Lundbeck Announced Major Restructuring to Regain Profitability and Ensure Value Creation

H. Lundbeck has 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 1000 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, the company expects to significantly improve the its profitability and 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.