,389 million. This compares to DKK 1,330
million as of 31 March 2010 and DKK 2,294 million as of 31 December 2010. At the
end of March 2011, Lundbeck had a net cash position of DKK 1,125 million,
compared to a net debt of DKK 585 million at the end of March 2010.
Balance sheet
As of 31 March 2011, Lundbeck had total assets of DKK 18,572 million, compared
to DKK 16,874 million at the end of the first quarter of 2010.
As of 31 March 2011, Lundbeck's equity amounted to DKK 11,040 million,
corresponding to a solvency ratio of 59.4% compared to 59.1% at the end of the
first quarter 2010.
Lundbeck operates with Long-Term Incentive schemes (LTI) for the Executive
Management and key employees in Denmark and abroad. To fund the programme
Lundbeck has during the quarter purchased treasury shares with a value of DKK 9
million corresponding to 71,025 shares.
At the Annual General Meeting in March, the proposed dividend of DKK 739 million
or DKK 3.77 per share was approved. The dividend was paid out in the beginning
of April.
Hedging
Lundbeck hedges income from its products through currency hedging. As a result
of Lundbeck's currency hedging policy, foreign exchange losses and gains on
hedging transactions are allocated directly to the hedged transaction. Hedging
had a positive effect on profit of DKK 8 million in the first quarter of 2011,
compared with a situation where the income is not hedged and included at the
current rates of exchange during the period. The effect was a DKK 58 million
gain in the first quarter of 2010. Of this amount the US dollar had the highest
financial impact with a gain of DKK 67 million.
Lundbeck hedges cash flow in US dollars on a rolling basis, approximately 12
months in advance. The average rate for the US dollar hedging contracts for
2011 is approximately USD/DKK 567. The corresponding rate for 2010 was
approximately USD/DKK 541. For the next 12 months, the average rate for the
existing US dollar hedging contracts is approximately USD/DKK 567.
Events after the balance sheet date
In April, Lundbeck's partner Mochida obtained approval of Lexapro(®) 10 mg
(escitalopram) from the Japanese Ministry of Health, Labour and Welfare (MHLW).
The schedule for the launch of Lexapro(®) will be announced after its National
Health Insurance price listing.
Also in April, the European launch of Sycrest(®) (asenapine) sublingual tablets
(5 mg, 10 mg) for the treatment of moderate to severe manic episodes associated
with bipolar I disorder in adults was initiated with Denmark as the first
country.
Accounting policies
The interim report is presented in accordance with IAS 34 "Interim Financial
Reporting" as adopted by the EU and additional Danish disclosure requirements
for the interim reports of listed companies.
Accounting policies are unchanged compared to the annual report 2010, which
contains a more detailed description of the Group's accounting policies.
Incentive plan in the Lundbeck Group
Members of Lundbeck's Executive Management and 113 key employees appointed by
Lundbeck's Executive Management Group who are employed by Lundbeck or Lundbeck's
subsidiaries were granted participation in Lundbeck's Long Term Incentive
program on 1 April 2011. The above-mentioned subsidiaries comprise Danish and
foreign enterprises in which Lundbeck directly or indirectly holds at least 50%
of the shares. The members of the company's Supervisory Board are not comprised
by the scheme.
For key employees in the US subsidiaries Stock Appreciation Rights and
Restricted Cash Units with conditions and award criteria similar to the grant
made to key employees of the parent company and its non-US subsidiaries was
issued.
The Long Term Incentive program vest over a three year period and in the
financial statements, the cost will be recognised in the income statement at
fair value over the vesting period. The grant to the Executive Management Group
is subject to achieving specific market goals.
Protection of patents and other intellectual property rights
Intellectual property rights are a prerequisite for Lundbeck's continued
investments in innovative pharmaceuticals. It is Lundbeck's policy to enforce
its granted intellectual property rights wherever they may be violated. Lundbeck
is involved in a number of trials around the world related to defending our
intellectual property rights. With regards to escitalopram Lundbeck is presently
involved in pending court trials in Austria, Belgium, Brazil, Canada, Denmark,
Finland, France, Germany, Hungary, Latvia, Lebanon, Lithuania, the Netherlands,
Norway, Portugal, Saudi Arabia, Spain, Taiwan, Turkey, UK and the US.
Risk factors
Lundbeck's overall risk exposure is unchanged and reflects the risk factors
described in the annual report 2010.
Conference call
Today at 2.00 pm (CET), Lundbeck will be hosting a conference call for the
financial community. You can listen to the call online at www.lundbeck.com under
the section "Investors - Presentations".
Management statement
The Supervisory Board and the Executive Management have discussed and adopted
the interim report of H. Lundbeck A/S for the period 1 January - 31 March 2011.
The interim report is presented in accordance with IAS 34 "Interim financial
reporting", as adopted by the EU and additional Danish disclosure requirements
for the interim reports of listed companies.
We consider the accounting policies applied to be appropriate. Accordingly, the
interim report gives a true and fair view of the Group's assets, liabilities and
financial position as of 31 March 2011 and of the results of the Group's
operations and cash flows for the first quarter of 2011, which ended on 31 March
2011.
