Drugmaker H. Lundbeck to Cut Staff, Costs
August 19 2015 - 11:30AM
Dow Jones News
Three months into the post, Kå re Schultz, the chief executive
of H. Lundbeck A/S, has produced a tough prescription to restore
profit at the Danish drug maker: cut costs by 20% and staff by
17%.
Mr. Schultz announced a company overhaul as the company swung to
a net loss of 3.91 billion Danish kroner ($579 million) in the
three months ending June 30, from a net profit of 144 million
kroner in the same period a year earlier.
The result included a 4.8 billion kroner charge for product
rights that won't materialize as a result of the restructuring.
Revenue rose 5.2% to 3.63 billion kroner, as increasing sales in
the U.S. helped offset a 28% decline in Europe.
"I am not satisfied with our profitability," said Mr. Schultz,
who joined Lundbeck in May after being snubbed for the top job at
his former employer and bigger Danish rival, insulin maker Novo
Nordisk A/S.
The Nordic region's third biggest drug maker by sales said it
will shed about 1,000 jobs, mainly in Europe, as it restructures
its commercial operations there amid falling European sales, fierce
competition from cheaper generic drugs and a tougher regulatory
environment.
The company, which specializes in brain disease and neurological
disorders, hopes to cut costs by roughly 3 billion kroner by
2017.
The restructuring program is expected to lead to an operating
loss of around 7 billion kroner this year, Lundbeck said, but help
return the company to a profit in 2016.
The firm spent years over-investing in a range of projects and
is now paying the price for a strategy that left it with "too much
in the early stage pipeline," according to Alm Brand analyst
Michael Friis Jorgensen.
The company said it will back out of several of these early
initiatives, none of which have been disclosed, and focus on
developing a core set of five products, including antidepressant
Brintellix and Abilify Maintena, a treatment for schizophrenia.
Lundbeck said it saw robust sales growth of most of its core
products, but sales of antidepressant Cipralex and Azilect, a
treatment of Parkinson's disease, declined because of generic
competition.
The company raised its full-year revenue guidance on a strong
performance of Onfi, a treatment of Lennox-Gastaut syndrome, and
Xenazine, for the treatment of chorea associated with Huntington's
disease.
It now forecasts revenue around 14 billion kroner, up from
between 13.2 billion kroner and 13.7 billion kroner previously.
Lundbeck shares soared nearly 22% to 205.30 kroner on the
Copenhagen bourse, their highest level in almost 13 years.
Write to Anna Molin at anna.molin@wsj.com
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(END) Dow Jones Newswires
August 19, 2015 11:15 ET (15:15 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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