In our opinion, the Management's report gives a true and fair view of activity
developments, the Group's general financial position and the results for the
period. It also gives a fair account of the significant risks and uncertainty
factors that may affect the Group.
The interim report has not been subject to audit or review.
Valby, 4 May 2011
Executive Management
Ulf Wiinberg Peter Høngaard Andersen Lars Bang
President and CEO Executive Vice President Executive Vice President
Anders Götzsche Anders Gersel Pedersen Stig Løkke Pedersen
Executive Vice President, CFO Executive Vice President Executive Vice President
Supervisory Board
Mats Petterson Thorleif Krarup Håkan Björklund
Chairman Deputy Chairman
Kim Rosenville Christensen Christian Dyvig Mona Elisabeth Elster
Peter Kürstein Jørn Mayntzhusen Jes Østergaard
Income statement
2011 2010 2010
Q1 Q1 FY
DKK million DKK million DKK million
--------------------------------------------------------------------+-----------
Revenue 4,103 3,849| 14,765
|
Cost of sales 781 698| 2,958
|
Gross profit 3,322 3,151| 11,807
|
|
|
Distribution costs 905 820| 3,496
|
Administrative expenses 479 448| 1,909
|
Profit before research and development costs 1,938 1,883| 6,402
|
|
|
Research and development costs 633 629| 3,045
|
Profit from operations 1,305 1,254| 3,357
|
|
|
Net financials (38) (11)| (68)
|
Profit before tax 1,267 1,243| 3,289
|
|
|
Tax on profit for the period 337 298| 823
|
Profit for the period 930 945| 2,466
|
|
|
|
|
Earnings per share (EPS) (DKK) 4.74 4.82| 12.58
|
Diluted earnings per share (DEPS) (DKK) 4.74 4.82| 12.58
Statement of comprehensive income
2011 2010 2010
Q1 Q1 FY
DKK million DKK million DKK million
--------------------------------------------------------------------+-----------
Profit for the period 930 945| 2,466
|
|
|
Currency translation, foreign subsidiaries (163) 213| 295
|
Currency translation concerning additions to |
net investments in foreign subsidiaries (232) 190| 240
|
Adjustment, deferred exchange gains/losses, 130 (132)| (213)
hedging |
|
Exchange gains/losses, hedging (transferred |
to the hedged items) (34) (32)| 163
|
Exchange gains/losses, trading (transferred |
from hedging) - -| 1
|
Accumulated exchange loss on divestment of - -| 2
associate |
|
Fair value adj. of available-for-sale (1) 3| (4)
financial assets |
|
Tax on other comprehensive income 32 (16)| (47)
|
Other comprehensive income (268) 226| 437
|
|
|
Comprehensive income 662 1,171| 2,903
Balance sheet
31.03.2011 31.03.2010 31.12.2010
DKK million DKK million DKK million
Assets
-----------------------------------------------------+-----------
Intangible assets 7,506 7,977| 8,012
|
Property, plant and equipment 3,018 3,003| 3,046
|
Financial assets 237 192| 191
|
Non-current assets 10,761 11,172| 11,249
|
|
|
Inventories 1,441 1,357| 1,491
|
Receivables 3,328 2,962| 2,917
|
Securities 653 53| 54
|
Cash 2,389 1,330| 2,294
|
Current assets 7,811 5,702| 6,756
|
|
|
Assets 18,572 16,874| 18,005
|
Equity and liabilities
-----------------------------------------------------+-----------
Share capital 980 980| 980
|
Share premium 224 224| 224
|
Currency translation reserve (620) (411)| (281)
|
Retained earnings 10,456 9,184| 10,199
|
Equity 11,040 9,977| 11,122
|
|
|
Provisions 970 1,110| 930
|
Debt 1,905 1,915| 1,918
|
Non-current liabilities 2,875 3,025| 2,848
|
|
|
Provisions 234 198| 216
|
Debt 12 53| -
|
Trade payables 1,087 805| 1,237
|
Other payables 2,760 2,098| 2,065
|
Prepayments from Forest 564 718| 517
|
Current liabilities 4,657 3,872| 4,035
|
|
|
Liabilities 7,532 6,897| 6,883
|
|
|
Equity and liabilities 18,572 16,874| 18,005
Statement of changes in equity at 31 March 2011
Currency
Share Share translation Retained
capital premium reserve earnings Equity
DKK million DKK million DKK million DKK million DKK million
2011
--------------------------------+-----------+-----------+-----------+-----------
Equity at 01.01.2011 980| 224| (281)| 10,199| 11,122
| | | |
| | | |
| | | |
Profit for the -| -| -| 930| 930
period | | | |
| | | |
Other comprehensive -| -| (339)| 71| (268)
income | | | |
| | | |
Comprehensive income -| -| (339)| 1,001| 662
| | | |
| | | |
| | | |
Distribution of -| -| -| (739)| (739)
dividends | | | |
| | | |
Buyback of treasury -| -| -| (9)| (9)
shares | | | |
| | | |
Incentive programmes -| -| -| 4| 4
| | | |
Other transactions -| -| -| (744)| (744)
| | | |
| | | |
| | | |
Equity at 31.03.2011 980| 224| (620)| 10,456| 11,040
| | | |
2010
--------------------------------+-----------+-----------+-----------+-----------
Equity at 01.01.2010 980| 224| (757)| 8,356| 8,803
| | | |
| | | |
| | | |
Profit for the -| -| -| 945| 945
period | | | |
| | | |
Other comprehensive -| -| 346| (120)| 226
income | | | |
| | | |
Comprehensive income -| -| 346| 825| 1,171
| | | |
| | | |
| | | |
Incentive programmes -| -| -| 3| 3
| | | |
Other transactions -| -| -| 3| 3
| | | |
| | | |
| | | |
Equity at 31.03.2010 980| 224| (411)| 9,184| 9,977
Cash flow statement
2011 2010 2010
Q1 Q1 FY
DKK million DKK million DKK million
--------------------------------------------------------------------+-----------
Profit from operations 1,305 1,254| 3,357
|
|
|
Adjustments 262 252| 1,080
|
Working capital changes (558) (467)| 88
|
Cash flows from operations before financial |
receipts and payments 1,009 1,039| 4,525
|
|
|
Financial receipts and payments (24) (21)| (78)
|
Cash flows from ordinary activities 985 1,018| 4,447
|
|
|
Income tax paid (176) (103)| (1,182)
|
Cash flows from operating activities 809 915| 3,265
|
|
|
Investments in and sale of bonds and other |
financial assets (601) 9| 21
|
Investments in and sale of intangible assets |
and property, plant and equipment (91) (60)| (824)
|
Cash flows from investing activities (692) (51)| (803)
|
|
|
Cash flows from operating and investing |
activities 117 864| 2,462
|
|
|
Cash flows from financing activities (9) (1,511)| (2,162)
|
|
|
Change in cash 108 (647)| 300
|
|
|
Cash at beginning of period 2,294 1,960| 1,960
|
Unrealised exchange adjustments for the |
period (13) 17| 34
|
Change for the period 108 (647)| 300
|
Cash at end of period 2,389 1,330| 2,294
|
|
|
|
|
Interest-bearing net cash and cash
equivalents is composed as follows:
--------------------------------------------------------------------+-----------
Cash 2,389 1,330| 2,294
|
Securities 653 53| 54
|
Interest-bearing debt (1,917) (1,968)| (1,918)
|
Interest-bearing net cash and cash |
equivalents, end of period 1,125 (585)| 430
Corporate Releases since last financial report (24 February 2011)
22 April 2011
Lundbeck's partner Mochida receives approval of Lexapro(®) in Japan
4 April 2011
Sycrest(®) roll-out starts with the launch of the product in the important
European region
30 March 2011
H. Lundbeck A/S held its Annual General Meeting on 30 March 2011 at the
company's registered office
29 March 2011
A new pharmaceutical candidate enters Lundbeck's development pipeline
7 March 2011
Notice of Annual General Meeting
7 March 2011
Lundbeck's chairman, Per Wold-Olsen, will not be seeking re-election
4 March 2011
FDA accepts Lundbeck's submission of the New Drug Application for clobazam
28 February 2011
Announcement of transactions with shares and linked securities in H. Lundbeck
A/S made by executives and their closely associated persons and legal entities
For more information, please visit www.lundbeck.com
Lundbeck contacts
Investors: Media:
Palle Holm Olesen Mads Kronborg
Chief Specialist, Investor Relations Media Relations Manager
+45 36 43 24 26 +45 36 43 28 51
Magnus Thorstholm Jensen Simon Mehl Augustesen
Investor Relations Officer International Media Specialist
+45 36 43 38 16 +45 36 43 49 80
Jacob Tolstrup
Vice President
+1 847 282 5713
About Lundbeck
H. Lundbeck A/S (LUN.CO, LUN DC, HLUKY) is an international pharmaceutical
company highly committed to improving the quality of life for people suffering
from central nervous system (CNS) disorders. For this purpose, Lundbeck is
engaged in the research, development, production, marketing and sale of
pharmaceuticals across the world. The company's products are targeted at
disorders such as depression and anxiety, schizophrenia, insomnia, epilepsy and
Huntington's, Alzheimer's and Parkinson's diseases.
Lundbeck was founded in 1915 by Hans Lundbeck in Copenhagen, Denmark. Today
Lundbeck employs approximately 5,900 people worldwide. Lundbeck is one of the
world's leading pharmaceutical companies working with CNS disorders. In 2010,
the company's revenue was DKK 14.8 billion (approximately EUR 2.0 billion or USD
2.6 billion). For more information, please visit www.lundbeck.com.
--------------------------------------------------------------------------------
[1] Xenazine(®) is a registered trademark of Biovail Laboratories International
(Barbados) S.R.L.
[2] Market shares for International Markets are based on IMS data from
Australia, Brazil, Canada, China, Mexico, Saudi Arabia, South Africa, South
Korea and Turkey.
[HUG#1512029]
